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Excess Insurance Clauses – OHIO



By: Jason A. Mosbaugh, Esq. - Cincinnati Office

            Often, one of the largest obstacles to the recovery of a client’s subrogation claim is a lack of liability insurance by the tortfeasors.  On the opposite side of the spectrum however if the tortfeasor is covered by multiple policies of insurance other issues can arise.  Take for instance the case where an individual covered by his own automobile liability insurance policy is driving a vehicle owned by another also covered by an automobile liability insurance policy.  If that driver and that vehicle get in a wreck causing injury to a third party, the question becomes which policy is responsible for paying the damages.  Nearly any automobile liability insurance policy will contain what is commonly referred to as an “excess insurance clause.”  The excess insurance clause states that the policy invoking the clause shall only be excess as to any other available insurance.  In layman’s terms, the policy proclaims we will pay but only after any other insurers pay first.      

            The ubiquity of these clauses however often result in both policies attempting to subjugate themselves to second place while putting the other on the hook first.  This is certainly not a new problem and the issue was once thought to be fully resolved by the Ohio Supreme Court in the decision entitled Buckeye Union Insurance Company v. State Automobile Mutual Insurance Company (1977) 49 Oh. St. 2d 213.  The Ohio Supreme Court in that decision essentially held that the competing clauses effectively neutralized each other and the dueling insurers were left to share and share alike as to the apportionment of liability.

            Following the Buckeye Union case however, certain insurers attempted to modify the language of their excess insurance clauses to avoid the effect in Buckeye Union.  These insurers essentially attempted to strengthen the language of their excess insurance clauses to avoid the application of the Buckeye Union case.  Until fairly recently, these issues had not yet been fully flushed out by higher courts however in the last year a number of appellate decisions appeared to have a final resolution of this issue.  The Sixth Appellate District in the case of The Cincinnati Insurance Company v. The Motorists Mutual Insurance Company, 2010-Oh.-5176 (Oct. 22, 2010); Motorists Mutual Insurance Company v. Progressive Specialty Insurance, 2010-CV-01629 (Nov. 24, 2010) and Progressive Insurance Company v. Motorists Insurance Company CV-10-717046 (Aug. 20, 2010) have all in essence ruled that the Ohio Supreme Court’s precedent in Buckeye Union remains controlling regardless of alternations to the language of the excess insurance clauses by the various insurers.  The rationale here is fairly obvious.  The Court found that if the intent of each respective insurer is to subjugate itself to the other, the clauses essentially cancel each other out having no effect.  In equity then, the remedy is a pro rata division of damages.  The Court’s in these various decisions all pointed to the fact that if the above rationale was not extended insurers would effectively begin an arms race against one another for the next best policy language which would afford them opportunity to relegate themselves to second position.  In other words, substance over form should prevail.

            It should be noted that to this point the case law has exclusively depended on the interpretation of excess insurance clauses and automobile liability insurance policies.  The effect on other policies including general commercial liability insurance policies and excess or umbrella insurance policies were not addressed by the Courts in the cases at hand. 

            In summary, in an automobile subrogation case where the tortfeasor is potentially insured by two automobile liability insurance policies, the Plaintiff should look to both insurers for contribution to be made whole.  If either of the two insurers elects to front the total amount of the Plaintiff’s damages then that insurer has a strong argument that it is subrogated to the extent of its pro-rata share of liability against the non-paying insurer.

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