Most people would not realize how much time and money is spent with insurance companies fighting with other insurance companies. Most of these fights result from situations where a person or company has more than one policy. An example would be where an Arlington resident buys some insurance in Grand Prairie, Dallas, Fort Worth, or maybe out in Weatherford or wherever but also buys another policy at the same time or later on from another company or agent. Next, an incident happens, the result of which is the policyholder has to file a claim or seek coverage through the policies of insurance. Then what happens is, the companies start fighting with each other about which one has to pay the claim or pay the costs of defending the claim asserted. The following case is yet another example of this type of situation.
The United States Fifth Circuit Court of Appeals handed down a decision is one of these cases on January 4, 2010. The style of the case is, Trinity Universal Insurance Company; Utica National Insurance; National American Insurance Company, Subrogees of Lacy Masonery Inc., v. Employers Mutual Casualty Company.
In this case, Employers Mutual Casualty Company (EMC) and the others issued commercial general liability insurance policies to Lacy Masonry, Inc. Lacy was sued. Trinity defended and eventually settled the case on behalf of Lacy. Utica defended and eventually settled the case on behalf of Lacy. And, finally, National defended and eventually settled the case on behalf of Lacy. EMC refused to defend or participate in the settlement.
Trinity, Utica, and National, then sued EMC for EMC’s pro rata share of the settlement and defense costs. EMC claimed they did not have a duty to defend and thus no duty to pay a pro rata share of settlement monies or defense costs. The court analysed the policy language and eventually ruled that EMC should have participated in the defense of Lacy. Because of the language in the EMC policy and earlier court decisions related to the policy language, the court partially agreed with EMC, that EMC did not have to contribute to the settlement costs. However, this language did nothing to protect EMC from having to handle its pro rate share of the defense costs because EMC clearly had a duty to atleast defend Lacy in the lawsuit.
A reading of the case distinguishes and explains in an understandable manner the reasoning of the court in this matter. Each situation and policy put together have to be analysed and then applied to the insurance laws in Texas to be able to fully understand the difference between one situation and another.
Updated: