This decision holds that with a long-tail loss, an excess insurer is not entitled to horizontal exhaustion of all underlying retention amounts for all years in which the loss is incurred. Instead, once the retention amount (or insurance the insured purchased to cover the retention amount) is exhausted, the excess insurer is liable for all sums incurred on the loss (up to its policy limits) without regard to whether retention amounts for other years have been exhausted—i.e., vertical exhaustion applies. Other insurance clauses in the policy did not benefit the insurer. First, other insurance clauses apply only to allocation among insurers, they offer no defense to the insurer’s obligation to the insured. Second, these other insurance clauses purported to make the policy excess to all other insurance, not just lower level insurance, such as the retention amounts. For purposes of Civ. Code 3287(a), damages are certain or capable of being made certain so that prejudgment interest runs, so long as any disputed issues are issues of law rather than issues of fact. So legal disputes about the meaning of insurance policy language, or whether policies could be vertically stacked, etc. did not prevent the damages from being certain since all of those questions were legal rather than factual in nature. If the defendant knows how much to pay if knew from the outset how all legal issues would be resolved, the sum is certain and prejudgment interest is owed.
California Court of Appeal, Fourth District, Division 2 (Ramirez, P.J.); September 29, 2017; 2017 WL 4324857