“When two insurance contracts both provide only excess coverage, liability must be determined on a proportional basis………..”
Appeals court rules insurer, state fund share liability for teachers
When two insurance contracts both provide only excess coverage, liability must be determined on a proportional basis, a federal appeals court ruled Thursday, affirming a lower court ruling in a dispute between a Nationwide Mutual Insurance Co. unit and the Georgia school board’s risk management fund.
The case involved Nationwide unit National Casualty, which provided policies to the Chamblee, Georgia-based Professional Association of Georgia Educators, and the Lawrenceville, Georgia-based School Board Association – Risk Management Fund, which is an agency that enables boards of education to share liability risk.
According to the ruling by the 11th U.S. Circuit Court of Appeals in Atlanta in National Casualty Co. v. Georgia School Board Association – Risk Management Fund, “Both parties’ insurance contracts include clauses asserting that when an educator is covered by ‘other insurance,’ they’ll only provide ‘excess’ coverage.”
Several educators who were insured by both National Causality and the fund were sued, and a coverage dispute arose between National Casualty and the fund.
The U.S. District Court in Atlanta ruled the parties had to provide coverage on a pro rata basis, applying a Georgia rule that when two insurance policies covering the same risk are irreconcilable, the insurers must share defense and indemnity costs.
In 2018, the Georgia Supreme Court ruled in the case that the requirement was applicable to the fund, even though it was not a commercial insurance company.
The district court said National Casualty’s pro rata share to date totaled $481,231 along with $99,037 in pre-judgment interest, and that future defense and indemnity expenses were to be apportioned equally.
National Casualty appealed the ruling, which was affirmed by a three-judge appeals court panel. “In this clash of irreconcilable ‘other insurance’ clauses, Georgia law doesn’t allow National Casualty’s clause to supersede the Fund’s clause,” said the panel, in affirming the lower court.
Attorneys in the case did not respond to requests for comment.