Module 6: Liability - Defense and Settlement Flashcards
In general, the Duty to Defend is broader than the duty to Indemnify. True or False?
True
Defense insurance is sometimes known as _______________ insurance.
litigation insurance
In the Shoshone First Bank v. Pacific Employers Ins. Co. case, the court decides to adopt majority rule and permit allocation. True or False?
False. The court adopts the minority rule and will not permit allocation [of the defense costs from the insured].
What is the issue in Crisci v. Security Insurance Co. (Tenant falls down stairway)?
Issue: What kind of duty if any to settle where insurance company is aware of substantial risk of recovery being beyond the policy limits and refuses to settle w/in the limits.
When is the insurer liable under the Reasonable Offer Test?
If the insurance company wasn’t gambling with someone else’s money, would it have behaved in the same way? If no, insurer is liable
“Follow form” excess coverage provides insurance above primary limits according to same terms as primary policy. True or False?
True. “Follow form” excess coverage provides insurance above primary limits according to same terms as primary policy.
“Umbrella coverage” provides…?
Provides excess liability coverage AND sometimes primary coverage that fills gaps in the primary policy
Name the case associated with the concept of Exhaustion
Comerica Inc. v. Zurich American Ins. Co.
What is typically the trigger for excess coverage?
The exhaustion of the primary policy
Definition of “exhaustion” by Comerica court
Excess policy clearly requires exhaustion which means “actual payment of losses by the underlying [primary] insurer.”
Commercial Union Assurance Co. v. Safeway Stores is similar to what other case?
Crisci (w/ added excess layer), except the Commercial Union court finds that the insurer doesn’t have a duty to the excess carrier in the same was as it does to primary.
If an excess carrier wants to insulate itself from an insured’s failure to accept a reasonable settlement offer, how may it do that according to the Commercial Union court?
According to the Commercial Union court, “it may do so by appropriate language in the policy.”
Drop-Down Liability Case Example
Mission National Ins. Co. v. Duke Transportation Co.
What is the issue in Mission National Ins. Co. v. Duke Transportation Company?
Issue: Where primary insurer collapses [due to insolvency], does excess carrier “drop down” as insured Duke alleges?
AKA does Duke have the right to look to it’s excess carrier when it’s primary carrier is insolvent
The reasonable offer test is also known as what?
The “disregard the limits” rule
