COVERAGE/BAD FAITH ALERT: Excess Insurers Off Hook When Policyholder Compromises Underlying Limits
May 26, 2011 - Applying Illinois law, a New York trial court dismissed a coverage suit against five excess carriers ruling that the excess policies could not attach when the policyholder had compromised the limits of an underlying excess policy. The court found that the policyholder's conduct in settling with another excess insurer for less than the total amount of the carrier's policies violated the other excess carrier's policies requiring exhaustion of the underlying limits.
JPMorgan Chase v. Indian Harbor Insurance Company, NO. 603766/2008 (N.Y. Sup. Ct.).