A US court held in January 2024 that where the coverage provided by one insurer “shall be in excess over any other valid and collectable insurance available to the Insured … unless such insurance is written only as specific excess insurance over the limit of liability provided in this policy” did not overlap with a policy that provided “primary insurance”.

An investment advisor was sued for defamation for allegedly sharing false information about a public company and discouraging investments. Associated Industries Insurance rejected the advisor’s claim and she undertook her own defence, spending more than $1 million in legal fees. Two years later the advisor realised that she had cover with Travelers Insurance who agreed to defend her and cover all litigation costs from then on. She sought cover for her litigation costs for the first two years from Associated. It was held that the Associated policy provided “excess” coverage whereas the Travelers policy provided primary coverage and there was therefore no claim under the Associated policy. An excess insurer which has a duty to defend is not obligated to provide a defence if the primary insurer is so obligated.

The wording of the policies provides useful wording to ensure such an outcome.

[Susan Harriman v Associated Industries Insurance Co. Inc., case no 22-1542, in the US Court of Appeals for the Fourth Circuit]