State Farm Fire & Cas. Co. v. Aetna Cas. and Sur. Co., 66 N.Y.2d 369 (1985)
When multiple insurance policies cover the same loss, the policy that expressly negates contribution with other carriers, or otherwise manifests that it is intended to be excess over other excess policies, is not required to contribute until policies that contemplate contribution with other excess policies are exhausted.
Summary
This case addresses the complex issue of prioritizing contribution among multiple insurance policies covering the same loss. Specifically, it involves a collision where a driver, Navarro, operating a vehicle with the owner’s permission, caused a death and injuries. The vehicle was covered by the owner’s primary insurance (Mutual), the driver’s non-owned vehicle policy (Aetna), and the owner’s umbrella policy (Fire). The court had to determine the order in which these insurers should contribute to any judgments. The Court of Appeals held that Aetna’s policy had to be exhausted before Fire’s umbrella policy was obligated to pay, because Fire’s policy explicitly negated contribution with other policies except those purchased to be excess over its own limits.
Facts
As a result of a car accident involving Gatillo LiMauro’s car driven by Vincent Navarro, Maureen LiMauro died, and John Fagan was injured. Two lawsuits were filed, one for wrongful death and another for personal injury. Three insurance policies potentially covered the LiMauro vehicle and its driver, Navarro:
1. State Farm Mutual Automobile Insurance Co. (Mutual): A “car policy” issued to the LiMauros, with $100,000/$300,000 limits.
2. Aetna Casualty and Surety Company (Aetna): A “family automobile policy” issued to Navarro, covering non-owned vehicles with $100,000/$300,000 limits.
3. State Farm Fire and Casualty Company (Fire): A “success protector policy” (umbrella policy) issued to the LiMauros, with a $1,000,000 limit, covering various risks, including automobile operation. It is undisputed that Navarro was driving the LiMauro vehicle with the LiMauros’ permission.
Procedural History
Fire initiated a declaratory judgment action, seeking a declaration that it was not required to contribute until Aetna’s policy limits were exhausted. The Special Term ruled that both policies covered the injuries and should contribute proportionally. The Appellate Division reversed, concluding that the policies did not cover the same insurable risk and that Aetna’s policy had to be exhausted first. The Court of Appeals affirmed the Appellate Division’s order.
Issue(s)
Whether an umbrella insurance policy, with an “other insurance” clause that states its coverage is excess and non-contributory, must contribute to a loss before a driver’s “non-owned” auto policy, which also contains an “other insurance” clause, is exhausted.
Holding
No, because the umbrella policy explicitly negates contribution with other policies except those purchased as excess over its own limits. A driver’s non-owned auto policy is designed to provide excess coverage over the primary insurance of the vehicle involved, not to act as primary insurance in relation to a true umbrella policy.
Court’s Reasoning
The Court acknowledged the difficulty of establishing priority among multiple insurers. It emphasized that each insurer contracts separately with its insured and attempts to limit its obligation to pay. The court stated the rule to be distilled from prior cases is that an insurance policy which purports to be excess coverage but contemplates contribution with other excess policies or does not by the language used negate that possibility must contribute ratably with a similar policy, but must be exhausted before a policy which expressly negates contribution with other carriers, or otherwise manifests that it is intended to be excess over other excess policies. “If other collectible insurance with any other insurer is available to the Insured covering a loss also covered hereunder (except insurance purchased to apply in excess of the sum of the Retained Limit — Coverage L and the limit of liability hereunder), the insurance hereunder shall be in excess of, and shall not contribute with, such other insurance.” The Court emphasized that Fire’s policy offered no primary coverage and was sold as a “success protector policy,” covering not only automobile risks but risks of many other types, making it clear it was intended to be true excess coverage. Fire’s policy specifically provided that it was excess over, and would not contribute with, other insurance, except insurance purchased to apply in excess of Fire’s own limits, negating any intention to contribute with other policies like Aetna’s, which was not purchased as excess over Fire’s limits. The intent and purpose of each policy, as well as the premium structure, supported this conclusion.