Multiple Sources of Recovery

1
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

2
Other Insurance in the Same Policy

• Examples
• Auto insurance
• Medical payments uninsured motorists
• Medical payments liability
• Commercial package policy
• Building commercial property

3
Other Insurance in the Same Policy (continued)

• Questions
• Carve-out
• Stacking
• Difference in loss valuation or deductibles
• Application of coinsurance clause

4
Other Insurance in a Similar or Dissimilar Policy

• Similar policy - examples
• Using neighbors 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

5
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 at-fault
  party of responsibility

6
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

7
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

8
Exonerating Provisions

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

9
Proportional Provisions

• Proration by face amounts
• As limit/(As limitBs limit)X Loss As
  maximum obligation
• Proration by amounts otherwise payable (AOP)
• As AOP/(As AOPBs AOP) X Loss As maximum
  obligation
• Contribution by equal shares
• Must consider policy limits
• Apportionment
• Potential for reducing coverage
• Fewer problems recently

10
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

11
Conflicts Among Other Insurance Provisions

• Examples
• Two exonerating provisions
• Excess and exonerating provisions
• Excess and proration
• Different proration provisions
• Building and blanket coverage

12
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

13
Procedures to Resolve Coverage Disputes

• Insurers 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

14
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