(216) 609-3940
SandRun Risk
  • Home
  • What We Do
    • Risk Management
    • Insurance Claims
    • Insurance Archaeology
  • Blog
  • About
    • Team
    • Our Company
    • Articles
  • Contact

A Settlement with a Primary Insurance Carrier May Impact the Policyholder's Ability to Seek Coverage Under Umbrella and Excess Insurance Policies

8/2/2016

1 Comment

 
Picture

When a policyholder settles with its primary insurance carrier for less than the policy limits, can the umbrella and excess policies be triggered? It depends.

Numerous courts follow Zeig v. Mass. Bonding & Insur. Co., 23 F.2d 665 (2nd Cir. 1928) which held that an excess insurance company must pay if the claim costs reach the excess insurance company layer even though the underlying carrier pays less than its policy limits. 

Umbrella and excess insurance carriers often argue that unless the underlying primary policy pays all of its limits, their policies are not triggered.  Some courts agree with this argument. See Citigroup, Inc. v. Federal Insurance Co., 649 F.3d 367 (5th Cir. 2011). 

The excess insurance carriers make this argument even if the policyholder pays the delta, the difference between the amount of the settlement and the insurance policy limit. 
 
Reviewing the policy language is key.
 
In Plantation Pipe Line Co. v. Highlands Ins. Co., 444 S.W.3d 307 (Tex. App. Aug. 29, 2014), the policyholder, Plantation Pipe Line, had sought coverage from its primary and excess general liability insurance carriers seeking coverage for millions of dollars in remediation clean-up costs it had incurred.  Plantation Pipe Line settled its claim with the primary, first layer and second layer excess carriers for less than the policy limits.  When it sought coverage from the third layer excess carrier for the amount in excess of that carrier’s policy attachment point, the third layer excess carrier argued that the underlying coverage was not exhausted because the underlying carriers had not paid, nor been found to pay, their full policy limits.  While the trial court agreed with the third layer excess carrier, the appellate court reversed and found in favor of Plantation Pipeline. The appellate court reviewed the policy language and found that the policy language did not require that the payment of losses be made solely by the underlying insurers.  Thus, Plantation Pipe Line’s payments, combined with the payments made by the underlying insurers for the remediation costs, could trigger the third layer excess carrier’s policy.
 
A careful review of policy language, as well as applicable case law, should be undertaken to ensure that a policyholder can trigger umbrella and excess policies when the policyholder wants to settle a claim for less than the primary insurance carrier’s policy limits.
1 Comment
GenieKnows Insurance link
9/6/2022 12:28:24 pm

There are many forms of insurance policy accessible on the market today, but every one of all of them are about safeguarding our team, loved ones, or even possessions from some kind of financial reduction.

No one knows what the future keeps, as well as it is actually consistently vital to have means to guard ourselves.

Insurance can protect our team from the reduction of task, wellness, car, lifestyle, or even property.

Insurance coverage is actually a fundamental part of an economic safety and security.

I understand there are actually the three major kinds of insurance: life, health, and automobile.

While obtaining insurance, folks commonly receive perplexed on whether select life insurance policy or health plan.

I am actually also in this circumstance may anybody aid me??

Reply



Leave a Reply.

    Authors

    Lori Siwik and Mark Siwik are the founders of SandRun Risk.  They apply the principles of vertical leadership and lean six sigma to the discipline of risk management.  From time to time they share their blog with guest authors who write about important risk management principles.

    Categories

    All
    Insurance Claims
    Mergers And Acquisitions
    Risk Management

    Archives

    May 2022
    December 2021
    September 2021
    August 2021
    July 2021
    June 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    June 2017
    May 2017
    March 2017
    December 2016
    November 2016
    October 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    June 2015
    May 2015
    April 2015
    March 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    May 2014
    April 2014
    March 2014

    Categories

    All
    Insurance Claims
    Mergers And Acquisitions
    Risk Management

    RSS Feed

What We Do.

Risk Management
Insurance Claims
Insurance Archaeology

Blog.

About.

Team
Our Company
Articles

Contact.

Legal.

Privacy
Terms of Use
 
Copyright ©2014 | 4199 Kinross Lakes Parkway, Ste. 275 Richfield, Ohio 44286 | 216-609-3940 | info@sandrunrisk.com