Montrose Chemical Corp. v. Superior Court

The insured was not entitled to require an excess insurer to pay under its policy just by showing claims remained unpaid after exhausting all underlying policies for the one policy year, as some excess policies’ “other insurance” provisions required exhaustion of insurance issued for other policy years if it covered the same loss.  Distinguishing State of California v. Continental Ins. Co. (2012) 55 Cal.4th 186, this decision holds that, at least with some of its many excess insurance policies, Montrose was not entitled to “electively stack” excess insurance policies vertically—that is, require the excess insurer to pay under its policy just by showing that all the underlying and lower level excess policies for the policy year had been exhausted and that claims or liabilities yet remained to be paid.  Whether such vertical stacking was allowed depended on the wording of each excess insurance policy, and among the 112 policies at issue in this suit, wording varied widely.  Some contained “other insurance” clauses that required exhaustion not only of the scheduled primary and underlying excess policies but also all other insurance covering the loss.  Policies containing that type of language prohibited the elective vertical stacking that Montrose sought since with a long-tail loss, such as this case involved (liabilities from DDT contamination), policies covering other years were “other insurance” covering the loss.

California Court of Appeal, Second District, Division 3 (Edmon, P.J.); August 31, 2017; 2017 WL 3772568

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