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When other insurance clauses are not disgusting, they are applied as written



Michael Darnell Wise was injured when he drove a forklift truck at work. While Mr. Wise touched car parts, fished the forklift and fell from a dock or ramp that led up to it, leaving Mr. Wise attached under the forklift. At the time of the accident, Mr. Wise for Central Coast Distribution, LLC d / b / a Mighty Auto Parts. He was seriously injured and eventually settled with the defendant for $ 3.5 million paid for by various insurance companies. Sedan, i St. Paul Fire And Marine Insurance Company v Pennsylvania National Mutual Casualty Insurance Company Case No. 2: 19-cv-05471-JDW, United States District Court of the Eastern District of Pennsylvania (March 8, 2021) Paul, as a redundant insurer, tried to get compensation for what it paid Mr. Wise from other insurance companies that were alleged to be primary for St. Paul's surplus insurance.

Carefully read the words used by the parties when entering into various contracts, including insurance contracts, clearing the parties' arguments and revealing a single way forward.

BACKGROUND

Under a Standard Industrial Leasing Form, Central Coast leased a warehouse from First Industrial, LP to operate in Harrisburg, Pennsylvania. The lease gave Central Coast a lease over a certain portion of the warehouse and gave it access to common areas on the property, including "loading areas." The lease agreement required both Central Coast and First Industrial to maintain insurance and included an exemption from the subrogation provision which provided that each party would have their respective insurance policies approved to prove compliance with an exemption from subrogation.

Central Coast & # 39 ;s Insurance Policy

Central Coast purchased two current insurances from Penn National. The first is a business owner's liability protection policy, a policy that has a liability limit of $ 1,000,000 per event. Central Coast also purchased a commercial umbrella liability policy from Penn National, a policy with a liability limit of $ 2,000,000 per event ("Penn National Umbrella Policy").

First Industry's insurance policy

First Industrial also purchased two insurances relating to this dispute. It purchased a general liability policy from the Federal Insurance Company ("FIC") with a liability limit of $ 1,000,000 per event. It also purchased a special commercial umbrella liability policy from St. Paul, ("St. Paul Policy"). St. Paul agreed to pay for First Industrial "any sums in excess of the withheld limit which [First Industrial] becomes legally obligated to pay as damages due to liability under law … due to: Personal injury … which occurs under the policy Period and caused by an occurrence [.] "

The St. Paul insurance has a" Other insurance "provision which provides:" If other insurance applies to claims that are also covered by this insurance, this insurance will apply over, and shall not contribute to the second insurance, whether it is primary, excessive, conditional or for any other reason. However, this provision does not apply if the other insurance is specifically written to exceed this insurance.

mediation, St. Paul and the FIC reached a $ 3.5 million settlement for all of Wise's claims against First Industrial, with St. Paul contributing $ 2.5 million to that settlement and The FIC contributed $ 1 million.

The current measure

On November 21, 2019, St. Paul filed this lawsuit against Penn National and sought a declaratory judgment that Penn National had to indemnify First Industrial in accordance with the Penn National Policies and the allotment of all amounts as St. Paul. Paul had paid to settle Mr. Wise's claim against First Industrial.

DISCUSSION

Under Pennsylvania law, which the parties agree to apply, the interpretation is an insurance is a matter of law. Because First Industrial is an insured under the Penn National Primary Policy, it also qualifies as an insured under the Penn National Umbrella Policy, which lists the Penn National Primary Policy in its underlying insurance schedule.

Prioritization of Coverage

Both Penn National Umbrella Policy and St. Paul Policy covers First Industrial for losses caused by bodily injury. And both include "other insurance provisions" that aim to outperform all other applicable insurance policies. Since both clauses are exaggerated clauses that apply here, the court must decide whether it can reconcile those provisions or whether they are mutually exclusive.

Courts must combine competing other insurance clauses whenever possible. A court can reconcile policy provisions if they can give effect to both provisions at the same time. Excessive clauses are mutually disgusting when following the explicit dictates of one policy would be in direct conflict with the other. If the insurance is disgusting, the court must disregard the redundant clauses, assess the victims and order the insurers to share the loss.

The Court may combine the clauses on "other insurance" in the two insurances here, so they are not mutually disgusting. Each insurance policy stipulates that the provision on "other insurance" "does not apply" to insurance policies that are "specifically written as a surplus over" the policy in question. St. The Paul policy obliges it to pay losses in excess of planned insurance or "Other insurance", and "Other insurance is" any insurance that covers damages that are fully or partially covered by this insurance. The St. Paul policy was therefore specifically written in addition to both the FIC policy, which is in an underlying insurance scheme, and the two Penn national policies, which fall within the St. Paul policy definition of "Other insurance." This difference enables the Court to reconcile the provisions on "other insurances" in the two insurances without placing them in direct conflict, with the result that the Penn National Primary Policy and the Penn National Umbrella Policy apply before the St. Paul Policy applies.

The amount of Penn National & # 39 ;s Obligation

The FIC paid $ 1 million of First Industrial & # 39 ;s deal with Mr. Wise, and that is not the case, leaving $ 2.5 million that St. Paul paid in question. Penn National's Primary Policy applies to First Industry's settlement with Mr. Wise because Mr. Wise's claim against First Industrial was liable to pay damages to Mr. Wise as a result of bodily injury, offering $ 1 million in coverage. olicy applies for the same reason. It offers an additional $ 2 million in coverage, which is enough to cover the remaining $ 1.5 million. As a result, Penn National must replace St. Paul as much as $ 2.5 million as St. Paul contributed to the settlement.

Penn National had an obligation to defend and harm its insured, First Industrial. It did not, but St. Paul did it. Now St. Paul's right to a summary judgment and to recover the amounts it paid for Penn National's insured. A suitable order follows.

Other insurance clauses often cause, as they did in this case, disputes that must be resolved through disputes. Since St. Paul's policy was clearly exaggerated over Penn National's direct presentation of primary coverage, it was required to spend up to its available limits to resolve the issue against its insured. It did nothing, offered nothing and let St. Paul and FIC finance the settlement to protect the insured. When the insured was protected, St Paul sued and repaid his payment in an appropriate manner from the responsible insurer. Justice was done because the insured was protected and the only dispute was which insurer owed what to whom.


© 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to the position of specialized insurance consultant. in insurance coverage, insurance claims handling, infidelity and insurance fraud almost equally for insurers and policyholders. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims lawyer and more than 52 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award.

For the past 53 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following libraries with books and other materials to enable insurers and their claims staff to become insured.

Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Zalma on Twitter at https://twitter.com/bzalma ; Go to Barry Zalma videos on Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at https://parler.com/profile/Zalma/ posts; and Read the last two issues of ZIFL here.


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