Insurance Coverage - SIR
- Satisfied by Other Insurance
Vons Companies, Inc. v. United States Fire Insurance Co.
USF contended that the self-insured
retention had to be paid from the insured's own pocket. The Court, however,
concluded that the SIR in the Vons policy stated it was subject to all
of the policy's terms and conditions. The Court noted that there was no
language in the policy which specifically stated the SIR was the responsibility
of the insured and could not be satisfied by the payment of funds by another
insurer. The "other insurance provision" provided that the Vons policy
would be excess if there was another policy covering the accident. Vons,
as a reasonable insured, could read this language as permitting the use
of other insurance proceeds to cover the SIR amount.
Coverage - Other Insurance
Surety Company v. United Pacific Insurance Company
In that respect, "other
insurance" clauses have no bearing. Further, applying public policy to
avoid a primary insurer escaping liability for a risk that resulted in
damage in their policy period, the Court concluded Century was liable to
contribute on some equitable basis to the defense and indemnity expenses
incurred in this case. To enforce the Century "other insurance" clause
and the pro rata clauses of the other insurers was impossible. The only
proper result was to ignore the clauses and to apportion the loss pro rata.
This was consistent with public policy disfavoring an escape clause where
promised coverage evaporates in the presence of other coverage.
California Pacific Homes
applies to "Self-Insured Retained Limit" or SIR. The insurers with SIR
demanded that insured pay its "retained limits" before contributing to
its "time on risk" allocation.
Armstrong World Industries
vs. Aetna decided that a tender by the policy holder to a chosen carrier
requires that the carrier to respond to the claim. The "chosen" carrier
may then seek to spread the loss by tendering to and invoking the "other
insurance" provision of the other policies pursuant to its rights of contribution
and/or indemnity under California law. The insured is legally entitled
to select one policy, if several provide coverage, to apply to a claim.
The Armstrong decision inferred
that if only one policy can apply to each injury then only one deductible
In Stonewall Insurance
Co. vs. City of Palos Verdes Estates, the court remanded the contribution
action between insurers back to the trial court with specific instructions:
"The specific amounts which Jefferson and Admiral (and any other insurer
from whom the City is entitled to recover) are to pay the City are to be
determined by giving effect to the policy limits and the deductible, retention
and "other insurance" clauses of the policies of those carriers from whom
the City is entitled to recover. The obligations of those carriers to reimburse
the City are not necessarily joint and several.
The Stonewall decision finds
that at least where an insurer is on the risk for multiple years and the
policy does not specifically state that only one policy maximum is available,
then the policy is ambiguous adn the insured is entitled to coverage for
the maximum per occurrence limit multiplied by the number of years
the insurer was on the risk. This meanss the insured is required to pay
multiple deductibles on multiple policy years.
FMC Corp. v. Plaisted &
Companies. 72 Cal. Rptr.2d 467 (Ct. App. 1998). In FMC, an insured manufacturer
sued its primary and excess/umbrella liability insurers, seeking a declaration
of coverage for pollution claims stemming from the manufacturer''s commercial
activities that caused toxic contamination to soil and groundwater at a
number of sites throughout the country. The FMC court found in favor of
the insured, but the insured claimed that the court erred when it applied
an anti-stacking rule in addition to finding that the insured was entitled
to recover "all sums" under the policies at issue in that case.
The FMC court noted that
"''[s]tacking policy limits means that when more than one policy is triggered
by an occurrence, each policy can be called upon to respond to the claim
up to the full limits of the policy." Id. at 501. Applying a stacking principle
to the facts in FMC, that court observed, would have entitled the insured
to recover up to $7 million in liability coverage for a single occurrence
under policies that specified a $1 million per occurrence limit. In short,
"''stacking'' of the limits of an insurer''s policies for consecutive policy
periods has been criticized as affording the insured substantially more
coverage, for liability attributable to any particular single occurrence,
than the insured bargained or paid for." Id. at 502 (citations omitted).
The conclusion of the court in FMC was that an anti-stacking rule should
apply so that only the policy limits of policies in effect during one of
the policy periods in which coverage was triggered for a single occurrence
can apply to property damage attributable to that occurrence, but that
the insured could select under which of several triggered policies it was
to be indemnified.
decision in California
Pacific Homes clearly takes into account the effect that stacking the
retained limits has on the availability of coverage. The Court of Appeal
observed, "[j]ust as stacking of policies may have the result of providing
far more coverage than an insured has purchased, so stacking of retained
limits would have the effect of affording an insured far less coverage
for occurrence-based claims than the insured has purchased." Id. at 332
(citing FMC Corp. v. Plaisted & Companies, 72 Cal. Rptr.2d 467 (Ct.
Pacific Homes court endorsed the principle that once coverage is triggered
the policy obligates the insurer to indemnify the insured for its entire
loss, and successive insurers on the risk when continuous property damage
firsts manifests itself are separately and independently obligated to indemnify
the insured. California Pacific Homes, Inc. v. Scottsdale Ins. Co., 83
Cal. Rptr.2d at 332 (citing Aerojet-General Corp. v. Transport Indem. Co.,
948 P.2d 909 (Cal. 1997)). For support, the trial court relied on the principles
set forth in Montrose Chem. Corp. v. Admiral Ins. Co., 913 P. 2d 878 (Cal.
1995) as applied in Armstrong World Indus., Inc. v. Aetna Casualty &
Sur. Co., 52 Cal. Rptr.2d 690 (Ct. App. 1996). In Armstrong, asbestos manufacturers
sought to recover under liability policies for asbestos property damage.
The Armstrong court concluded that the covenant contained in the policies
at issue in that case to pay "all sums" that the insured was liable to
pay as damages entitled the insured to select one policy, if several provided
coverage, from which to seek indemnification for the entire claim. Although
in California Pacific Homes the Court of Appeal subsequently noted that
the Scottsdale and National policies did not contain the "all sums" language
that appeared in the Armstrong policies, the Court of Appeal did not find
the language in the Scottsdale and National policies to be inconsistent
with the judgment of the trial court.
J. Reynolds Co. v. California Ins. Guarantee Association
Aetna policy contained a retrospective premium endorsement. When the retrospective
premium was calculated, in accordance with the terms of the Aetna policy,
Reynolds' premium payment to Aetna included $200,000 of the incurred loss.
Reynolds filed suit against the California Insurance Guarantee Association
(CIGA), an association of member insurers formed to protect insureds from
injury due to the insolvency of its members. Reynolds claims that CIGA
had a duty to reimburse it the $200,000 it had paid to Aetna. The trial
court granted summary judgment in favor of CIGA on the ground that the
$200,000 retrospective premium payment was not a claim covered by CIGA,
within the statutory definition of "covered claims." (Ins. Code, §
1063.1.) We agree with the trial court and affirm the judgment.
INSURANCE COMPANY vs. ENTERPRISE RENT-A-CAR COMPANY OF LOS ANGELES et al.,
is a corporation authorized to do business in California for, among other
things, the short term rental of automobiles to the general public.
As owner of the vehicles it rents, Enterprise complies with California’s
financial responsibility laws by posting a cash deposit pursuant to Vehicle
Code section 16054.2.
respect to CIGA, the court ruled that Mercury’s claim was an obligation
to an insurer excluded from “covered claims,” pursuant to section 1063.2,
subdivision (e) and section 1063.1, subdivision (c)(4). The claim
was not a “covered claim” pursuant to section 1063.1, subdivision (c)(5),
which excludes the portion of any claim in excess of any applicable limits
provided in the now insolvent carrier’s policy. The claim was
also not a “covered claim” pursuant to section 1063.1, subdivision (c)(9)
because it was covered by other insurance, i.e., Enterprise’s cash deposit.
Lastly, the court ruled the claim did not fall within the statutory exception
of section 1063.2, subdivision (c)(1), granting a UM insurer a right of
subrogation against CIGA.
INC., vs. WORKERS’ COMPENSATION APPEALS BOARD, ESTHER BACHMAN et al.,
Inc. (Denny’s) petitions this court by a writ of review challenging the
decision of the Workers’ Compensation Appeals Board (WCAB) to dismiss the
California Insurance Guarantee Association (CIGA) as a party to a workers’
compensation claim. Denny’s contends CIGA is statutorily required
to guarantee a proportionate share of an insolvent insurer’s disability
obligation when a permissibly self-insured employer is jointly and severally
liable for the claim.
agree with the WCAB and find the claim outside CIGA’s indemnification responsibility.
Essentially, Denny’s made the business decision to opt for self-insurance
over private insurance and to not purchase an excess workers’ compensation
policy. To use an annoying proverb, pro tali numismate tales merces.
(“You get what you pay for.”)
U. E. Texas vs. General
Plumbing leaks under different
buildings in the same complex are separate occurrences for the purpose
of determining deductibles.
Black Diamond Asphalt
vs. Superior Court
Party with unsatisfied SIR
may file against CIGA insured.