Excess or Primary Insurance?

A policy is primary if the insured has a right to collect the proceeds in the event of a loss regardless of any other insurance he may have. It is excess if his right is contingent on his having exhausted the limits of his primary insurance policy. While a 'true' excess insurance policy is one that specifically requires the insured to have other insurance coverage before it will be held responsible for any part of a claim, many policies are not explicit enough to dispel all questions on the subject; sometimes the circumstances of the claim and the existence of overlapping insurance policies complicate matters. Each case requires its own analysis. In most states, when two insurance policies covering the same risk both contain 'other insurance' clauses that cannot be reconciled, those clauses cancel each other out and the insurers share in liability pro rata. See, eg, State Farm Fire & Cas. Co. v. Holton, 131 Ga.App. 247 (Ga. Ct.App. 1974); Lumberman Mut. Cas. Co. v. Allstate Ins. Co., 435 NYS2d 953 (1980.

Because an excess insurer may be asked to pay a judgment or settlement only after the primary insurer has paid, the question of which will be treated as having the primary responsibility is of major importance to both insurers ' and the covered medical practitioner may end up feeling like the proverbial hot potato, with each insurer attempting to pass the insurance coverage responsibilities off to the other.