Fireman's Fund Insurance v. Maryland Casualty Co.
65 Cal. App. 4th 1279 | California Court of Appeal | 1998
What This Case Means for Subcontractors
Two insurance companies both covered the same construction company. When a lawsuit arose, Fireman's Fund paid for the defense and settlement costs. Fireman's Fund then sued Maryland Casualty to recover its share of those costs. Maryland argued it didn't have to pay because the insured had already settled with them. The California court ruled that one insurer can demand payment from coinsurers for defense costs without needing the insured to have a valid claim against the other insurer. This matters to subcontractors because it clarifies how insurance companies split costs when multiple policies cover the same project.
Key Takeaways
- •If you're covered by multiple insurance policies, each insurer can be forced to pay its fair share of defense costs even if the insured has already settled with another insurer
- •Equitable contribution between insurers is separate from subrogation—one insurer doesn't need the insured's permission or remaining claims to recover from coinsurers
- •Make sure your insurance policies clearly state coverage periods and limits, because overlapping coverage creates disputes over who pays what percentage of costs
Equitable contribution exists independently of the rights of the insured.
Frequently Asked Question
If I have two insurance policies covering the same project, can one insurance company force the other to pay its share of defense costs?
Yes. California courts allow one insurer to recover its pro rata share of defense costs directly from coinsurers, even if the insured has already settled with the other insurer. This is called equitable contribution and works independently of the insured's own claims. Each insurer's obligation to contribute is based on the coverage it provided, not on whether the insured still has valid claims.
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