A California federal court recently issued a summary
judgment ruling after interpreting two "other insurance"
clauses in California State Automobile Inter-Insurance Bureau
v. Progressive Casualty Insurance Company, 2012 U.S. Dist.
LEXIS 57996 (N.D. Cal, April 25, 2012). One insurer argued
that the "other insurance" clauses conflicted with each
other, but the Court disagreed and found no conflict where one
other insurance clause specifically provided for excess coverage in
The policyholder had a homeowner's insurance policy with
California State Automobile Inter-Insurance Bureau
("AAA") and a watercraft policy with Progressive Casualty
Insurance Company ("Progressive"). Both issued
liability limits of $500,000.
In a paddleboat accident involving a claim against their mutual
insured, both carriers agreed to defend and indemnify under various
reservation of rights. Upon settlement, AAA contributed
$500,000 to the settlement and Progressive offered $300,000, for a
total of $800,000. AAA contended that both carriers were
co-primary insurers and should have evenly split the $800,000
settlement payment. However, Progressive contended that its
policy was not even triggered until AAA first paid its policy limit
of $500,000 as the primary insurer.
To determine whether Progressive was the excess insurer, the
Court looked to the "other insurance" clauses of both
policies. AAA's other insurance clause provided that:
This insurance is excess over any other valid and collectible
insurance except insurance written specifically to cover as excess
over the limits of liability that apply in this policy.
Progressive's other insurance clause stated:
If there is other applicable liability insurance or bond, we
will pay only our share of the damages. Our share is the
proportion that our Limit of Liability bears to the total
applicable limits. However, any insurance we provide for the
ownership, maintenance or use of a watercraft, other than a covered
watercraft, shall be excess over any other collectible insurance,
self-insurance, or bond.
AAA relied on Fireman's Fund Insurance Company v.
Maryland Casualty Company, 65 Cal.App.4th 1279, 1305 (1998)
that where two other insurance clauses directly conflict with each
other, the insurers would share expenses on a pro rata
The Court sided with Progressive and found that there was no
actual conflict between these two other insurance clauses.
According to the Court, the Progressive policy provided pro rata
coverage with any other primary policy, but carved out a specific
exception when liability arose out of the use of a watercraft,
other than a covered watercraft. In such cases of liability
involving watercrafts, the policy would act as excess coverage to
any other collectibile insurance. Since the Court found the
paddleboat to be a watercraft and that AAA had not alleged that the
paddleboat was a "covered" watercraft,
Progressive's policy was excess to AAA's policy.
AAA also argued that Progressive assumed it was a co-primary
insurer with AAA for the duration of the underlying litigation,
that Progressive did not specifically ever point out that it was an
excess insurer during the underlying ligation, and that Progressive
never reserved its rights regarding its relationship with
AAA. However, the Court granted summary judgment anyway in
favor of Progressive as Progressive issued a reservation of rights
to the insured and there was no authority cited for the proposition
that an insurer must reserve its rights with another
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