Concurrent Coverage: Supporting Policy Limits

Illustration of a clipboard with an insurance policy on itConcurrent coverage disputes offer some interesting challenges for an arbitrator. There are a number of scenarios under which proof of policy limits is required for an arbitrator to make a proper decision in a concurrent coverage case. Without support for the policy limit, the arbitrator may be forced to make an award for all damages proven, or none at all, where a pro-rata apportionment might otherwise be appropriate. 

Here are some examples:
  • In our first case, a filer (Alpha) attempts to recover damages for a third party that was in an accident with the vehicle that Alpha insures while being driven by the responder’s (Beta) named insured. Alpha asserts that the two policies have mutually repugnant other insurance clauses, so pro-rata apportionment of the damages would apply. The arbitrator agrees that pro-rata apportionment among Alpha’s and Beta’s policies is proper. Alpha does not present evidence of their policy limit, preventing the arbitrator from making a pro-rata calculation for an award. In this case, Alpha has failed to provide sufficient support for the pro-rata apportionment, and the arbitrator is forced to make a $0 award.
  • In the second example, Alpha files for contribution to third-party damages from Beta as Beta’s insured was in an accident while driving Alpha’s vehicle, as in the previous example. Alpha asserts that Beta is primary. Beta claims that the policies should share the damages on a pro-rata basis. Alpha proved all the damages, but Beta did not provide their own policy limits in evidence. The arbitrator agrees that the policies dictate pro-rata sharing, but is forced to make a full award in favor of Alpha for all damages as Beta did not provide sufficient evidence to support the pro-rata sharing percentages.
It is worth noting that there may be an inclination to turn to Rule 3-9 for a post-decision inquiry in such cases to show the policy limit after the fact. However, under Rule 3-9, there would be no relief for the scenarios, above. Example three, below, offers a look at one instance in which Rule 3-9 would offer a change to an award:
  • Alpha files for recovery of third party damages arising out of an accident in which their insured was driving a vehicle insured by Beta. Alpha agrees to accept policy limits, and argues that Beta is either the primary liability carrier, or else, that the policies should share the damages pro-rata as Alpha has not seen Beta’s policy language. Beta asserts that they have excess coverage for the Alpha-named insured, only. The damages are $7500.00. The arbitrator finds that the coverage would apply on a pro-rata basis, but awards the full amount as Beta did not offer support for their policy limit and so pro-rata apportionment could not be supported. Beta files a post decision inquiry under Rule 3-9 with support that they only have $5,000 policy limits. The award is then reduced to the policy limit.
These are only some of the examples of cases in which a pro-rata coverage finding is a likely outcome. It is critical that the parties produce proof of their policy limits in matters of concurrent coverage to equip the arbitrator with the support he or she will need to make the most accurate decision concerning the apportionment of damages.

Article published in: August 2020 E-Bulletin