Arch issued primary insurance that covered the same risk that Lloyds also covered through its primary insurance. The two insurers shared indemnity costs, but Arch insisted that it was not liable for defense costs due to another insurance clause which appeared in its policy not only in the policy conditions but also in the coverage section. This decision rejects Arch’s argument and holds it liable for its proportionate share of the defense costs. Escape clauses which exempt a primary insurer from liability if there is other primary insurance for the loss are contrary to public policy, and it does not matter where in the policy the escape clause is placed.
California Court of Appeal, Third District (Hull, J.); April 11, 2016; Case No. C072500