Insurance coverage Fundamentals: “Different Insurance coverage” Clauses


The Eleventh Circuit not too long ago confirmed the rule that “different insurance coverage” clauses shouldn’t be used to drawback policyholders. Nat’l Cas. Co. v. Georgia Sch. Bd. Ass’n – Threat Mgmt. Fund, No. 22-13779, 2023 WL 5977299, at *1 (eleventh Cir. Sept. 14, 2023). In a dispute between an insurance coverage firm and a public danger administration fund, each insurance coverage insurance policies included “different insurance coverage” clauses stating that every insurer would solely present extra insurance coverage protection the place the policyholder is roofed by different insurance coverage. The district court docket discovered that the clauses had been irreconcilable as a result of each insurance coverage insurance policies couldn’t present solely extra insurance coverage protection—no less than one coverage would wish to supply main protection. Due to the battle, the Georgia federal district court docket utilized Georgia’s irreconcilable-clauses rule and held that every coverage should present protection to the policyholder on a professional rata foundation. The Eleventh Circuit affirmed the district court docket’s software of Georgia’s irreconcilable-clauses rule.

The district court docket’s ruling was primarily based on software of Georgia’s irreconcilable-clauses rule, which supplies that insurers should share protection and indemnity prices on a professional rata foundation when conflicting “different insurance coverage” clauses are irreconcilable in insurance coverage insurance policies protecting the identical danger. The district court docket even licensed to the Georgia Supreme Courtroom the query of whether or not Georgia’s irreconcilable-clauses rule utilized to public danger administration funds. The Supreme Courtroom answered sure.

“Different insurance coverage” clauses are included in insurance policies to keep away from a number of insurers paying for a similar loss by making one coverage extra to a different coverage the place they cowl the identical danger. The clauses apply solely amongst insurers; they don’t seem to be meant to use to policyholders and thus shouldn’t drawback them. Georgia’s irreconcilable-clauses rule ensures that policyholders will not be deprived when a battle arises between insurers referring to “different insurance coverage” clauses.

Basic ideas referring to “different insurance coverage” clauses embrace the next:

  • Escape: “Different insurance coverage” clauses might present that an insurer generally can keep away from its duties to defend or indemnify if different insurance coverage covers the loss. 
  • Extra: “Different insurance coverage” clauses might present that an insurer can restrict its legal responsibility for protection prices and lined loss to solely the quantity exceeding what is roofed by different relevant insurance coverage insurance policies.  
  • Professional Rata: “Different insurance coverage” clauses might present that an insurer pays its professional rata share of protection prices and lined loss if different insurance coverage exists. 
  • Mutual Repugnancy: The place the “different insurance coverage” clauses are similar in two or extra insurance policies, the clauses will not be given impact. The insurers share the protection prices and lined loss on a professional rata foundation. Georgia’s irreconcilable-clauses rule addresses this idea.
  • Particular versus Basic: When a dispute arises between two insurers over competing “different insurance coverage” clauses, insurers generally contend {that a} extra particular clause ought to govern over a extra normal clause. Most courts have rejected this argument. 

Though “different insurance coverage” clauses are meant to use solely amongst insurers, being aware of the clauses might help policyholders shield themselves.


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