Legal Memorandum: Excess Insurer Claims against the Primary Insurer

Issue: In Florida, if no report is made and the excess insurer is later called upon to provide coverage, can the excess insurer recover from the primary insurer?

Area of Law: Insurance Law
Keywords: Claim against a primary insurer; An excess insurer; First-party bad-faith claim
Jurisdiction: Florida
Cited Cases: 389 So. 2d 272; 238 N.W.2d 862; 475 N.Y.S.2d 267; 356 N.W.2d 648; 393 N.W.2d 479; 390 So. 2d 761; 886 F. Supp. 837; 678 So. 2d 1325
Cited Statutes: None
Date: 12/01/2000

           Two seminal Florida cases establish that an excess insurer can bring a first-party bad-faith claim against a primary insurer to the same extent as an insured.*FN1  The first case is Ranger Insurance Co. v. Travelers Indemnity Co., 389 So. 2d 272 (Fla. Dist. Ct. App.—1st Dist. 1980).  In that case the primary policy provided coverage up to $100,000.  One month before trial, the claimants made settlement demands totaling $200,000 and the primary insurer countered the demands at $30,000.  The primary insurer did not pursue settlement, though the excess insurer had stated it would contribute if the settlement exceeded $100,000.  Id. at 273-74.  The jury awarded damages exceeding the amount of the plaintiffs’ settlement demand.  Both insurers paid the judgment, and the excess sued the primary to recover the amount it had paid to the claimants.  Id. at 274.  The excess insurer sued the primary insurer, alleging among other things that the $30,000 offer was unreasonable and that the primary insurer refused to accept its own attorney’s evaluation of the claims, settlement advice, and the expected jury-verdict range.  Id.  The court decided to recognize a cause of action based on the theory of equitable subrogation.  Id. at 274-75.


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