{"id":888790,"date":"2016-05-18T10:52:46","date_gmt":"2016-05-18T16:52:46","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=888790"},"modified":"2016-05-18T10:52:46","modified_gmt":"2016-05-18T16:52:46","slug":"dont-get-caught-in-the-middle-of-a-battle-between-insurers-over-other-insurance-clauses","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/dont-get-caught-in-the-middle-of-a-battle-between-insurers-over-other-insurance-clauses\/","title":{"rendered":"Don&#8217;t Get Caught In the Middle of a Battle Between Insurers Over &#8220;Other Insurance&#8221; Clauses"},"content":{"rendered":"<p>Kevin Pollack | Property Insurance Coverage Law Blog | May 12, 2016<\/p>\n<p>Some of you may have encountered situations where your clients have more than one insurance policy covering the same risk. This is especially true in the commercial context where businesses not only purchase their own insurance policies, but also request to be named as additional insureds on insurance policies issued to tenants or business partners. At first blush, you might not think this could create a problem because isn&#8217;t having two insurance policies better than having just one? Well. . .we all know that common sense doesn\u2019t always apply in the insurance industry (even though it should). The problem in this context is how insurers try to enforce a clause found in many insurance policies called the <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/california-court-rejects-primary-carriers-excess-other-insurance-position\/\" target=\"_blank\">\u201cother insurance\u201d clause or provision<\/a>.<\/p>\n<p>Most insurance policies contain <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/3-no-escape-california-court-of-appeals-gives-a-primary-cgl-insurers-other-insurance-clause-two-thumbs-down\/\" target=\"_blank\">\u201cother insurance\u201d<\/a> clauses that attempt to limit the insurer&#8217;s liability to the extent that other insurance (<em>i.e.<\/em>, an insurance policy issued by a different insurer) covers the same risk. Other Insurance clauses are designed to try to control how each insurer that has issued a policy covering the same risk should contribute or share a covered loss.<sup>1<\/sup> Historically, \u201cother insurance\u201d clauses were designed to prevent multiple recoveries when more than one policy provided coverage for a given loss.<sup>2<\/sup> However, insurers today often try to use Other Insurance clauses to convert their policy from primary coverage to excess coverage to avoid having to provide the benefits that policyholders pay for. Insurers try to point the finger at a different insurer and argue that they shouldn\u2019t be forced to cover an insured\u2019s loss because \u201cother insurance\u201d covers the risk.<\/p>\n<p>Importantly, <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/based-on-other-insurance-clause-do-insurer-has-no-duty-to-defend-suit-covered-by-general-liability-policy\/\" target=\"_blank\">Other Insurance clauses<\/a> <em><strong>should have no bearing on an insured\u2019s rights<\/strong><\/em> and are not intended to prejudice insureds. Instead, the provisions are intended to be used by and between insurers to apportion or prorate the loss between insurers.<sup>3<\/sup><\/p>\n<p>A recent California Court of Appeal decision<sup>4<\/sup> highlighted this issue by frowning upon a primary commercial general liability (\u201cCGL\u201d) insurer\u2019s attempt to try use its \u201cother insurance\u201d provision to avoid paying for the defense of its insured&#8217;s construction defect litigation and finding that the insurer\u2019s conduct violated public policy.<\/p>\n<p>The facts underlying the case can be summarized as follows: Certain Underwriters at Lloyds, London (\u201cLloyds\u201d), and Arch Specialty Insurance Company (\u201cArch\u201d) were primary insurers of Framecon, Inc., but at different times. Lloyds issued CGL policies to Framecon from October 28, 2000 to October 28, 2002. Thereafter, Arch issued a CGL policy to Framecon effective October 28, 2002 to October 28, 2003. Between 1999 and April 2002, Framecon entered into subcontracts to do carpentry and framing work on homes being developed by KB Home Sacramento, Inc., and KB Home North Bay, Inc. (together, \u201cKB Home\u201d). KB Home was named as an additional insured under the insurance policies issued to Framecon by both insurers.<\/p>\n<p>Subsequently, owners of some homes developed by KB Home and worked on by Framecon sued KB Home for construction defects and KB Home filed cross-complaints against Framecon for indemnity. Both Framecon and KB Home tendered claims to Lloyds and Arch. Although Lloyds agreed to defend both KB Home and Framecon, Arch refused to provide, or otherwise contribute money to, the defense of KB Homes and Framecon on the grounds that its policy was excess over Lloyds\u2019 policy and that its insuring clause and Other Insurance provision didn\u2019t obligate it to defend the insureds because other insurance was available. After providing a defense to the insureds, Lloyds sued Arch for declaratory relief and equitable contribution for the defense costs incurred to defend the insureds.<\/p>\n<p>The trial court ruled that Arch had&#8230;<\/p>\n<p><a href=\"http:\/\/www.propertyinsurancecoveragelaw.com\/2016\/05\/articles\/insurance\/dont-get-caught-in-the-middle-of-a-battle-between-insurers-over-other-insurance-clauses\/index.html\" target=\"_blank\">To finish reading this article<\/a><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Kevin Pollack | Property Insurance Coverage Law Blog | May 12, 2016 Some of you may have encountered situations where your clients have more than one insurance policy covering the same risk. This is especially true in the commercial context where businesses not only purchase their own insurance policies, but also request to be named&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/dont-get-caught-in-the-middle-of-a-battle-between-insurers-over-other-insurance-clauses\/\">Continue reading <span class=\"screen-reader-text\">Don&#8217;t Get Caught In the Middle of a Battle Between Insurers Over &#8220;Other Insurance&#8221; Clauses<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[3],"tags":[9227,23],"class_list":["post-888790","post","type-post","status-publish","format-standard","hentry","category-insurance-claims","tag-insurance-clause","tag-insurance-coverage","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Don&#039;t Get Caught In the Middle of a Battle Between Insurers Over &quot;Other Insurance&quot; 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