Weekly Law Resume - May 17, 2012: Insurance Coverage – Contribution Action – Self Insured Retention


Axis Surplus Insurance Company v. Glenco Insurance Ltd Court of Appeal, Fourth District (April 11, 2012)

When an action for equitable contribution is brought by a settling insurer against a non-participating carrier, the settlement is presumptive evidence of the non-settling insurer’s liability and the amount thereof. This case considered the effect of a Self-Insured Retention (“SIR”) on the non-settling carrier’s exposure to a contribution claim.

This case arose out of a construction defect lawsuit. Pacifica Point L.P. purchased the Carmel Pointe apartments in 2004 and subsequently converted them to condominiums. After their completion, the homeowners association brought a construction defect suit against Pacifica. The homeowners’ experts came up with a preliminary defects list with a total cost of repair of $13,976,250. The defense experts’ preliminary repair estimate totaled $1,466,747.50. The Association made a time limited settlement demand of $1,000,000.

Pacifica was insured in 2004-2005 and 2005-2006 by a commercial general liability policy issued by Axis Surplus Insurance Company. It also had obtained a specific wrap-up/owners controlled insurance policy (“OCIP”) for the Carmel Pointe Project from Glenco Insurance Ltd. with a policy period from 2004-2007. Glenco’s policy had a $250,000 SIR, and it provided that Glencoe had no duty to investigate or defend any claim until Pacifica satisfied the SIR. Axis agreed to defend under a reservation of rights. Because of the unsatisfied SIR, Glenco did not accept the tender, but reserved its rights and “monitored” the claim, requesting notification once Pacifica satisfied its SIR.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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