Transition to Umbrella and Excess Coverage: Primary Coverage Exhaustion, Exhaustion of Policy Limits, Horizontal Exhaustion, Duty to Defend and Zieg/Qualcomm, and Exhausting SIR/Deductibles
Wm Scott Patterson
Senior Coverage Counsel NAC Claims Legal Group
Zurich North America
Jacquelyn A. Beatty
Karr Tuttle Campbell
Gerald P. Konkel
Morgan, Lewis & Bockius LLP
William T. Um
Kilpatrick Townsend & Stockton LLP
Seth D. Lamden
Neal, Gerber & Eisenberg LLP
Primary Coverage Exhaustion, Exhaustion of Policy Limits, Horizontal Exhaustion
- What Are the Rights and Obligations Between Primary and Excess Coverage?
- Difficulties and methods for demonstrating primary exhaustion so that a policyholder can access its excess coverage
- Exhaustion of underlying coverage and attachment of excess: is exhaustion by payment required, or can underlying layers be exhausted by settlement?
- Exhaustion by layers or at least all primary before excess
- Exhaustion of Policy Limits: How Does Primary Coverage Have to Exhaust in Order to Bring Excess Coverage onto the Risk?; Proving exhaustion of policy limits?
- Is there horizontal exhaustion in a strict sense or are rights controlled by other insurance causes?
- Can indemnity agreements or statutes alter or affect exhaustion requirements?
- Can excess layer be reached if a policy holder settled with primary insurer for less than the limit amount?
- To what extent does a policy holder need to satisfy any gaps before the first layer of excess can be reached?
Excess Insurance Issues Relating to the Duty to Defend and the Zieg/Qualcomm Dispute
- Does a settlement for less than full limits prevent the policyholder from ever exhausting so it can never collect from the excess policies in that year?
- The Zieg/Qualcomm dispute: Does a policyholder have to collect 100% of underlying coverage before being able to access excess coverage? Or are excess insurance companies relieved of their obligations if an underlying insurance company pays less than 100% of its limits?
- Does a primary carrier’s settlement for less than its full limits trigger the excess policy status?
- Settlement considerations when in a Qualcomm Jurisdiction
- How to allocate a settlement after an insurer or insurers refuse to defend
- Where do key jurisdictions stand with respect to these issues?
- Case law regarding duty to defend by excess carriers
- Case law regarding possible drop down by excess carriers SIRs/Deductibles: How Are They Different, How Are They Satisfied, Exhausted and Allocated
- How SIR’s, deductibles and retro agreements are dealt with by courts in allocating coverage
- Application of SIRs/deductibles/fronting policies in the allocation
- SIR exhaustion
- Differences between retentions and deductibles
- Satisfying retentions/deductibles
- Exhaustion of retentions/deductibles
- Allocation and retentions/deductibles?