Case Briefs

In Lexington Insurance Co. v. General Accident Insurance Co. of America, ___ F.3d ___; 2003 WL 21782276 (1st Cir. 2003), the First Circuit considered the obligation of an excess liability insurer to contribute to the cost of defending an underlying insured. The insured was a law firm that placed a professional responsibility insurance contract with the primary insurer with a $10 million limit of liability and also placed coverage with excess insurers for liability exceeding the $10 million primary layer. The insured was later implicated in a securities fraud suit and the primary insurer paid $5.5 million toward defense costs. The primary insurer then demanded that the excess insurers share pro rata in these defense costs. While the primary insurer reached an accord with most of the excess insurers, it was unable to reach agreement with the first excess layer insurer.

The first excess insurer's contract provided that it would indemnify the insured “in accordance with the applicable insuring agreements, terms, conditions and exclusions of the Underlying Policy” except for “the obligation to … defend and for costs and expenses incident to the same … and any other provision inconsistent with” the excess contract. The court concluded that this language excused the excess insurer from any obligation to share in the underlying defense costs.