Other Insurance Clause Only Applies to Concurrent Policies
Barry Zalma
Oct 10, 2023
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After the trial court granted the Travelers Indemnity Company and The Travelers Indemnity Company of Connecticut’s (collectively Travelers) motion for partial summary judgment finding that indemnity costs incurred by Travelers in connection with the asbestos liabilities of defendants’ subsidiary should be allocated on a pro-rata time-on-the-risk basis and not for events after the expiration of the policy.
In The Travelers Indemnity Company et al. v. Fishbach, L.L.C., et al., 2023 NY Slip Op 04741, Appeal No. 608, Index No. 657060/21 Case No. 2023-00815, Supreme Court of New York, First Department (September 26, 2023) resolved the dispute.
DECISION
The appellate court agreed with Travelers that it was not liable to cover costs incurred by the insured that occurred outside of the policy period and that any costs it was entitled to cover should be allocated pro rata over the entire period during which damages (personal injuries) occurred.
Finding that the appeal was controlled by Keyspan Gas E. Corp. v Munich Reins. Am., Inc. (31 N.Y.3d 51, 61 [2018]), where the Court of Appeals found that the so-called “unavailability rule,” which would require insurers to bear the risk for periods when applicable insurance coverage was not available in the marketplace, was inconsistent with the contract language that provides the foundation for the pro rata approach-namely, the during the policy period limitation-and that to allocate risk to the insurer for years outside the policy period would be to ignore the very premise underlying pro rata allocation
Thus, with respect to insurance policy language like issued by Travelers, which limited indemnification to losses and occurrences during the policy period the insured, and not the insurer, bore the risk for those years during which such coverage was unavailable.
Defendants’ contention that Supreme Court (trial court in New York) erred by failing to give effect to the “other insurance” provisions in the Travelers policies was unavailing. New York law is clear that other insurance clauses do not apply to successive insurance policies thus, despite the fact that the subject provision contains no temporal or policy period limitation, when harmonized with the definition of bodily injury, the “other insurance” provision within the Travelers policies pertains to concurrent policies that named defendants (or their subsidiaries) as additional insureds.
Defendants provided no evidence that the 1990 settlement with Travelers had anything to do with litigation commenced four years later the Supreme Court correctly determined that, as “the release explicitly limits itself to current and future obligations and liabilities for premiums,” it was irrelevant to the allocation of indemnity costs.
ZALMA OPINION
New York ignored spurious claims and applied the clear and unambiguous language of the Travelers’ policies to find that there can be no coverage applied as a result of an “other insurance” clause to other insurance in effect after the termination of the Travelers’ policies. Sharing only occurs when policies in effect at the same time for the same loss both have other insurance clauses that require pro-rata sharing of losses not sharing four years after settlement for a different claim after expiration of the policy.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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Can read and understand the insurance policies issued by the insurer.
Understands the promises made by the policy.
Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
Are competent investigators.
Have empathy and recognize the difference between empathy and sympathy.
Understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals.
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Understand how to negotiate a fair and reasonable settlement with the insured that is fair and reasonable to both the insured and the insurer.
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