Multiple Sources of Recovery
Sources of multiple recovery
Other insurance in the same policy
Other insurance in a similar policy
Other insurance in a dissimilar policy
Noninsurance agreements
Third parties
“Other insurance” provisions
Conflicts among “other insurance” provisions

Other Insurance in the Same Policy
Examples
Auto insurance
Medical payments & uninsured motorists
Medical payments & liability
Commercial package policy
Building & commercial property

Other Insurance in the Same
Policy (continued)
Questions:
Carve-out
Stacking
Difference in loss valuation or deductibles
Application of coinsurance clause

Other Insurance in a Similar or
Dissimilar Policy
Similar policy - examples
Using neighbor’s car
New homeowners policy on new home
Dissimilar policies - examples
Rental car - Personal auto and fleet coverage
Borrowing sailboat - Homeowners and watercraft
Employee injury - Workers Comp, health insurance, personal auto

Other Sources of Recovery
Noninsurance agreements
Product warranties or guarantees
Credit card coverage
Rental cars
New purchases
Third parties
First party insurance does not relieve atfault party of responsibility

“Other Insurance” Provisions
Other-insurance situations
More than one insurance source provides recovery
Characteristics of “other insurance” provisions
Not necessarily labeled
Usually in conditions section
Multiple “other insurance” provisions if distinct coverages
Single clause may contain multiple provisions
Inconsistency exists
Difficult to apply

Types of “Other Insurance”
Provisions
Exonerating provisions
Limiting liability to a proportion of a loss
Limiting liability to excess portion of loss
Making insurance primary
Maintain principle of indemnity

Exonerating Provisions
Prohibition of other insurance
Exclusions
General disclaimer if other insurance applies
Offset to reduce coverage limit by amount of other coverage

Proportional Provisions
Proration by face amounts
A’s limit/(A’s limit+B’s limit+…)X Loss = A’s maximum obligation
Proration by amounts otherwise payable (AOP)
A’s AOP/(A’s AOP+B’s AOP+…) X Loss = A’s maximum obligation
Contribution by equal shares
Must consider policy limits
Apportionment
Potential for reducing coverage
Fewer problems recently

Excess and Primary Provisions
Example - Auto insurance
Use of other autos
Effect of insolvency of primary insurer
Ocean marine
Primary/excess based on policy effective date

Conflicts Among “Other
Insurance” Provisions
Examples
Two exonerating provisions
Excess and exonerating provisions
Excess and proration
Different proration provisions
Building and blanket coverage

Conflicts Among “Other
Insurance” Provisions - continued
Methods to resolve conflicts
Drafting “other insurance” provision
Negotiation
Drafting policy coverage to minimize overlaps
Industry-developed guidelines and procedures
Litigation

Procedures to Resolve Coverage
Disputes
Insurer’s Options When Claim is Filed
1 - Accept claim or defend suit
2 - Disclaim obligation under policy
3 - Issue reservation of rights letter or nonwaiver agreement
4 - Seek declaratory judgment

Legal Doctrines
Contract of Adhesion Doctrine
Insurer prepares agreement
Insured prepares agreement
Sophisticated insured rule
Reasonable Expectations Doctrine
Unconscionable Advantage Doctrine
Substantial Performance Doctrine
Waiver and Estoppel
Collateral estoppel
Judicial estoppel