In Continental Cas. Co. v. Indian Head Indus., Inc., ___ F. App'x ___, No. 15-2217, 2016 WL 7321362 (6th Cir. December 16, 2016) (emphasis added), a panel of the Sixth Circuit Court of Appeals concisely summarized the prevailing alternative rules on allocation of indemnity and defense expenses under multiple insurance policies:
E. The Allocation of Indemnity Damages and Defense Costs
There are multiple approaches a court may take in assigning the allocation of damages and costs under an insurance policy. See Arco Indus. Corp. v. Am. Motorists Ins. Co., 232 Mich. App. 146, 160–61 (1998). At issue in this case are two of these possible approaches. The “all sums” or “joint and several liability” approach considers each insurer of any policy triggered to be liable for the insured’s entire loss, including costs falling outside the policy’s period. Id. at 160. Liable insurers may then seek contribution from other insurers whose policies have been triggered. Id. The “time-on-the-risk" or “pro rata” approach assigns liability among the insurers for the triggered policies based on the portion of the underlying injuries that may be associated with each policy so as to make the insurer liable only for the prorated share of injuries. Id. at 161.
The panel then went on to apply Michigan law and pro rata allocation among the insurance policies at issue.
Please Read The Disclaimer. ©2016 by Dennis J. Wall. All Rights Reserved.