Superior Court Addresses When Duty to Defend by Excess Carrier is Triggered

On an issue of apparent first impression in the case of Lexington Insurance v. Charter Oak Fire Insurance, No. 2876 EDA 2012, 2013 Pa.Super. 286 (Pa.Super. 2013 Bender, P.J., Donohue, J., Musmanno, J.)(Opinion by Bender, P.J.), the Pennsylvania Superior Court ruled that the duty of an excess insurance carrier to defend an insured is triggered when the primary carrier exhausts its policy through actual payment of a judgment or settlement.

The underlying case involved a contractor and a subcontractor, who had obtained multiple layers of insurance.  The contractor, subcontractor and others were sued after a fatal accident on a work site.

The unanimous Superior Court panel found that an excess carrier had a duty to defend an insured once a primary carrier had exhausted its policy as opposed to when the parties were still engaged in settlement negotiations that would exceed the primary policy limits.

Anyone wishing to review this decision may click this LINK.

Source: Article - "Excess Insurer's Duty Triggered by Exhausted Primary Policy" by Max Mitchell, The Legal Intelligencer (Nov. 18, 2013).