Carriers Insurance Company v. American Policyholders' Insurance Company
Merrill's leased vehicles to Cummings and provided personal injury and property damage insurance for the vehicles. This was $3,000,000 of personal injury liability and $500,000 of property damage coverage through Carriers. Cummings independently got $250,000 of liability insurance through American. Both contained provisions claiming them to be "excess insurance."
One of Cummings' employees then negligently killed another driver in a car accident. Carriers settled for $200,000 for wrongful death and $8,000 for property damage. American refused to contribute, so Carriers sued for contribution.
Judgment against American for $104,000.
Who is liable when both insurance policies claim to be excess insurance?
"Other insurance" clauses were designed to prevent fraud induced by overinsuring. However, car accidents are dangerous enough to deter fraudulent claims. Although they are then pointless, there is no public policy violation in them.
When both policies are excess insurance though, neither can be given effect without a primary policy. To resolve the issue when there is no primary policy, both excess insurance policies should just be considered primary and share the loss.
The insurance companies should split the cost 50⁄50. Affirmed.