Category Archives: Contribution and Indemnity between Insurers

Three Insurers Sue Federal Government Over Claims Paid As A Result Of Wildfire

State Farm, Allstate and the Hartford are suing the United States government for $7.2 million they paid to homeowners because of the 2002 Hayman wildfire set by a U.S. Forest Service employee.  The employee, Terry Barton, was patrolling for illegal campfires when she stopped to set her own fire, claiming it was to burn a letter from her estranged husband.  The fire spread, eventually burning more than 100,000 acres and more than 100 homes.  However, according to her husband, he never wrote her any letter.  According to one of Ms. Barton’s daughters, she may instead have been following a psychology teacher’s advice to write down her feelings in a letter and burn it.  Other theories include the one you see a lot of: she set the fire so she could report it and be a hero.

Leave a Comment

Filed under Contribution and Indemnity between Insurers

No Contribution Between Primary and Excess Insurers

The great joys of insurance coverage include that it has its own specialized and highly complex language, that it relies on abstract concepts and theory that amount to a sort of philosophy, and that often the facts produce multiple possible legal interpretations. Usually one of these is the “best” but not necessarily the “right” answer.
What often looks to some like a legal fog, however, has a number of pretty clear principles that cut down many arguments like wheat before the reaper.
Such is Travelers Casualty & Surety Co. v. Ins. Co. of the State of Pennsylvania, 2006 WL 149005 (N.D. Cal. January 19, 2006). This case reiterated the rule, under California law, that there is no right of contribution between primary and excess levels of insurance. The rest of the case, however, features a ripping good debate over contribution between primary insurers.

Leave a Comment

Filed under Contribution and Indemnity between Insurers

“Exhaustion” Occurs When Underlying Insurer Settles Its Liabilities

In a case similar to State Farm v. Mendoza, which I posted about a few days ago, the Eighth Circuit has held that a primary insurer exhausts its policy under certain circumstances when it settles its liabilities in a case for less than its policy limits.
In Reliance v. Chitwood, WL 44085 (January 10, 2006), the primary insurer, Continental Western, settled its liabilities regarding its insured’s truck accident for $600,000, less than its $750,000 policy limits. The settlement agreement called for the plaintiff to collect on a judgment only from Reliance’s $1 million excess policy, but to collect only to the degree the judgment exceeded $750,000. Reliance then settled the remainder of the case for $250,000 and sought non-contractual indemnity from Continental Western for amounts it paid below $750,000. The court found that Continental Western fulfilled its obligation to protect Reliance from liability for amounts below $750,000, which was what Reliance had bargained for as excess insurer. It was Reliance’s choice to settle and pay the amount between $600,000 and $750,000.

Leave a Comment

Filed under Contribution and Indemnity between Insurers, Liability Policies