Primary or excess: Who’s on first?
Russell Brenner was injured on the Milwaukee World Festival (MWF) premises while working for Hunzinger Construction Company. At the time of the injury, MWF was insured under a policy with National Casualty Company. Hunzinger had a policy with Amerisure Insurance Company, and MWF was an additional insured on that policy pursuant to a contractors blanket additional insured endorsement. Brenner filed a personal injury suit, pursuing claims against both National and Amerisure.
As the litigation progressed, National and Amerisure filed cross-motions for summary judgment, addressing the extent to which Amerisure was required to provide coverage for Brenner’s injuries. The court determined that National’s policy provided primary coverage and Amerisure’s policy provided excess coverage. Brenner subsequently settled his claims for an amount less than National’s policy limits. The court entered a final order disposing of the litigation. National appealed.
On appeal, National asserted that Amerisure was not an excess insurer but a primary insurer that must share the costs of defense and indemnification with National.
The parties agreed that the case involved a circumstance where MWF had more than one policy applicable to the same risk at the same time. According to case law, “Whenever two policies apply to the same insured at the same time, the issue of which policy must pay first—or which is primary and which is excess—is dealt with by ‘other insurance’ clauses.” If, however, the policies are inconsistent on the issue of which pays first, state law holds that “the insurers shall be jointly and severally liable to the insured on any coverage where the terms are inconsistent.”
The relevant portion of the National policy defined National’s coverage obligations to MWF as follows:
- Other Insurance
If other valid and collectible insurance is available to the insured for a loss we cover … our obligations are limited as follows:
- Primary Insurance
This insurance is primary except when Paragraph b. below applies …
- Excess Insurance
(1) This insurance is excess over:
(b) Any other primary insurance available to you covering liability for damages arising out of the premises or operations, or the products and completed operations, for which you have been added as an additional insured by attachment of an endorsement.
Amerisure’s policy insured MWF pursuant to the following language in the additional insured endorsement:
- Other Insurance
Any coverage provided in this endorsement is excess over any other valid and collectible insurance available to the additional insured whether primary, excess, contingent, or on any other basis unless the written contract … requires that this insurance be primary, in which case this insurance will be primary without contribution from such other insurance available to the additional insured.
National conceded that “[t]he con-tract between M[WF] and Hunzinger does not expressly require that the insurance Hunzinger agrees to procurefor M[WF]’s benefit be primary.” Further, National conceded that “the effect of Amerisure’s ‘Other Insurance’ provision is that the Amerisure [p]olicy[issued to Hunzinger] applies in excessof other valid and collectible insurance.”
With the foregoing concessions in place, National argued that its own policy was “similar” to Amerisure’s in providing coverage for MWF that was “excess over any other primary insurance.” In other words, National viewed both policies as providing excess coverage for MWF. National argued that the two provisions were therefore in conflict, and both coverages should be treated as primary with the risk divided equally between the two insurers.
The court rejected National’s policy interpretation because it did not account for the totality of the language in the applicable portions of the policies. TheNational policy provided that the insurance for MWF “is primary except when Paragraph b. applies.” In Paragraph b., the policy stated that National’s coverage is excess of “any other primary insurance.” These provisions did not create a conflict with the language of Amerisure’s policy because the plain language of Amerisure’s policy stated that when other valid and collectible insurance is available, “[a]ny coverage”Amerisure provided to MWF was excess, not primary, absent a contract provision that National agreed did not exist.
The court also rejected National’s contention that the court must read each of the applicable policies “without regard to the other policy’s ‘Other Insurance’ provision.” The court concluded instead that it must “examine each policy to determine whether, and to what extent, it had anticipated the existence of an ‘other insurance’ provision in another policy and expressly contracted for exoneration from liability in that event.”
The court stated that the applicable language showed that National provided primary coverage for MWF unless MWF had primary coverageavailable from another source. Ameri-sure provided excess coverage for MWFwhen other insurance was availableunless a separate contract term requir-ed Amerisure to provide primary coverage—and all parties agreed that such a separate contract term was not in place. The court said it therefore could give effect to both the National and the Amerisure policies: (1) National pro-vided primary coverage because MWF did not have primary coverage available from another source; and (2) Ameri-sure provided excess coverage because no separate contract term required otherwise. The judgment of the lower court was affirmed.
Brenner v. National Casualty Company—Court of Appeals of Wisconsin—November 19, 2019—No. 2018AP2252.