This declaratory judgment action stems from a motor vehicle accident where claimants allege that the driver of a tractor-trailer struck and injured them. The plaintiff Old Republic Insurance Company (Old Republic) provided a defense to the driver, the lessee of the tractor – DAM Express Delivery Service (DAM) and the owner of the trailer – Coca-Cola (Coke) in the underlying action.
The owner of the tractor, Ryder Transportation Services (Ryder), obtained insurance through Old Republic covering DAM and Ryder on a primary basis with respect to the tractor. However, a dispute arose over whether the defendant, Stratford Insurance Company’s, (Stratford) policy issued to DAM, also covered any potential losses on a primary basis. In such an event, Old Republic would only be obligated to pay its proportional share of any losses covered by both policies.
The “other insurance” provision of defendant’s policy stated that coverage for the trailer was “on the same basis, primary or excess, as for the [tractor[ if the [tractor] is a covered auto.” However, after learning of the underlying loss, Stratford drafted, and DAM agreed to a retroactive endorsement stating “liability coverage is excess over any other collectible insurance.”
The plaintiff sought a judgment declaring that (1) its policy is co-primary with Stratford’s policy; (2) Stratford is required to provide primary coverage for the tractor; and (3) the endorsement is ineffective. The court found that because Ryder agreed to solely provide primary insurance for the tractor, neither DAM nor Stratford could have intended for Stratford to provide primary coverage on a risk that DAM never sought to insure and that Stratford knew nothing about. Thus, Old Republic stood alone in providing primary coverage for the tractor. Further, since the Stratford policy did not provide primary coverage for the tractor there was no basis for ruling that the Stratford policy provides primary coverage for the trailer. Thus, Old Republic’s primary coverage for the tractor applies to the entire tractor-trailer unit.
The court did find, however, that because Stratford conceded that its coverage was excess coverage, it was is obligated to share equally in the costs of defending the underlying action because “the duty of an insurer to defend is the same whether its potential liability is either as a primary or as an excess carrier.”