Category Legal Affairs

A US double insurance contribution case

30 August 2016 Norton Rose Fulbright
Patrick Bracher

Patrick Bracher

A Los Angeles appeal court ordered two excess insurers to contribute pro rata to a $4 million settlement of a lawsuit by a building inspector who was paralysed after falling from a ladder at a construction site. Westchester Insurance Co was the excess insurer of the general contractor and Hudson Specialty Insurance Co was excess insurer for the subcontractor and both insureds were negligent in relation to the event.

Both policies had an ‘other insurance’ clause denying cover if it was otherwise insured. As in South Africa, the court interpreted such a term in both policies to mean that each must contribute proportionately to the loss because the two policies were found to be on equal footing.

The contractor’s policy had a policy limit of $25 million and the subcontractor’s policy was limited to $5 million. Therefore the subcontractor’s insurer Hudson was ordered to a pay a contribution of $667 000 to the main contractor’s insurer Westchester (one-sixth).

[EMJ Corp. et al v Hudson Specialty Insurance Co.]

First published by: Financial Institutions Legal Snapshot

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