It is a universal principle of insurance that where two policies covering the same loss purport to cancel each other out and only cover losses in excess of what other insurers cover, liability will be shared on a pro rata basis, usually equally. In a Georgia US decision regarding coverage for the same losses under insurance for public school employees, the losses were shared equally even though the one insurer had a far more elaborate ‘other insurance’ clause.

The one insurer had the common wording that “if valid and collectable insurance is available for the loss covered, the obligations of the insurer are excess over the available and collectable insurance”. The other insurer had two long paragraphs saying the policy was “specifically in excess” of any other insurance “of any kind whatsoever whether primary or excess” with examples which themselves were not limited and related to any other policy which “purports to be in excess” to the insured policy.

The appeal court said that the law in Georgia went back to a 1974 case setting out the principle that the two insurance policies which purport to cancel each other out result in the loss being divided equally. The court said that although the one clause may be shorter than the other they were functionally the same. Both policies were collectable and available because they would pay if liability exceeded what the other insurance covered. In these situations there is no specific clause which is “super excess” merely because it expressly provides that its coverage is in excess to other coverage.

The same result would follow in South Africa.

[National Casualty Co. v Georgia School Board Association – Risk Management Fund, case number 22-13779, in the U.S. Court of Appeals for the Eleventh Circuit]