PRIMARY'S INSOLVENCY DOESN'T
AFFECT UMBRELLA TRIGGER
|
General Liability |
Excess
Coverage |
|
Insolvency |
|
An umbrella policy was written with $5
million limits over a required $500,000 underlying primary policy. The umbrella
insurer was sued by a client of the underlying insurer when that insurer
declared insolvency. The claimant sought a ruling that the umbrella insurer be
held responsible to make its limits available on a primary basis for
outstanding claims that could no longer be handled by the insolvent insurer.
The claimant appealed when a lower court ruled in favor of the umbrella
insurer.
The higher court considered the claimant's argument that, due to the insolvency, the umbrella insurer should be obligated to step in to the place of the insolvent carrier. The higher court disagreed. It found the umbrella policy clearly stating that an underlying insurer's insolvency did not change its obligation. Its policy was only responsible for losses that exceeded the underlying, per loss limit of $500,000.
Value City Inc. Et Al., Appellant v. Integrity Insurance Company,
Appellee.