How Excess is an Excess Insurance Policy?

The Appellate Division, Second Department recently addressed a declaratory judgment action brought by Utica Insurance Company that sought a declaration that Utica’s umbrella policy was excess to GEICO’s umbrella policy and that Utica, therefore, was not required to contribute until the GEICO policy had been fully exhausted.  In upholding the lower court’s decision that granted Utica summary judgment the Appellate Division addressed a specific provision in GEICO’s policy that stated the policy was “excess over any insurance.”  In comparison, Utica’s policy stated that it was “excess over, and shall not contribute with any of the other insurance, whether primary, excess, contingent or on any other basis.”

The court explained that when a policy does not specifically negate contribution with other excess policies, “it must contribute ratably with similar policies, [or be] exhausted before a policy which expressly negates contribution or otherwise manifests that it is intended to be excess over other excess policies.”  Utica’s specificity on how its excess umbrella policy should be treated prevailed over GEICO’s vague language in its excess umbrella policy. Accordingly, insurers should take careful consideration of this language in determining when coverage is triggered on an excess policy.

Thanks to Michael Nunley for his contribution to this post.  For more information, please contact nbrown@wcmlaw.com.