Friday, March 1, 2013
C.A. Clarifies Priorities in Insurance Coverage Dispute
By a MetNews Staff Writer
The insurer for an employer who is only vicariously liable for the tort of an employee is only required to provide coverage if all of the employee’s coverage, primary and excess, has been exhausted, the Fourth District Court of Appeal ruled yesterday.
Div. One, in an opinion by Justice Gilbert Nares, said San Diego Superior Court Judge Timothy Casserly erred in awarding GuideOne Mutual Insurance Company $600,000 on a claim for contribution to the settlement of a catastrophic injury case.
The insurers’ dispute arose after a settlement for injuries sustained by a motorcyclist, Robert Jester, who was struck by a vehicle driven by a pastor, Gary West. Jester’s complaint named West; Crosswinds Community Church; and the Christian Evangelical Assemblies with which Crosswinds is affiliated as defendants.
The complaint alleged that West and his wife were taking another couple to lunch in connection with church and denominational business at the time of the collision, which occurred in a restaurant parking lot.
The defendants and their insurer agreed to settle for $4.5 million. West’s personal auto insurer kicked in $100,000, the policy limit; GuideOne, which covered both the pastor and the church, contributed its limits of $1 million in auto and $1 million in umbrella coverage; and Utica National Insurance Group, which insured the Christian Evangelical Assemblies, paid out its $1 million auto coverage limit and $2.4 million of its $5 million umbrella coverage.
In granting summary judgment to GuideOne on its equitable contribution claim, Casserly reasoned that the companies’ policies were of equal priority and that GuideOne was therefore entitled to recover what it paid in excess of one-sixth of the total paid out under umbrella coverage.
Nares, however, said there was “no rationale for [the] proposition that umbrella or ‘excess’ policies should be treated differently than primary policies for purposes of priority.” It is well established that a primary policy covering a tortfeasor must be exhausted before the insurer for a party that is only vicariously liable is required to pay, he said.
“This conclusion is also supported by rules of indemnity as between a primary tortfeasor and one who is only vicariously liable. A vicariously liable party has the right to pursue indemnity against the primary tortfeasor and/or any insurance policy that covers the primary tortfeasor.”
The case is GuideOne Mutual Insurance Company v. Utica National Insurance Group, 13 S.O.S. 1033.
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