Wade Clark Mulcahy LLP

<p style="text-align: justify;">In a declaratory judgment action (“DJA”) initiated by <a href="https://www.wcmlaw.com/wp-content/uploads/2022/02/Travelers.pdf">Travelers</a> Property Casualty Company of America (“Travelers”) in the Southern District of New York, Travelers sought a ruling that (1) Wesco Insurance Company (“Wesco”) has a duty to defend and indemnify a mutual insured, Broadway, as an additional insured on Wesco’s policy; (2) the coverage provided by Wesco is primary; and (3) Travelers’ obligations to Broadway are excess and non-contributory to Wesco’s with respect to the two pending underlying personal injury actions from which the DJA stems. Travelers contended that its policy’s “other insurance” clause indicates it is excess to, not co-primary with, Wesco’s policy. This argument is predicated upon Travelers’ “other insurance” language which explicitly states it is excess to policies for which Broadway is an additional insured.</p>
<p style="text-align: justify;">Travelers and Wesco cross-moved for summary judgment--both were granted in part and denied in part. Travelers’ was granted as to Wesco’s duty to defend and, if necessary, indemnify Broadway as an additional insured, making Wesco’s coverage of Broadway, primary coverage. Wesco’s was granted as to the respective “other insurance” policies. Specifically, Wesco argued that the respective provisions mandate that the policies are co-primary because Travelers’ Blanket Additional Insured Endorsement provides the policy is primary when “a written contract or written agreement . . . specifically requires that this insurance apply on a primary and non-contributory basis.” Although Travelers countered that its amendment to the “other insurance” provision states its obligations are “excess over any of the other insurance . . . that is available to the insured when the insured is added as an additional insured under any other policy,” the court stated that the amendment modified only Section IV of the policy, not the Blanket Additional Insured Endorsement.</p>
<p style="text-align: justify;">Stepping outside the language of the policies, the court supported its decision by pointing to the contract between Travelers’ named insured and Broadway. The contract stated in no uncertain terms that Broadway required Travelers’ named insured to include Broadway as an additional insured on a primary and non-contributory basis. Hence, on February 8, 2022, the court ruled that Travelers and Wesco have a co-primary duty to defend Broadway. We note also that Wesco attempted to saddle Travelers with 60% of the defense costs based on policy limits but the court denied this method of pro rata apportioning based on policy intent evidenced by the “methods of sharing” language.</p>
<p style="text-align: justify;">This decision highlights the importance of “other insurance” intricacies and how thinking three or four steps ahead can limit exposure in the commercial litigation context.</p>
<p style="text-align: justify;">Thanks to Richard Dunne for his contribution to this article.  If you have any questions, contact <a href="mailto:mcare@wcmlaw.com">Matthew Care</a>.</p>