Southern District Relies on Underlying Limit, Not “Other Insurance” Clause, to Determine Coverage Dispute

Government Emples. Ins. Co. v. Ohio Cas. Group (S.D.N.Y., Sept. 3, 2014)

This dispute between two excess insurance providers stems from a settlement in an underlying personal injury claim where the plaintiff contributed to the settlement, but the defendants did not. In seeking reimbursement, the plaintiff argued that the defendants’ policy’s “other insurance” clause governed and that, since it was “nearly identical to [plaintiff’s] ‘other insurance’ clause,” the two carriers shared the same tier of coverage and should havecontributed pro rata to the settlement. The defendants argued that their coverage obligations were never triggered because their insurance policy applied only to losses in excess of $10 million. The Southern District found that the disputed language of the defendants’ policy unambiguously provided that the policy applied in excess of a $10 million underlying limit. The court held that the plaintiff’s emphasis on the “other insurance” provision was misplaced because the “other insurance” clause only became relevant if there was a covered loss in the first instance. The defendants’ policy only operated above the designated underlying limit, and since the underlying claim settled for less than the $10 million limit, the plaintiff’s claim for indemnification failed as a matter of law.