CDCMA Significant Case
On a regular basis, the CDCMA will select a Construction Defect Claim related Court Case that is deemed to be significant in regards to our industry and provide revelant information regarding the case. Often there will be a link where additional information can be found.
CA Court Says Policy Provision Purporting to Remove Duty to Defend
if Another Carrier Defending is Ineffective
On April 11th, The CA Court of Appeal, 3rd Appellate District ruled in Certain Underwriters at Lloyd's v. Arch Specialty, that Arch's "other insurance" clause stating that Arch would have no duty to defend any case as long as any other insurance provided a defense was ineffective to remove a duty to defend in cases where multiple successive primary policies were triggered.
According to the court, "We conclude Arch's "other insurance" clause cannot be enforced in this equitable contribution action between successive primary insurers. Enforcement of such a clause in a primary CGL policy would violate public policy."
Arch had taken the position that the language in their policy made them excess to any other primary policy in relation to defense. Both the coverage section and the conditions of the policy contained language attempting to reach this end. The trial court in the matter agreed with Arch and accepted Arch's reliance on a case holding that placing the "other insurance" clause in the "Insuring Agreement" as opposed to merely placing it in the conditions/limitations portion of the contract would make the "other insurance" clause enforceable. Underwriters argued that the language constituted an unenforceable escape clause against public policy. The Appellate Court agreed with the Underwriters.
The full decision can be found here...