Carriers Insurance Company v. American Policyholders’ Insurance Company

Cummings Bros. (Cummings) entered into an agreement with Merrill's Rental Service, Inc. (Merrill's) to rent motor vehicles from Merrill's. Merrill’s agreed to provide personal-injury and property-damage insurance for its vehicles when these vehicles were being operated by Cummings’ employees. Merrill’s obtained this insurance through Carriers Insurance Company (Carriers) (plaintiff). Merrill’s policy with Carriers insured personal-injury damages up to $3,000,000 and property damages up to $500,000. Cummings also obtained $250,000 worth of liability insurance through American Policyholders’ Insurance Company (APIC) (defendant). While the agreement with Merrill’s was in effect, a Cummings employee driving a Merrill’s vehicle got into an accident with another vehicle. The driver of the other vehicle was killed, and his vehicle was damaged. A wrongful-death suit was commenced. Carriers settled that claim for $200,000 and a property-damage claim for $8,000. Before and after Carriers settled these claims, Carriers sought contribution from APIC. APIC refused. Carriers sued APIC seeking contribution. A $104,000 judgment was entered against APIC. Both the APIC and the Carriers’ policies contained “other insurance” clauses. Under Carriers’ other-insurance clause, if there was another insurance policy in effect, then the Carriers’ policy would be deemed excess insurance. Under the APIC other-insurance clause, if there was other, valid insurance in effect, the APIC insurance would be deemed excess insurance. Neither insurance policy contained language specifying if either insurance was primary or secondary. The presiding justice of the court determined that these conflicting other-insurance clauses should be disregarded. APIC appealed.