INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
Please, you pay first
In a tragic accident, Michael Swanson struck and killed a motorcyclist. Swanson was sued for causing a wrongful death. He was insured under a personal auto policy that paid its full limits for the loss. This was just the beginning of the issue as the damages awarded for the loss substantially exceeded the maximum amount available under that policy.
Swanson’s loss was established to have occurred while he was working for Edward Jones Trust Company. It turned out that, also at the time of the loss, two other possible sources of coverage existed. His employer held a commercial auto policy from Hartford Fire Insurance Company (The Hartford) and an excess liability policy provided by Chubb Custom Insurance Company (Chubb).
Both policies contained excess clauses that, minimally, required that other available coverage first respond before any contribution under their policy was available. However, the insurers disagreed on how to interpret the effect of the clauses. The Hartford believed that further payments should be shared.
Chubb’s position was that its coverage was available only after The Hartford responded to the loss. As the amount of protection available from The Hartford’s policy was sufficient to handle the remaining damage, Chubb’s policy would not have to make a contribution. The Hartford sued to enforce sharing the financial responsibility. An initial court agreed with The Hartford’s argument and ruled in its favor.
The situation was reviewed on a de novo basis by a circuit appeals court. De novo refers to any judicial review made without reliance on what was decided by a lower court—a fresh or new look.
The critical matter taken on by the superior court was whether the insurer’s excess coverage clauses were mutually exclusive. In this case, if the excess clauses were deemed to be identical, they would cancel each other out. Then, a shared, pro rata response would be required from the insurers.
The two clauses used different policy language. The Hartford’s policy provided primary insurance for cars owned by the policyholder. Non-owned cars were covered on an excess basis. Excess coverage was provided over any other collectible insurance. The Chubb policy covered damages that were excess of all underlying insurance.
Per the de novo review, it was determined that the latter policy’s wording represented true excess coverage. The former (The Hartford) was excess over all collectible insurance. As, under the particular loss, the Chubb policy was not collectible insurance; shared responsibility for the loss did not exist.
A result of the de novo examination was to vacate the initial court’s ruling. The matter was remanded to that court to handle in accordance with the higher court’s opinion.
Hartford Fire Insurance Company v. Chubb Custom Insurance Company—US Court of Appeals, Eighth Circuit —No. 24-1159—July 2, 2025.
