Carriers With Mutually Repugnant Other Insurance Clauses Found To Contribute Pro-Rata To Underlying Defense

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Certain Underwriters at Lloyds v. Waveblast Watersports, Inc.. 2015 U.S. Dist. LEXIS 4267, (S.D. Fla. Jan. 14, 2015). This declaratory judgment action stems from an underlying parasailing accident.  Plaintiff sought a declaration that it had no duty to defend or indemnify under a policy it issued to defendant Waveblast as the named insured, and defendant Sands Harbor an additional insured. Defendant Scottsdale issued a policy to Sands Harbor as the named insured.

Scottsdale and Sands Harbor moved for Final Summary Judgment seeking a ruling that Plaintiff had a duty to defend and indemnify Sands Harbor in the underlying lawsuit. Defendants argued that the underlying claims fell within the parasail endorsement of Plaintiff’s policy and were not excluded by the watercraft exclusion in Plaintiff’s policy.

Plaintiff did not contest this point, and moved for partial Summary Judgment seeking a ruling that the “other insurance” clauses in Plaintiff’s and Scottsdale’s policies were “mutually repugnant,” and, thus, both insurance companies owed Sands Harbor a defense on a co-primary basis, pro rata according to policy limits.

The court found that Plaintiff had a duty to defend Sands Harbor in the underlying lawsuit and granted defendants’ motion with respect to Plaintiff’s duty to defend.  However, the court found that the issue of indemnity was premature and denied defendants’ motion on that basis.

With regards to plaintiff’s motion, the court noted that the “other insurance” clauses of both policies were virtually identical, and that the court was faced with classic “other insurance” clauses because both policies state that they will not serve as primary insurance where there is other applicable insurance.  Accordingly, the court found, the “other insurance” clauses were mutually repugnant and cancel each other out in entirety, which results in apportioning the policies on a pro-rata basis determined by the policy limits in relation to the loss.