United States:
Excess Insurance Implications Of A Below Limits Settlement
24 October 2014
Reed Smith
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While policyholders frequently negotiate the terms and
conditions of primary insurance, it is somewhat less common for
policyholders to give the same attention to the language in their
excess coverage. Excess policies which state that coverage attaches
only after the underlying insurer pays out its full-limits of
liability can frustrate policyholders attempting to resolve a
coverage dispute with an underlying insurer. Policy wording is
critical –
as demonstrated in a recent Texas appellate court. Excess
insurance can be drafted or endorsed to recognize exhaustion of
underlying limits when either the insurer or the policyholder makes
the required payments. Policyholders should carefully
negotiate the terms of excess – as well as primary –
coverage during the renewal process.
This article is presented for informational purposes only
and is not intended to constitute legal advice.
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