Excess “Other Insurance” Clause Relieves Insurer of Duty to Contribute to Defense

The Ohio Court of Appeals, applying Ohio law, has enforced an employment practices liability (“EPL”) carrier’s “other insurance” clause, holding that the insured’s commercial general liability (“CGL”) policy afforded primary coverage and therefore the EPL insurer had no duty to contribute to the defense of a claim.  Great Am. Ins. Co. v. Phila. Indem. Ins. Co., 2022 WL 1025886 (Ohio Ct. App. Apr. 6, 2022).

A housing association was sued by its tenants seeking damages for bodily injury and civil rights violations.  The insured tendered the suit to its CGL carrier based on the bodily injury claim.  The CGL insurer acknowledged a duty to defend and retained counsel for the insured.  The insured subsequently tendered the suit to its EPL insurer.  Based on the potentially covered civil rights claim, the EPL insurer reserved rights.  After the claim concluded, the CGL insurer sought contribution from the EPL insurer for defense costs as a co-primary insurer. 

While the trial court ruled for the CGL insurer, the appellate court reversed.  The appellate court examined the EPL carrier’s “other insurance” provision, which stated that the EPL policy “shall be excess over any other policy under which another insurer has a duty to defend a claim.”  The court also pointed to the EPL policy’s definition of “Defense Costs,” which carved out “[a]ny amounts incurred in defense of any Claim for which any other insurer has a duty to defend, regardless of whether or not such other insurer undertakes such a duty.”  Because the CGL policy was a duty-to-defend policy, the appellate court held that the CGL coverage was primary.  “To hold otherwise,” the court determined, “would deprive [the EPL insurer] of its right to a reasonable expectation to rely on the terms of its own contract with its insured."  The court rejected the CGL carrier’s argument that the CGL and EPL policies insured different risks and therefore should be viewed as co-primary policies, holding that the EPL carrier’s “other insurance” clause made it excess to the CGL coverage.