Two Excess Insurers Obligated When Primary Protection Was Self-Insured
A high school track team member sustained severe and permanent injuries while a passenger in a van. The vehicle, owned by the team coach and driven by the coach's wife, was struck by a heavy truck that failed to stop at an intersection. The van was among several private autos transporting the team to a year-end party after their last regular practice. The lawsuit was settled, with 90% liability assigned to the trucker and 10% to the school district and its "general" excess liability insurer, which was self-insured instead of carrying primary liability insurance.
The excess insurer filed a declaratory judgment action to determine the extent of coverage and its relevance to the incident, which was covered by another excess liability insurer for interschool athletic and other extracurricular activities. (That insurer had previously denied coverage.) The court granted summary judgment, ruling that the loss was covered by the policy. A second summary judgment determined that the "special purpose" coverage applied before the "general" excess liability coverage, making the latter insurer eligible for reimbursement from the former for its expenditures. Both summary judgment orders were appealed.
The "special" excess insurer contended that the event was neither a recognized nor an officially sponsored sporting event covered by its policy and thus fell outside the scope of coverage. The appellate court determined that the policy was created at the national level by the insurer, made available through various state school athletic associations, and was optional for school districts to subscribe.
It was found that the state school athletic association in Washington State had statutory authority to "control, supervise and regulate the conduct of interschool athletic activities and other interschool extracurricular activities..." The involved school district purchased the coverage and designated track as a covered activity. The policy's insuring clause specifically provided coverage for activities in accordance with the association's rules, including related travel by vehicle authorized by the school or a covered individual. The coach was considered a covered person. The court determined that coverage applied under the "special" excess liability policy.
Regarding the trial court's summary judgment, the sports activity protection first provided coverage before the general excess liability policy. The appeal court determined that both insurers must share the liability. It used the "maximum loss" rule, which required "equal sharing of a loss until the limits of the smaller policy are exhausted, the balance of the loss then being paid from the larger policy up to its limits or until full compensation for the loss is made.”
The trial court's summary judgment affirming coverage under the applicable special athletic activities policy was upheld. However, the second summary judgment, which stated that coverage under this policy took precedence over the general excess liability policy, was reversed and remanded with instructions to apportion coverage between the two insurers.
Odessa School District No 105 ET AL., Respondents v. Ins. Co. Of North America, Petitioner. Washington Court of Appeals, Division Three. No. 9730-7-III. May 17, 1990. 57 Wn. App. 893. CCH 1990 Fire and Casualty Cases, Paragraph 2629.
