MC Consultants Claims Handling - East Region

Duty to Defend, Contribution among Insurers, and Coverage Exhaustion A Fifty State Survey

Written by: Nicholas F. Morisani and Jannea S. Rogers Adams and Reese LLP

Alabama

I. Duty to Defend Issues A. Coverage Trigger – Alabama requires an injury-in-fact; the time of an occurrence is the time the complaining party was actually damaged as opposed to the time of the wrongful act. American States Ins. Co. v. Martin, 662 So. 2d 245, 250 (Ala. 1995).

B. Reservation of Rights (“ROR”) – Insurer must provide notice to insured and keep insured informed of the status of the declaratory case. Shelby Steel Fabricators, Inc. v. U.S. Fid. & Guar. Ins. Co., 569 So. 2d 309, 313 (Ala. 1990). “The mere fact that the insurer chooses to defend its insured under a reservation of rights does not ipso facto constitute such a conflict of interest that the insured is entitled at the outset to engage defense counsel of its choice at the expense of the insurer.” L & S Roofing Supply Co. v. St. Paul Fire & Marine Ins. Co., 521 So. 2d 1298, 1304 (Ala. 1987).

C. Mechanics of a ROR – When an insurer defends under a reservation of rights, the insurer has an enhanced obligation of good faith, and, if the insurer meets this obligation, then the insured is not entitled to separate defense counsel. Id. This enhanced obligation of good faith is met by satisfying the following criteria: (1) the insurer must thoroughly investigate the cause of the insured’s accident and the nature and severity of the plaintiff’s injuries; (2) it must retain competent defense counsel for the insured; (3) the insurer must fully inform the insured not only of the reservation-of-rights defense itself, but of all developments relevant to his policy coverage and the lawsuit (i.e. settlement offers); and (4) the insurer must refrain from engaging in any action which would demonstrate a greater concern for the insurer’s monetary interest than for the insured’s financial risk. Id. at 1303. See also Lifestar Response of Ala., Inc. v. Admiral Ins. Co., 17 So. 3d 200, 217 (Ala. 2009) (“[W]hen an insurer defends its insured under a reservation of rights retained counsel should understand that counsel represents only the insured, not the insurer.”).

D. Occurrence – Policy definition controls but where no policy definition, courts will apply plain meaning of the term. The term has been defined as “something that happens or takes place; specifically, an accident, event, or continuing condition that results in personal injury or property damage that is neither expected nor intended from the standpoint of an insured party.” St. Paul Fire & Marine Ins. Co. v. Christiansen Marine, Inc., 893 So. 2d 1124, 1136-1137 (Ala. 2004). See also USF&G v. Warwick Development Corp., 446 So. 2d 1021 (Ala. 1984) (interpreting a pre-1985 policy but finding that a construction defect was not an “occurrence”).

E. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Yes, primary carriers can pursue one another for contribution. Nationwide Mut. Ins. Co. v. Hall, 643 So. 2d 551 (Ala. 1994).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not locate any Alabama cases discussing this issue.

C. Subrogation Issues with Insured – Insurer generally has the right to be subrogated to the extent of its payment on the loss to any right of action that the insured may have against a third person whose negligence or wrongful act caused the loss. Mount Airy Ins. Co v. Doe Law Firm, 668 So. 2d 534 (Ala. 1995);

D. Targeted Tender – Research did not reveal Alabama cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Primary insurer has no duty of good faith to excess insurer. Federal Ins. Co. v. Travelers Cas. & Sur. Co., 843 So. 2d 140 (Ala. 2002). Ambiguity in primary policy will be resolved in favor of excess insurer seeking contribution. Home Indem. Co. v. Employers Nat. Ins. Corp., 564 So. 2d 945 (Ala. 1990).

B. Pro Rata Obligations and Who is Excess Issues – There are no federal or state cases in Alabama that specifically address the issue of how liability is allocated among insurers for ongoing property damage.

Alaska

I. Duty to Defend Issues A. Coverage Trigger – Coverage is triggered by an occurrence which requires an “accident” that results in “property damage.” Fejes v. Alaska Ins. Co., Inc., 984 P.2d 519, 523 (Alaska 1999).

B. Reservation of Rights (“ROR”) – The insurance company may proceed under a reservation of rights, but the insured must consent to a defense under a reservation of rights. Sauer v. Home Idem. Co., 841 P.2d 176, 182-183 (Alaska 1992).

C. Mechanics of a ROR – Once the insurer reserves its rights under circumstances involving either a coverage defense or a policy defense, the insurer must provide the insured with independent counsel. Chi of Alaska v. Emplrs Reinsurance Corp., 844 P.2d 1113, 1117 (Alaska 1993). In addition, if an insured refuses to accede to the insurer’s reservation of rights, the insurer must either accept liability under the policy and defend unconditionally or surrender control of the defense. Id. at 1118.

D. Occurrence – An occurrence requires an accident and the Alaska Supreme Court has defined “accident” as “anything that begins to be, that happens, or that is a result which is not anticipated and is unforeseen and unexpected.” Fejes v. Alaska Ins. Co., Inc., 984 P.2d 519, 523 (Alaska 1999).

E. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Yes, so long as the non-participating insurer had a legal duty to provide a defense or indemnity coverage. Marwell Constr., Inc. v. Underwriters at Lloyd's, London, 465 P.2d 298 (Alaska 1970).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not locate any Alaska cases discussing this issue.

C. Subrogation Issues with Insured – Excess carriers are entitled to equitable subrogation to the rights of the insured. R.W. Beck & Associates v. City & Borough of Sitka, 27 F.3d 1475, 1486 (9th Cir. 1994).

D. Targeted Tender – Research did not reveal Alaska cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Absent policy language to the contrary, an excess insurer will not be presumed to have duty to drop down and cover losses insured by primary insurer. Alaska Rural Elec. Coop. Ass'n v. INSCO Ltd., 785

P.2d 1193, 1194 (Alaska 1990). See also Safety Nat'l Cas. Corp. v. Pacific Employers Ins., 927 P.2d 748 (Alaska 1996) (holding that excess insurers do not insure against underlying carriers’ insolvency absent contrary terms). The payment or non-payment of funds owed by a primary insurer is irrelevant to an excess carrier’s duty. Grace v. Insurance Co. of North America, 944 P.2d 460 (Alaska 1997).

B. Pro Rata Obligations and Who is Excess Issues – There are no federal or state cases in Alaska that specifically address the issue of how liability is allocated among insurers for ongoing property damage.

C. Other Insurance Clauses – Follows the Lamb-Weston rule: where other insurance clauses conflict, they are to be ignored and each insurer is liable for a prorated amount of the resultant damage not to exceed his policy limits. See Werley v. United Servs. Auto. Ass'n, 498 P.2d 112, 119 (Alaska 1972).

Arizona

I. Duty to Defend Issues A. Coverage Trigger – Arizona requires an injury-in-fact; the time of an occurrence is the time the complaining party was actually damaged as opposed to the time of the wrongful act. Associated Aviation Underwriters v. Wood, 98 P.3d 572, 595 (Ariz. App. 2004). Coverage has also been triggered based on “continuous trigger” theory and requiring coverage for ongoing property damage occurring during the policy period even if other similar damage preceded that damage. Lennar Corp. v. Auto Owners Ins. Co., 151 P.3d 538, 549 (Ariz. App. 2007).

B. Reservation of Rights (“ROR”) – The insurer’s right to provide a defense for its insured is not lost where it chooses to defend under a reservation of rights. McGough v. Insurance Co. of North America, 143 Ariz. 26, 691 P.2d 738 (App.1984). The insurer is not required to reserve rights prior to beginning defense and may subsequently reserve its rights upon learning new information that would provide grounds for a coverage defense. United Servs. Auto Ass’n v. Morris, 741 P. 2d 246, 250 (Ariz. 1987).

C. Mechanics of a ROR – The insurer must “properly communicate” this to the insured. See Farmers Ins. Co. v. Vagnozzi, 675 P.2d 703, 708 (Ariz. 1983).

D. Occurrence – The courts will look to the policy definition of occurrence. See Associated Aviation Underwriters v. Wood, 98 P.3d 572, 595 (Ariz. App. 2004).

E. Right to Repair – Yes; Arizona has a statutory provision stating the following: “At least 90 days before filing a dwelling action, the purchaser shall give written notice by certified mail . . . to the seller specifying in detail the basis of the dwelling action. After receipt of the notice described above, the seller may inspect the dwelling to determine the

nature and cause of the alleged defects and the extent of any repairs necessary to remedy the alleged defects.”

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Insurers have a right to contribution from other insurers where the non-participating insurer failed to defend but had a duty to do so. National Indem. Co. v. St. Paul Ins. Companies, 724 P. 2d 544, 545 (Ariz. 1986).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Insurers have a right to contribution from other insurers where the non-participating insurer failed to defend or indemnify. National Indem. Co. v. St. Paul Ins. Companies, 724 P. 2d 544, 545 (Ariz. 1986). See also Regal Homes, Inc. v. CNA Ins., 171 P.3d 610 (Ariz. Ct. App. Div. 1 2007).

C. Subrogation Issues with Insured – Insurers are entitled to legal or equitable subrogation regardless of whether there is such a provision in the insurance policy. Title Ins. Co. of Minnesota v. Costain Arizona, Inc., 164 Ariz. 203, 791 P.2d 1086, 1089 (Ct. App. Div. 1 1990).

D. Targeted Tender – Research did not reveal Arizona cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Excess has right of equitable subrogation; excess must prove the primary failed to fulfill a duty owed to the insured. Cal. Cas. Ins. Co. v. State Farm Mut. Auto. Ins. Co., 913 P.2d 505, 510 (Ariz. Ct. App. 1996). Excess insurer was not obligated to provide coverage until primary policy limits of $500,000 had been paid, and primary insurer’s insolvency did not require excess insurer to pay as primary insurer. Maricopa County v. Federal Ins. Co., 757 P.2d 112 (Ct. App. Div. 2 1988).

B. Pro Rata Obligations and Who is Excess Issues – There are no federal or state cases in Arizona that specifically address the issue of how liability is allocated among insurers for ongoing property damage.

Arkansas

I. Duty to Defend Issues A. Coverage Trigger – Coverage is triggered based on injury-in-fact rule. Unigard Sec. Ins. Co. v. Murphy Oil USA, Inc., 962 S.W.2d 735, 738-739 (Ark. 1998).

B. Reservation of Rights (“ROR”) – Insurers may defend under a reservation of rights. Employers Nat. Ins. Co. v. Grantors to Diaz Refinery PRP Committee Site Trust, 855 S.W.2d 936, 939-940 (Ark. 1993).

C. Mechanics of a ROR – If the insurer defends under a reservation of rights, the insurer must allow the insured to select independent counsel to continue representing the insured. Union Ins. Co. v. Knife Co., 902 F. Supp. 877, 880 (W.D. Ark. 1995).

D. Occurrence – Construction defect will not be considered an “occurrence” under a CGL policy. Essex Ins. Co. v. Holder, 261 S.W.3d 456 (Ark. 2008). Where “occurrence” is defined as an “accident,” the Arkansas Supreme Court stated the definition of “accident” is “an event that takes place without one’s foresight or expectation-an event that proceeds from an unknown cause, or is an unusual effect of a known cause, and therefore not expected.” Continental Ins. Co. v. Hodges, 534 S.W.2d 764, 765 (Ark.1976).

E. Right to Repair – No statute.

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Liability insurers have a right to contribution amongst each other under Ark. Code § 16-61-201. Redland Ins. Co. v. Shelter Mut. Ins. Co., 193 F.3d 1021, 1023 (8th Cir. 1999).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not locate any Arkansas cases discussing this issue.

C. Subrogation Issues with Insured – The insurer has the right to be subrogated to the rights of its insured once the insurer satisfies the insured’s claims. See Miller v. Baker Implement Co., 439 F.3d 407, 409 (8th Cir. 2006).

D. Targeted Tender – Research did not reveal Arkansas cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Under Arkansas law, an excess insurer is subrogated to the rights of the insured against the primary insurer where the excess carrier acts on behalf of the insured after the primary insurer has refused to do so. Trinity Universal Insurance Company v. State Farm Mutual Automobile Insurance

Company, 246 Ark. 1021, 441 S.W.2d 95 (1969). See also Blevins v. Commercial Standard Ins. Companies, 544 F.2d 967 (8th Cir. 1976).

B. Pro Rata Obligations and Who is Excess Issues – There are no federal or state cases in Arkansas that specifically address the issue of how liability is allocated among insurers for ongoing property damage.

California

I. Duty to Defend Issues A. Coverage Trigger – Continuous trigger theory – California Supreme Court adopted the continuous trigger of coverage for progressive injury and damage claims in Montrose Chemical Corp. of Calif. v. Admiral Ins. Co., 10 Cal. 4th 645 (Cal. 1985).

B. Reservation of Rights (“ROR”) – Insurer must proceed under a reservation of rights in order to preserve right to assert noncoverage defenses later. J.C. Penny Cas. Ins. Co. v. M.K., 52 Cal. Rptr. 64 (Cal. 1991).

C. Mechanics of a ROR – Once the insurer reserves its rights, the insured has the right to select independent defense counsel where an actual conflict of interest exists. See CAL. CIV. CODE § 2860; San Diego Fed. Credit Union v. Cumis Ins. Soc'y, 208 Cal. Rptr. 494 (Cal. Ct. App. 1984).

D. Right to Repair – Cal. Civ. Code § 910 states, prior to filing an action the claimant shall provide written notice of their claim that the construction of a residence is in violation of California standards set forth in Ca. Civ. Code §§ 896, et seq. Upon request by owner, builder must provide information relevant to the alleged violation including plans and specifications and must present owner with contact information of three additional contractors to perform repairs. Cal. Civ. Code § 917.

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Insurer covering “all sums” may provide full coverage and seek contribution from other insurers. Stonlight Tile, Inc. v. California Ins. Guar. Ass’n, 58 Cal. Rptr. 3d 74, 88 (Cal. App. 2007). Contribution, however, will not be allowed between a primary and an excess carrier. See Fireman’s Fund Ins. Co. v. Md. Cas. Co., 77 Cal. Rptr. 2d 296, 308 (Ct. App. 1998) (“in the absence of an express agreement to the contrary, there is never any right to contribution between primary and excess carriers of the same insured”).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – A primary carrier will likely be permitted to pursue the carrier of an additional insured for contribution. See Insurance Co. of State of Pennsylvania v. National Fire Ins. Co. of Hartford, 2008 WL 5197172, *1 (Cal. App. 4 Dist. December 12, 2008) (acknowledging that insurer had previously sought to recover contribution from the carriers of additional insureds regarding an underlying construction defect case).

C. Subrogation Issues with Insured – Subrogation by one co-insurer seeking contribution for defense costs from a non-performing co-insurer is permitted. Employers Ins. Co. of Wausau v. Travelers Indem. Co., 141 Cal. App. 4th 398 (Cal. App. 1st Dist. 2006).

D. Targeted Tender – Research did not reveal California cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Excess has right of equitable subrogation; excess must prove the primary failed to fulfill a duty owed to the insured. Fireman’s Fund Ins. Co. v. Maryland Cas. Co., 26 Cal. Rptr. 2d 762, 772 (Ct. App. 1994). There is legal authority in California rejecting the “closer to the risk” rule. See Nat'l Union Fire Ins. Co. v. Am. & Foreign Ins. Co., 2006 U.S. Dist. LEXIS 96778 (C.D. Cal. Feb. 8, 2006) (rejecting closer to risk argument when assessing OCIP excess policy versus a primary CGL issued to a subcontractor).

B. Pro Rata Obligations and Who is Excess Issues – Once a policy is triggered, the insurer is responsible for full extent of liability, not just the part that occurred during the policy. Stonlight Tile, Inc. v. California Ins. Guar. Ass’n, 58 Cal. Rptr. 3d 74, 88 (Cal. App. 2007).

C. Other Insurance Clauses – Courts will likely find “other insurance” clauses in excess policies are mutually repugnant and order proration. Fire Ins. Exch. v. Am. States Ins. Co., 46 Cal. Rptr. 2d 135, 141 (Ct. App. 1995).

Colorado

I. Duty to Defend Issues A. Coverage Trigger – Continuous trigger theory – Colorado Supreme Court adopted the continuous trigger of coverage for progressive injury and damage claims in Public Serv. Co. of Colo. V. Wallis and Companies, 986 P.2d 924, 939 (Colo. 1999). But see American Employer’s Ins. Co. v. Pinkard Constr. Co., 806 P.2d 954 (Colo. 1994) (exposure trigger applied) and Browder v. U.S. Fid. & Guar. Co., 873 P.2d 16 (Colo. Ct. App. 1993) (case involved both continuous and injury-in-fact theories).

B. Reservation of Rights (“ROR”) – Yes; an insurer may provide a defense subject to a reservation of rights to seek reimbursement should the facts at trial provide that the incident resulting in liability was not covered by the policy. Signature Dev. Cos. v. Royal Ins. Co. of Am., 2000 U.S. App. LEXIS 27094 (10th Cir. Colo. 2000) (applying Colorado law) (quotations omitted). Where insurer has knowledge of a ground of forfeiture under the policy and conducts defense without reservation of rights, insurer may be precluded from later contesting coverage obligation where insured is prejudiced. Mgmt. Specialists, Inc. v. Northfield Ins. Co., 117 P.3d 32, 37 (Colo. App. 2004).

C. Mechanics of a ROR – “Colorado law imposes a duty on insurers to advance funds toward the defense of claims that may ultimately turn out not to be covered under the insurance policies. . . . [Colorado also] recognizes a corresponding legal remedy, allowing insurers to obtain reimbursement when coverage is found not to exist, so long as they reserve (at least by letter) the right to do so.” Valley Forge Ins. Co. v. Health Care Mgmt. Ptnrs, LTD., 616 F.3d 1086, 1092 (10th Cir. Colo. 2010) (citations omitted). The duty to defend continues until the insurer can establish that the allegations in the complaint are solely and entirely within the exclusion in the insurance policy. Signature Dev., 2000 U.S. App. LEXIS 27094 (10th Cir. Colo. 2000) (applying Colorado law) (quotations omitted).

D. Occurrence – With specific regard to construction defect cases, the Colorado General Assembly has specifically defined an “occurrence” to include an insured’s own work that is faulty. See C.R.S.A. § 13-20-808(3) (“In interpreting a liability insurance policy issued to a construction professional, a court shall presume that the work of a construction professional that results in property damage, including damage to the work itself or other work, is an accident unless the property damage is intended and expected by the insured.”). The General Assembly, however, immediately points out coverage is still unavailable where (a) the damage is to the insured’s own work (i.e. the typical “Your Work” exclusion) and (b) and this section is not intended to “[create] insurance coverage that is not included in the insurance policy.” C.R.S.A. § 13-20-808(3)(a) and (b).

E. Right to Repair – Yes; see C.R.S. § 13-20-803.5(3) (providing a 45 day time period from completion of inspection of commercial property for the contractor to send offer to settle to the owner).

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Insurers have a right to contribution from other insurers where the non-participating insurer failed to defend but had a duty to do so. National Cas. Co. v. Great Southwest Fire Ins. Co., 833 P.2d 741, 747-748. (Colo. 1992).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not locate any Colorado cases discussing this issue.

C. Subrogation Issues with Insured – Insurer is entitled to subrogation only in the amount necessary to make it whole and thus cannot seek punitive damages. Colorado Farm Bureau Mut. Ins. Co. v. CAT Continental, Inc., 649 F. Supp. 49, 51-52 (D. Colo. 1986).

D. Targeted Tender – Research did not reveal Colorado cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers. However, under Colorado law primary coverage insurers “are duty bound to defend the insured and are required to contribute their pro rata share” to the defense costs. National Cas. Co. v. Great S.W. Fire Ins. Co., 833 P.2d 741, 747-48 (Colo. 1992).

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Where primary insurer for accident refused to assume its duty of defense, causing excess insurer to incur attorney fees and costs in defending claims brought against mutual insured, excess insurer was entitled to seek reimbursement of all fees and costs from primary insurer, since settlement amount in underlying liability suit was within limits of primary insurer’s policy. Colonial Ins. Co. of California v. American Hardware Mut. Ins. Co., 969 P.2d 796 (Colo. App. 1998). Where excess insurer’s policy stated its duty to defend was triggered when primary policy was “exhausted by occurrence,” primary insurer could pursue excess insurer for contribution after primary insurer’s policy limits reached. Millers' Mut. Ins. Ass'n of Illinois v. Iowa Nat. Mut. Ins. Co., 618 F.Supp. 301 (D.C.Colo. 1985).

B. Pro Rata Obligations and Who is Excess Issues – In cases where damage is continuing and indivisible, liability should be allocated according to the time-on-the-risk method, taking into account the degree of risk assumed in each policy and requiring the insured to be responsible for one SIR per policy-year where applicable. Public Serv. Co. v. Wallis & Cos., 986 P.2d 924, 943 (Colo. 1999). The total amount of damages should be divided by the total number of years to yield the amount of damage that is fairly attributable to each year. Id. at 941. Liability is apportioned by the degree of risk assumed by each policy. Id. However, a greater proportion of the indemnity coverage may be attributed to policy periods when more of the damage occurred. Hoang v. Assur. Co. of Am., 149 P.3d 798, 801 (Colo. 2007), aff’d on other grounds, 149 P.3d 798 (Colo. 2007).

Connecticut

I. Duty to Defend Issues

A. Coverage Trigger – Injury-In-Fact – A contractor’s liability policy, which limited protection to “accidents” occurring within policy period, did not cover fire damage to a home on which contractor had done work, where the fire occurred after cancellation of policy, even though the contractor’s alleged “negligent activity” occurred during policy period, there being no showing of protection for accidents after completion of operations. Tiedemann v. Nationwide Mut. Fire Ins. Co., 324 A.2d 263, 266 (Conn.1973).

B. Reservation of Rights (“ROR”) – Where an insurer fails to deny a claim in a reasonable amount of time, the insurer may be estopped from denying coverage. Bouchard v. Ravelers Indemnity Co., 253 A.2d 497, 498 (Conn. Super. Ct. 1969). An insurer also waives its right to deny coverage if the insurer, knowing the facts of the claim and not reserving its rights, defends the claim. Nat’l Cas. Ins. Co. v. Stella, 601 A.2d 557, 559 (Conn. App. Ct. 1992).

C. Mechanics of a ROR – “Connecticut courts [have] intimated that even a reservation of rights may sometimes be ineffective to prevent a waiver if the insurance company performed acts which were inconsistent with the reservation.” Shelby Mut. Casualty Co. v. Richmond, 185 F.2d 803, 807 (2d Cir. Conn. 1950) (citing Basta v. United States Fid. & Guar. Co., 140 A. 816, 818 (Conn. 1928)). If “the insurer conducts itself in a manner inconsistent with the reservation of rights or makes assurances to the insured that the claim will be taken care of, the reservation of rights may be waived.” West Haven v. Hartford Ins. Co., 602 A.2d 988, 996 (Conn. 1992) (citation omitted). Where an insurer does not prevail in a declaratory judgment action it files to determine whether coverage is due, the insured may be entitled to attorneys fees. See ACMAT Corp. v. Greater N.Y. Mut. Ins. Co., 923 A.2d 697, 708 (Conn. 2007).

D. Occurrence – The Supreme Court of Connecticut has adopted an “unfortunate event” test (similar to the “exposure trigger theory”) in which the “occurrence” is the unfortunate event causing bodily injury. See Metropolitan Life Ins. Co. v. Aetna Cas.& Sur. Co., 765 A.2d 891 (Conn. 2001) (holding that, in an asbestos case, the “occurrence” is each claimant’s initial exposure to asbestos).

E. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – No contribution between primary insurers because the duty to defend is personal to each insurer thus there is no common obligation to support contribution theory. Transamerica Ins. Group v. Empire Mut. Ins. Co., 327 A.2d 734, 735 (C.P. 1974).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not locate any Connecticut cases discussing this issue.

C. Subrogation Issues with Insured – Insurer is entitled to subrogation in the amount it paid to the insured only if the amount of damages awarded exceeds the difference

between the amount the insurer paid and the insured’s actual damages. Wasko v. Manella, 849 A.2d 777, 784 (Conn.2004).

D. Targeted Tender – Research did not reveal Connecticut cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Connecticut law does not acknowledge a duty between a primary and excess insurer. Infinity Ins. Co. v. Worcester Ins. Co., 2005 WL 941405, *8 (Conn. Super. March 18, 2005).

B. Pro Rata Obligations and Who is Excess Issues – No federal or state cases in Connecticut specifically addressing the issue of how liability is allocated among insurers for ongoing property damage.

C. Other Insurance Clauses – Where policies’ “other insurance” clauses “contemplate the particular risk equally, liability will be prorated based on the total policy limits.” See Sacharko v. Center Equities Limited Partnership, 479 A.2d 1219, 1224 (Conn. 1984).

Delaware

I. Duty to Defend Issues A. Coverage Trigger – “Injury-in -fact” determines the whether coverage is triggered. See Hoechst Celanese Corp. v. Certain Underwriters at Lloyd's London, 673 A.2d 164, 170 (Del. 1996). But see E. I. du Pont de Nemours & Co. v. Admiral Ins. Co., 1995 WL 654020, *8 (Del. Super. Ct. 1995) (noting the “continuous trigger theory” provides that “any policy on the risk during the entire injurious process, meaning during exposure, progression and manifestation, will be required to respond.”)

B. Reservation of Rights (“ROR”) – Yes; an insurer must inform the insured as soon as practicable after it has ascertained facts upon which it bases its reservation, and if the insurer does not, the insurer may be estopped from arguing no coverage obligation later. Viking Pump, Inc. v. Liberty Mut. Ins. Co., 2007 Del. Ch. LEXIS 43, 101 (Del. Ch. 2007).

C. Mechanics of a ROR – “A reservation of rights given by an insurance company ‘will be held sufficient only if it fairly informs the insured of the insurer's position.’ Thus, ordinarily, when an insurer states grounds for potentially disclaiming liability, it waives all other possible grounds for disclaimer.” Viking Pump, 2007 Del. Ch. LEXIS 43 (Del. Ch. Apr. 2, 2007) (citations omitted).

D. Occurrence – The key determination is “whether the injury or damage occurred during the policy period, even if the injury or damage did not become manifest until after the policy period.” See Hoechst Celanese Corp., 673 A. 2d at 169.

E. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Insurer paying the entire loss has a right of action against co-insurers as for a ratable proportion of the liability paid by it. Monsanto Co. v. C.E. Heath Compensation and Liability Ins. Co., 652 A.2d 30 (Del. 1994). See also Levy v, HLI Operating Co., Inc., 924 A.2d 210 (Del. Ch. 2007). See also Levy v, HLI Operating Co., Inc., 924 A.2d 210 (Del. Ch. 2007).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not locate any Delaware cases discussing this issue.

C. Subrogation Issues with Insured – “An insurer who pays a loss suffered by the insured is entitled to be subrogated [to the extent of] any right of action which the insured may have against a third person whose tort caused the loss. . . . No right of subrogation exists, however, against the insured, co-insured, or where the wrongdoer is insured under the same policy.” Lexington Ins. Co. v. Raboin, 712 A.2d 1011, 1015 (Del. Super. 1998)

D. Targeted Tender – Research did not reveal Delaware cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers. But see Chubb Custom Ins. Co. v. Nutri/System, L.P., 1999 Del. Super. LEXIS 438, 7-8 (Del. Super. Ct. May 19, 1999) (applying Illinois law and acknowledging the targeted tender rules).

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – There is no Delaware law which provides that absent a contractual undertaking to do so, a primary insurer has a duty to notify an umbrella or excess carrier of claims against the insured, or to notify the excess carriers that the limits under the primary policy will be soon be exhausted. Hoechst Celanese Corp. v. National Union Fire Ins. Co. of Pittsburgh, Pennsylvania, 1993 WL 603360, *2 (Del. Super. 1993).

B. Pro Rata Obligations and Who is Excess Issues – Where property damages are ongoing, every policy in effect during the ongoing injury must provide coverage. New Castle County v. Cont’l Cas. Co., 725 F. Supp. 800, 812 (D. Del. 1989). Determining how the coverage is allocated, however, is based on the policies: courts will not read into a policy a pro rata allocation based on time on the risk because insurers are jointly and severally liable for sums they are legally obligated to pay. Hercules, Inc. v. Amer. Home Assurance Co., 784 A.2d 481, 491 (Del. 2001). But, where the property damage is

capable of being divisible, Delaware cases have allocated damages accordingly. E.I. Dupont v. Allstate Ins. Co., 879 A.2d 929, 939 (Del. 2004).

C. Other Insurance Clauses – Policies with mutually repugnant excess “other insurance” clauses contribute equally to the loss rather than prorate. Liberty Mut. Ins. Co. v. Fireman’s Fund Ins. Co., 470 A.2d 289 (Del. Super. Ct. 1983).

Florida

I. Duty to Defend Issues A. Coverage Trigger – The time of occurrence within the meaning of an ‘occurrence’ policy is the time at which the injury first manifests itself. Auto Owners Ins. Co. v. Travelers Cas. & Surety Co., 227 F.Supp.2d 1248, 1266 (M.D. Fla. 2002).

B. Reservation of Rights (“ROR”) – Yes; an insurer may reserve its right to challenge coverage under the policy without breaching its duty to defend by providing a defense under a reservation of rights. First Am. Title Ins. Co. v. Nat'l Union Fire Ins. Co., 695 So. 2d 475, 477 (Fla. 3d DCA 1997).

C. Mechanics of a ROR – Florida law requires that written notice of the insurer’s reservation of rights to assert a coverage defense be given to the named insured within thirty (30) days after the insurer knew or should have known of the coverage defense. FLA. STAT. § 627.426(2)(a). “It is well-settled law that, when an insurer agrees to defend under a reservation of rights or refuses to defend, the insurer transfers to the insured the power to conduct its own defense . . . .” BellSouth Telecomms., Inc. v. Church & Tower of Fla., Inc., 930 So. 2d 668, 670-71 (Fla. 3d DCA 2006). “Thus, if the insurer offers to defend under a reservation of rights, the insured has the right to reject the defense and hire its own attorneys and control the defense.” Mid-Continent Cas. Co. v. Am. Pride Bldg. Co., LLC, 601 F.3d 1143, 1149 (11th Cir. 2010) (quotation omitted).

D. Occurrence – A construction defect will likely be considered an “occurrence” under a CGL policy. U. S. Fire Ins. Co. v. J. S. U. B., Inc., 979 So. 2d 871 (Fla. 2007).

E. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Once right to contribution is found, court must then find whether the insurers had a common obligation. Fidelity Ins. Co. v. American Home Assur. Co., 664 F.Supp.2d 397 (S.D. N.Y. 2009). No contribution because no common obligation based on the fact the duty to defend is personal to each insurer. Continental Cas. Co. v. United Pacific Ins. Co., 637 So. 2d 270, 272-273 (Fla. Dist. Ct. App. 5th Dist. 1994).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – It is the burden of an additional insured to apportion its damages to claims that were subject to coverage by another primary insurer and the impossibility of doing so leaves the additional insured without a remedy. Aetna Ins. Co. v. Waco Scaffold, 370 So.2d 1149 (Fla .Dist. Ct. App. 1978).

C. Subrogation Issues with Insured – Insurers are entitled to legal or equitable subrogation regardless of whether there is such a provision in the insurance policy. Continental Cas. Co. v. Ryan Inc. Eastern, 974 So. 2d 368, 376–77 (Fla. 2008)

D. Targeted Tender – Research did not reveal any Florida cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – An excess insurer does not provide “drop down” coverage where a primary insurer becomes insolvent. Golden Isles Hospital, Inc. v. Continental Cas. Co., 327 So. 2d 789 (Fla. Dist. Ct. App. 3d Dist. 1976).

B. Pro Rata Obligations and Who is Excess Issues – No federal or state cases in Florida specifically address the issue of how liability is allocated among insurers for ongoing property damage.

C. Other Insurance Clauses – Where two primary policies contain “other insurance” clauses, the excess clauses are generally treated as mutually repugnant and the loss is pro rated between the insurers. Allstate Ins. Co. v. Executive Car and Truck Leasing, Inc., 494 So. 2d 487 (Fla. 1986). Georgia

I. Duty to Defend Issues A. Coverage Trigger – The Georgia Court of Appeals applied the injury-in-fact theory of triggering coverage in Prescott’s Altama Datsun, Inc. v. Monarch Ins. Co. of Ohio, 317 S.E.2d 845, 846 (Ga. App. 1984). See also, Owners Ins. Co. v. James, 295 F.Supp.2d 1354 (N.D. Ga. 2003). But see Boardman Petroleum Inc. v. Federated Mut. Ins. Co., 926 F. Supp. 1566 (S.D. Ga. 1995) (where the court applied the “continuous exposure” trigger based on the policy language).

B. Reservation of Rights (“ROR”) – Yes, under Georgia law, an insurer can reserve its rights unilaterally or with the implied consent of the insured. State Farm Fire & Cas. Co. v. Walnut Ave. Partners, LLC, 675 S.E.2d 534, 540 (Ga. Ct. App. 2009).

C. Insurer’s Ongoing Duties Under ROR – “[T]he reservation of rights must fairly inform “the insured that, notwithstanding [the insurer’s] defense of the action, it disclaims liability and does not waive the defenses available to it against the insured.”

World Harvest Church, Inc. v. GuideOne Mut. Ins. Co., 695 S.E.2d 6, 10 (Ga. 2010). The reservation of rights should also inform insured of the specific basis for the insurer’s reservations about coverage. Id. Length alone will not render the letter effective: the reservation of rights must be unambiguous, and, if it is ambiguous, the purported reservation of rights must be construed strictly against the insurer and liberally in favor of the insured. Id.

D. Occurrence – Construction defect will not be considered an “occurrence” under a CGL policy. Custom Planning & Development v. American National Fire Ins. Co., 606 S.E.2d 39 (Ga. Ct. App. 2004).

E. Right to Repair – GA. CODE ANN. § 8-2-41 provides that a contractor has a right to repair defects before the owner can commence a lawsuit against the contractor; and upon entering a contract for the sale, construction, or improvement of a dwelling, the contractor must provide notice to the owner of the dwelling of the contractor’s right to resolve alleged construction defects.

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Insurer paying whole loss has right of contribution as to a ratable proportion of the amount paid. Continental Ins. Co. v. Federal Ins. Co., 266 S.E.2d 351 (Georgia 1980). But see Barton & Ludwig, Inc. v. Fid. & Deposit Co. of Maryland, 570 F. Supp. 1470, 1472-73 (N.D. Ga. 1983) (Court held no contribution between primary insurers and no contribution between primary insurer and excess insurer).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Barton & Ludwig, Inc. v. Fid. & Deposit Co. of Maryland, 570 F. Supp. 1470, 1472-73 (N.D. Ga. 1983) (Court held no contribution between primary insurer and excess insurer). See also Continental Cas. Co. v. Synalloy Corp., 667 F.Supp. 1523, 1540-1541 (S.D. Ga. 1983).

C. Subrogation Issues with Insured – Subrogation by the insurer is allowed, but the insurer-subrogee’s rights rise no higher than those of the insured. Georgia Farm Bureau Mut. Ins. Co. v. Southeastern Fidelity Ins. Co., 242 S.E.2d 743, 744 (Ga. 1978).

D. Targeted Tender – Research did not reveal Georgia cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Primary insurer owes a duty to settle to the excess insured that derives from the primary’s duty to the insured. Evanston Ins. Co. v. Stonewall Surplus Lines Co., 11 F.3d 852 (11th Cir. 1997).

B. Pro Rata Obligations and Who is Excess Issues – No federal or state cases in Georgia specifically address the issue of allocating liability among insurers for ongoing property damage.

C. Other Insurance Clauses – Excess policies are regarded as true excess coverage over and above all primary policies, including those with excess other insurance clauses. Cincinnati Ins. Co. v. St. Paul Fire & Marine Ins. Co., 474 S.E.2d 78, 80 (Ga. Ct. App. 1996).

Hawaii

I. Duty to Defend Issues A. Coverage Trigger – the Supreme Court of Hawaii has adopted the injury-in-fact approach for all standard comprehensive general liability policies. But in cases where the injury occurs continuously over a period covered by different insurers or policies, and actual apportionment of the injury is difficult or impossible to determine, the court will apply the continuous injury trigger to apportion liability among the insurers. Sentinel Ins. Co. v. First Ins. Co. of Haw., Ltd., 875 P.2d 894 (Haw. 1994).

B. Reservation of Rights (“ROR”) – The insurer must promptly notify the insured that a basis to disclaim coverage exists. Further, if an insurer, after undertaking the defense, wishes to withdraw from the defense, it must promptly inform the insured of its intentions and permit the insured to obtain a defense on its own behalf. AIG Hawai'i Ins. Co. v. Smith, 891 P.2d 261, 264-265 (Haw. 1995).

C. Mechanics of a ROR – Once an insurer reserves its rights to deny coverage, the insurer cannot seek information which would defeat coverage from the attorney hired to represent the insured. See Finley v. Home Ins. Co., 90 Haw. 25, 975 P.2d 1145, 1157 (1998) (when insurer provided insured with defense under reservation of rights that only reserved defense of policy limits and exclusion of coverage for punitive damages, and otherwise unconditionally assumed insured’s defense, its action of subsequently obtaining from counsel it assigned to insured’s defense information defeating coverage that counsel obtained from insured violated duty of loyalty to insured and equitably estopped insurer from asserting coverage defenses).

D. Right to Repair – Hawaii has a right to repair statute which requires the contractor to provide the owner, within 30 days of service of the notice of claim, with a written response offering to settle without inspection by making a monetary payment and/or repairs. See HAW. REV. STAT. ANN. § 672E-4(b) – (b).

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Contribution not likely permitted based on rule that absent an agreement, there is no contribution between a primary and excess carrier Reliance Ins. Co. v. Doctors Co., 299 F.Supp.2d 1131, 1151-1152 (D. Hawai‘i 2003).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any Hawai‘i cases discussing a primary carrier’s right to seek contribution from an additional insured’s own carrier.

C. Subrogation Issues with Insured – Hawaii recognizes insurer’s right to subrogation, and a tortfeasor that has constructive knowledge of insurer’s perfected right of subrogation cannot rely on insured’s release to preclude insurer’s subrogation claim. See State Farm Fire & Cas. Co. v. Pacific Rent-All, Inc., 978 P.2d 753, 770 (Haw. 1999)

D. Targeted Tender – Research did not reveal Hawaii cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Primary insured must exhaust policy limits or conclude lawsuit before excess carrier’s duty is triggered. Dairy Rd. Partners v. Island Ins. Co., 992 P.2d 93, 118-19 (Haw. 2000). Predicting Hawai‘i law, district court held excess and primary carriers could not seek contribution from one another based on rule that absent an agreement, there is no contribution between a primary and excess carrier. Reliance Ins. Co. v. Doctors Co., 299 F.Supp.2d 1131, 1151- 1152 (D. Hawai‘i 2003).

B. Pro Rata Obligations and Who is Excess Issues – Time on the risk model – any policy on the risk at any time during the continuing loss is triggered. Sentinel Ins. Co. v. First Ins. Co. of Haw., 875 P.2d 894, 915 (Haw. 1994). In deciding how the risk is allocated, Hawaii courts have allocated liability based on the months insurers were on the risk, rather than years. See id. at 919.

C. Other Insurance Clauses – Research did not reveal any cases discussing “other insurance” clauses in the construction defect context.

Idaho

I. Duty to Defend Issues A. Coverage Trigger – Idaho follows the injury-in-fact theory. Millers Mut. Fire Ins. Co. of Texas v. Ed Bailey, Inc., 647 P.2d 1249, 1251 (Idaho 1982).

B. Reservation of Rights (“ROR”) – Idaho allows insurers to reserve defenses with a reservation of rights agreement. Mut. of Enumclaw v. Harvey, 772 P.2d 216 (Idaho 1989).

C. Mechanics of a ROR – Idaho requires that a reservation of rights’ letter simply inform the insured of any potential defenses that the insurer found on a preliminary

analysis of the case. Sparks v. Transamerica Ins. Co., 1998 U.S. App. LEXIS 6848, aff’d, 141 F.3d 1179 (9th Cir. 1998).

D. Occurrence – The time of ‘occurrence’ of an accident, within the meaning of a liability indemnity policy, is not the time the wrongful act was committed but the time the complaining party was actually damaged. Ed Bailey, Inc., 647 P.2d at 1251.

E. Right to Repair – I.C. § 6-2503 requires claimant to send written notice to contractor of the claim and afford the contractor an opportunity to repair.

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Contribution claims are permitted between primary carriers, but, in the occasional situation where two or more insurers provide a separate defense, the considerations supporting contribution are less applicable. Mut. of Enumclaw v. Harvey, 772 P.2d 216 (Idaho 1989). See also Aetna Cas. & Surety Co. v. Mut. Of Enumclaw Ins. Co., 772 P.2d 216 (Idaho 1989) (contribution claims arise where insurer breaches obligation to defend insured).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not locate any Delaware cases discussing this issue.

C. Subrogation Issues with Insured – Equitable subrogation is permitted among concurrent primary insurers. State v. Cont'l Cas. Co., 879 P.2d 1111, 1114-15 (Idaho 1994).

D. Targeted Tender – Research did not reveal Idaho cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Research did not locate any Delaware cases discussing this issue.

B. Pro Rata Obligations and Who is Excess Issues – No Idaho federal or state cases specifically address the issue of liability allocation among insurers for ongoing property damage.

C. Other Insurance Clauses – Conflicting “other insurance” clauses in cases where the insured is covered by multiple policies are mutually repugnant and will be disregarded; primary policy must be exhausted before excess applies and before primary can seek reimbursement from excess. Empire Fire and Marine Ins. Co. v. North Pacific Ins. Co., 905 P.2d 1025 (Idaho 1995). If the “other insurance” clauses of two or more applicable insurance policies conflict, then the conflicting clauses are void. Purdy v. Farmers Ins. Co. Of Idaho, 2003 WL 163214 (Idaho 2003).

Illinois

I. Duty to Defend Issues A. Coverage Trigger – General rule in Illinois is “injury-in-fact.” Occurrence policies affording coverage for bodily injury and those affording coverage for property damage are both governed by an injury-in-fact trigger. United States Gypsum Co. v. Admiral Ins. Co., 643 N.E.2d 1226, 1255 (Ill. Ct. App. 1994). But, where the injury-in- fact occurs continuously over a period covered by different insurers or policies and actual apportionment of the injury is difficult or impossible to determine, the continuous injury trigger may be employed to equitably apportion liability among insurers.” Id. at 1255- 1256.

B. Reservation of Rights (“ROR”) – An insurer must defend a suit under a reservation of rights or seek a declaratory judgment in order to raise coverage defenses later. Employers Ins. v. Ehlco Liquidating Trust, 186 Ill. 2d 127, 150 (Ill. 1999).

C. Mechanics of a ROR – The insurer must reserve its rights within a reasonable time of a demand by the insured or the insurer will be estopped from raising coverage defense. Electric Ins. Co. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 346 F.Supp.2d 958 (N.D. Ill. 2004). “If the insurer adequately informs the insured that it is proceeding under a reservation of rights, and the insured accepts defense counsel provided by the insurer, the insurer has not breached its duty to the insured and is not estopped from asserting policy defenses.” Stoneridge Dev. Co. v. Essex Ins. Co., 888 N.E.2d 633, 644 (Ill. App. Ct. 2008). “[I]f [the insurer] declines to defend under a reservation of rights, to avoid estoppel, the insurer must file a declaratory action or answer and cross claim in an action against an insured.” Santa's Best Craft, LLC v. St. Paul Fire & Marine Ins. Co., 611 F.3d 339, 349 (7th Cir. 2010) (analyzing Illinois law).

D. Occurrence – A construction defect will not be considered an “occurrence” under a CGL policy. Monticello Ins. Co. v. Wil-Freds Construction Inc., 661 N.E.2d 451 (Ill. App. Ct. 1996). Coverage triggered only where the property damage, as opposed to its cause, occurs during the policy period. United States Gypsum Co. v. Admiral Ins. Co., 643 N.E.2d 1226, 1255 (Ill. Ct. App. 1994).

E. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Illinois courts have held no contribution among primary carriers based on fact that an insured can choose which insurer will defend her and that insurer cannot later seek contribution from other insurers. Cincinnati Cos. v. West American Ins. Co., 287 679 N.E.2d 91, 94-96 (Ill. App. 2d Dist. 1997). But see Forum Ins. Co. v. Ranger Ins. Co., 711 F. Supp. 909, 914 (N.D. Ill. 1989) (finding a right to contribution where the non-participating insurer had a duty to defend).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – If an additional insured chooses not to tender its defense to its own carrier, instead relying solely on the indemnitor’s additional insured endorsement, the additional insured's own carrier should not be held liable for contribution to the indemnitor’s carrier, since its policy was never triggered. Institute of London Underwriters v. Hartford Fire Ins. Co., 599 N.E.2d 1311, 1315-17 (Ill. App. Ct. 1992).

C. Subrogation Issues with Insured – Equitable subrogation by the insurer is permitted, but where the terms of the insurance policy contain a subrogation provision which somehow limits the insurer’s right to subrogation, the insurer will not be entitled to equitable subrogation in contravention of the terms of the policy. Spirek v. State Farm Mut. Auto. Ins. Co., 382 N.E.2d 111, 117–18 (1st Dist. 1978).

D. Targeted Tender – When an insured has coverage under multiple policies, it may choose a single insurer to defend and indemnify it and forego coverage under its other policies. John Burns Const. Co. v. Indiana Ins. Co., 727 N.E.2d 211, 215 (Ill. 2000). The “targeted” insurer may not demand contribution from those insurers whose coverage the insured elected to forgo. Id. at 216-17. The insured has the “paramount right” to seek or not to seek an insurer’s participation in a claim as the insured chooses.” Alcan United, Inc. v. West Bend Mut. Ins. Co., 707 N.E.2d 687, 692 (Ill. App. 1999). An insured may later “deactivate coverage with a carrier previously selected for purposes of invoking exclusive coverage with another carrier.” Id. at 695.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Absent obligatory policy language to the contrary, an excess carrier has no duty to drop down and cover that portion of a loss once within a primary insurer’s coverage. Hartford Accident & Indem. Co. v. Chicago Hous. Auth., 12 F.3d 92, 95, 97 (7th Cir. 1993) (applying Illinois law). Primary cannot pursue excess for contribution based on rule that excess insurer’s duty is secondary. Argonaut Ins. Co. v. Safeway Steel Products, Inc., 822 N.E.2d 79, 87 (Ill. App. 1st Dist. 2004).

B. Pro Rata Obligations and Who is Excess Issues – The Illinois courts adopt the continuous trigger theory, under which property damage is deemed to occur continuously for a fixed period, and therefore, every insurer on the risk during this fixed trigger period is jointly and severally liable to the extent of their policy limits. Board of Education of Township High School District No. 211 v. Int’l. Ins. Co., 720 N.E.2d 622, 627 (Ill. App. 1999) (citing Lentirs Gypsum v. Admiral Ins. Co., 643 N.E.2d 1226 (Ill. App. 1999)). The entire loss is therein equitably allocated among the insurers. Id.

including those with excess “other insurance” clauses. Am. Country Ins. Co. v. Hanover Ins. Co., 689 N.E.2d 186, 188-91 (Ill. App. Ct. 1998).

Indiana

I. Duty to Defend Issues A. Coverage Trigger – Indiana applies the injury-in-fact theory. Coverage under an occurrence policy is activated when the insured sustains actual damage irrespective of when the negligent act or omission which caused the damage occurred. Baylor Heating and Air Conditioning, Inc. v. Federated Mut. Ins. Co., 987 F.2d 415, 418 (7th Cir. 1993) (applying Indiana law) (citing United States Fidelity & Guar. Co. v. American Ins. Co., 345 N.E.2d 267, 270 (Ind. 1976)). See also, PSI Energy, Inc. v. Home Ins. Co., 801 N.E.2d 705 (Ind. App. 2004).

B. Reservation of Rights (“ROR”) – Once an insurer determines it has no duty to defend, it must either defend under a reservation of rights or file a declaratory judgment action for a determination of its obligations under the policy. Employers Ins. v. Recticel Foam Corp., 716 N.E.2d 1015, 1025-1026 (Ind. App. 1999).

C. Mechanics of a ROR – An insurer is also excused from its duty to defend when an independent investigation reveals with certainty the claim is outside the policy’s coverage. Recticel Foam Corp., 716 N.E.2d at 1026. Although a federal court opinion, it has been held that if an insurer does not have full knowledge of facts that may allow it to deny coverage, it does not normally waive the defense by not including it in its reservation of rights letter. Armstrong Cleaners, Inc. v. Erie Ins. Exch., 364 F. Supp. 2d 797, 809 (D. Ind. 2005).

D. Occurrence – A construction defect will not be considered an “occurrence” under a CGL policy. R.N. Thompson v. American States Ins. Co., 686 N.E.2d 451 (Ind. Ct. App. 1997). Look to when the insured is actually damaged rather then when the injury- causing act or omission took place. See Baylor Heating and Air Conditioning, Inc. v. Federated Mut. Ins. Co., 987 F.2d 415, 418 (7th Cir. 1993) (applying Indiana law) (citing United States Fidelity & Guar. Co. v. American Ins. Co., 345 N.E.2d 267, 270 (Ind. 1976)).

E. Right to Repair – Ind. Code § 32-27-3-2 provides that a contractor has a right to repair alleged defects before the homeowner can commence a lawsuit. Ind. Code §§ 32- 27-3-12 further provides that upon entering into a contract for sale, construction, or substantial remodeling of a residence, a contractor must provide notice to the homeowner of the contractor’s right to offer to cure the alleged defects.

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – There exists a right of contribution where an insurer failed to provide a defense despite having such a duty. Indiana Ins. Companies v. Granite State Ins. Co., 689 F.Supp. 1549 (S.D. Ind. 1988) (applying

Indiana law). However, the specific means by which liability is allocated between or among concurrent insurers is determined not by an adjustment of equities, but by the provisions of the contracts which the insurers made. Am. Econ. Ins. Co. v. Motorists Mut. Ins. Co., 593 N.E.2d 1242, 1246 (Ind. Ct. App.), aff’d in part, vacated in part on other grounds, 605 N.E.2d 162 (Ind. 1992).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not locate any Indiana cases discussing this issue.

C. Subrogation Issues with Insured – Upon payment of a loss, insurer is generally entitled to subrogation to the extent of its payment on the loss to any right of action that the insured may have against a third party. Doherty v. Davy Songer, Inc., 195 F.3d 919 (7th Cir. 1999) (applying Indiana law).

D. Targeted Tender – Research did not reveal Indiana cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Based on Indiana precedent, it is not likely a duty will be found between an excess carrier and a primary carrier. See Newnam Mfg., Inc. v. Transcontinental Ins. Co., 871 N.E.2d 396, 403 (Ind. App. 2007).

B. Pro Rata Obligations and Who is Excess Issues – The fact that the damaging effects of an occurrence taking place over time continue past the policy period is immaterial under an “all sums” policy. Rather, if coverage under an “all sums” policy is triggered by an occurrence, the insurer will be liable for all amounts related to such occurrence. Allstate Ins. Co. v. Dana Corp., 759 N.E.2d 1049, 1057–58 (Ind. 2001).

C. Other Insurance Clauses – Where excess “other insurance” clauses conflict, the clauses are treated as mutually repugnant and thus disregarded. As a result, each insurer is liable for pro rated amount of damage not to exceed policy limits. United Farm Bureau Mut. Ins. Co. v. Nationwide Mut. Fire Ins. Co., 678 N.E.2d 1165 ( Ind. Ct. App. 1997). See also Indiana Ins. Co. v. American Underwriters, Inc., 304 N.E.2d 783, 787 (1973) (“[W]here ‘other insurance’ clauses conflict . . . they are to be ignored and each insurer is liable for a prorated amount of the resultant damage not to exceed his policy limits. In such a case, there exists dual primary liability.”).

Iowa

I. Duty to Defend Issues A. Coverage Trigger – Iowa adheres to the “injury-in-fact” theory of determining when coverage is triggered. Tacker v. American Family Mut. Ins. Co., 530 N.W.2d 674, 676 (Iowa 1995).

B. Reservation of Rights (“ROR”) – An insurer must specifically reserve its rights to deny coverage under the policy, or else it will waive its coverage defenses. Johnston Equipment Corp of Iowa v. Industrial Indem., 489 N.W.2d 13, 17 (Iowa 1992) (citing Intel Corp. v. Hartford Accident & Indem. Co., 692 F.Supp. 1171, 1180 (N.D. Cal. 1988)).

C. Mechanics of a ROR – “[W]hen an insurer provides a defense under a reservation of rights and rejects a fair and reasonable settlement demand that a reasonable and prudent insurer would pay, the insured is free to consummate the settlement on terms that protect the insured from any personal exposure.” Kelly v. Iowa Mut. Ins. Co., 620 N.W.2d 637, 645 (Iowa 2000). Predicting Iowa law, a federal court has found that an insurer was not entitled to collect its fees and costs in defending an insured under a reservation of rights when it is later determined that coverage was not due under the policy. See Pekin Ins. Co. v. Tysa, Inc., 2006 U.S. Dist. LEXIS 93525, 53-54 (S.D. Iowa Dec. 27, 2006).

D. Occurrence – The time of “occurrence” is when the claimant sustains damages, not when the act or omission causing the damage takes place. Tacker v. American Family Mut. Ins. Co., 530 N.W.2d 674, 676 (Iowa 1995).

E. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Contribution is allowed. See National Sur. Corp. v. Ranger Ins. Co., 260 F.3d 881, 884 (8th Cir.2001) (applying Iowa law regarding insurers’ rights to contribution from each other in case involving other- insurance clauses); Westfield Ins. Co. v. Economy Fire & Cas. Co., 623 N.W.2d 871, 878 (Iowa 2001) (applying, in case where insurance company sought contribution from another insurance company, Iowa’s pro rata approach for situations where two insurance companies provide insurance on the same loss; “the question of their respective insurance obligations is determined by construction of the [policy] language used by the respective insurers”).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not locate any Iowa cases discussing this issue.

C. Subrogation Issues with Insured – Contribution rights acquired by insurer- subrogee against tortfeasor rise no higher than those held by its insured-subrogor against him, and one who must indemnify another cannot, at same time, claim contribution from him. St. Paul Ins. Companies v. Horace Mann Ins. Co., 231 N.W.2d 619 (Iowa 1975).

D. Targeted Tender – Research did not reveal Iowa cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues

A. Obligations between Primary and Excess Carrier – Although cases did not specifically discuss the duty between the two in the construction defect context, one Iowa case held an excess carrier may be entitled to indemnity for costs of defense from primary carrier who has refused to defend. Farm & City Ins. Co. v. U. S. Fidelity and Guar. Co., 323 N.W.2d 259 (Iowa 1982).

B. Pro Rata Obligations and Who is Excess Issues – No federal or state cases in Iowa specifically addressed the issue allocating liability among insurers in an ongoing property damage situation.

C. Other Insurance Clauses – When “other insurance” clauses can reasonably be interpreted to conflict with each other, the clauses are to be ignored, and the two policies should be prorated by the proportion of each policy’s limit to the total of all applicable limits. Union Ins. Co. v. Iowa Hardware Mut. Ins. Co., 175 N.W.2d 413 (Iowa 1970). Excess “other insurance” clauses in primary policy will be disregarded when placed against an excess insurance policy. See Vigilant Ins. Co. v. Allied Prop. & Cas. Ins. Co., 609 N.W.2d 538, 540-41 (Iowa 2000).

Kansas

I. Duty to Defend Issues A. Coverage Trigger – Kansas adheres to the continuous theory. By way of example, coverage under excess liability policies for noise-induced hearing loss claims asserted by insured’s employees was continuously triggered from first exposure to manifestation of injury because the injury occurred simultaneously with exposure to excessive noise and an “injury” is what triggered the policies. Atchison, Topeka & Santa Fe Ry. Co. v. Stonewall Ins. Co., 71 P.3d 1097, 1127 (Kan. 2003). See also Scott v. Keever, 512 P.2d 346 (1973) (recognizing the continuous theory of triggering coverage).

B. Reservation of Rights (“ROR”) – An insurer may be estopped from denying coverage for failure to make a timely and proper reservation of rights. Lone Star Steakhouse & Saloon, Inc. v. Liberty Mut. Ins. Group, 343 F. Supp. 2d 989, 1009 (D. Kan. 2004). Where an insurer has knowledge of a ground to deny coverage under the policy but conducts the defense without disclaiming liability and giving notice of its reservation of rights, the insurer is estopped from later contesting liability. Id.

C. Mechanics of a ROR – “Under Kansas law, when an insurer has undertaken a defense under a liability policy, a reservation of rights regarding defenses to coverage is ineffective unless it makes specific reference to the policy defense being relied upon by the insurer.” Sapp v. Greif, 1998 U.S. App. LEXIS 6668, 17-18 (10th Cir. 1998) (applying Kansas law). This allows “the insured to make an intelligent decision whether to consent to the assumption of his defense and the control of his lawsuit by the carrier, or to take another course.” Id. (citation omitted).

D. Occurrence – A construction defect will likely be considered an “occurrence”

under a CGL policy. Lee Buildes Inc. v. Farm Bureau Mut. Ins. Co., 137 P.3d 486 (Kan. 2006). Court will look to the policy definition of occurrence to determine the meaning. See Cessna Aircraft Co. v. Hartford Acc. & Indem. Co., 900 F.Supp. 1489 (D. Kan. 1995).

E. Right to Repair – Before filing an action against a contractor, the claimant must serve written notice of the claim on the contractor, which describes the claim or claims in detail, thereby giving the contractor a chance to reply with an offer to repair. Kan. Stat. Ann. § 60-4704.

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Kansas cases did not specifically discuss contribution among primary insurers.

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not locate any Kansas cases discussing this issue.

C. Subrogation Issues with Insured – Subrogation is permitted but the insurer’s subrogation rights rise no higher than the insured’s rights would be. Farmers Ins. Co., Inc. v. Farm Bureau Mut. Ins. Co., 608 P.2d 923, 928 (Kan. 1980). Excess carrier is not permitted to file subrogation claim against defense counsel based on legal malpractice. Bank IV Wichita v. Am, Mullins, Unruh, Kuhn & Wilson, 827 P.2d 758 (Kan. 1992).

D. Targeted Tender – Research did not reveal Kansas cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Where there is both primary and excess insurance coverage, limits of primary insurance must be exhausted before primary carrier has right to require excess insurer to contribute to settlement. Associated Wholesale Grocers, Inc. v. Americold Corp., 934 P.2d 65 (Kan. 1997) But see Ins. Co. of N. America v. Med. Protective Co., 570 F. Supp. 964, 973 (D. Kan. 1983) (applying Kansas law) (primary carrier does not have a right to contribution against an excess carrier).

B. Pro Rata Obligations and Who is Excess Issues – Look to the language of the policy to determine how liability is allocated between concurrent insurers. W. Cas. & Sur. Co. v. Trinity Universal Ins. Co., 764 P.2d 1256, 1259 (Kan. Ct. App. 1988). Otherwise, there are no federal or state cases in Kansas specifically addressing the issue of how liability is allocated among insurers for ongoing property damage.

C. Other Insurance Clauses – Courts should focus not on the equities but on the clauses contained in the policies—namely the “other insurance” clauses—to determine the allocation of liability. W. Cas. & Sur. Co. v. Trinity Universal Ins. Co., 764 P.2d

1256, 1259 (Kan. Ct. App. 1988) (where pro rata clause and other insurance clauses conflict, pro rata clause is disregarded and full effect is give to the other insurance clause).

Kentucky

I. Duty to Defend Issues A. Coverage Trigger – Kentucky follows the continuous theory in determining when coverage is triggered. James Graham Brown Foundation, Inc. v. St. Paul Fire & Marine Ins. Co., 814 S.W.2d 273, 278 (Ky. 1991).

B. Reservation of Rights (“ROR”) – An insurer must, in order to prevent waiver from taking effect, promptly provide the insured with unequivocal notice that it will be defending the suit under a reservation of all defenses that it may have based on the policy’s provisions. Western Farm Bureau Mut. Ins. Co. v. Danville Constr. Co., 463 S.W.2d 125, 127 (Ky. 1971). In addition, KY. REV. STAT. § 304.14-280 provides an itemized list of actions that do not constitute a waiver of any provision of a policy or of any defense. They include (1) acknowledging the receipt of notice of a claim, (2) providing forms for reporting a claim, giving related information, making proof of loss, or receiving or acknowledging the receipt of such forms or proofs, (3) investigating a claim or negotiating toward a possible settlement, and (4) providing advance or partial payments under a policy as an accommodation to any person suffering a loss or injury.

C. Mechanics of a ROR – “That an insured may seek to defend himself without counsel after refusing to accept a defense offered under a reservation of rights is one of the risks an insurer must take when it elects to offer a defense under a reservation of rights.” O'Bannon v. Aetna Casualty & Surety Co., 678 S.W.2d 390, 393 (Ky. 1984) (citation omitted). Predicting Kentucky law, a federal court has stated “Kentucky . . . will allow reimbursement for an insurer after a unilateral reservation of rights by the insurer over the objection of the insured. . . . This reimbursement right arises under an implied- in-law contract theory to allow an insurer to seek reimbursement when (1) the insurer has timely asserted a reservation of rights; (2) the insurer has notified the insured of its intent to seek reimbursement; and (3) the insured has meaningful control of the defense and negotiation process.” Travelers Prop. Cas. Co. of Am. v. Hillerich & Bradsby Co., 598 F.3d 257, 268 (6th Cir. Ky. 2010).

D. Occurrence – A construction defect may be considered an “occurrence” under a CGL policy. See Bituminous Cas. Corp. v. Kenway Contracting, Inc., 240 S.W.3d 633 (Ky. 2007) (poor work could be considered an “occurrence” under a CGL policy). The term “occurrence” is more expansive than “accident” in that it can include losses and damage arising over a period of time from continuous or repeated exposure to conditions which would not qualify for coverage under the term “accident.” James Graham Brown Foundation, Inc. v. St. Paul Fire & Marine Ins. Co., 814 S.W.2d 273, 278 (Ky. 1991).

E. Right to Repair – The owner must provide contractor with written notice of claim prior to bringing claim. Ky. Rev. Stat. § 411.258. Upon entering into a contract for the construction of a residence, construction professional must provide notice to the owner of the construction professional’s right to offer to cure construction defects before the homeowner can file a lawsuit. Ky. Rev. Stat. § 411.260.

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – There exists a right of contribution where a concurrent insurer failed to provide a defense despite having such a duty. See Ohio Cas. Ins. Co. v. State Farm Mut. Auto. Ins. Co., 511 S.W.2d 671, 675 (Ky. 1974).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not locate any Kentucky cases discussing this issue.

C. Subrogation Issues with Insured – Excess carrier is not permitted to file subrogation claim against defense counsel based on legal malpractice. Am. Cont'l Ins. Co. v. Weber & Rose, P.S.C., 997 S.W.2d 12 (Ky. Ct. App. 1998).

D. Targeted Tender – Research did not reveal Kentucky cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Absent obligatory policy language, an excess insurer is not required to drop down and cover that portion of a loss once within an insolvent primary insurer’s coverage. Hendrix v. Fireman's Fund Ins. Co., 823 S.W.2d 937, 941 (Ky. Ct. App. 1991).

B. Pro Rata Obligations and Who is Excess Issues – No federal or state cases in Kentucky specifically address liability allocation among insurers for ongoing property damage.

Louisiana

I. Duty to Defend Issues A. Coverage Trigger – Louisiana applies the “manifestation theory.” See Audubon Trace Condominium Ass’n., Inc. v. Brignac-Derbes, Inc., 924 So. 2d 1131 (La. App. 2006) (applying a manifestation trigger). But see Cole v. Celotex Corp., 599 So. 2d 1058 (La. 1992) (applying the exposure theory in an asbestos case involving a liability policy

covering “bodily injury”); Norfolk Southern Corp. v. California Union Ins. Co., 859 So. 2d 201, 205 (La. App. 2003) (stating that the exposure theory is applicable to determine which policies, if any, are triggered in the cases dealing with Louisiana worksites causing long-term environmental damage); and Johnson v. Orleans Parish School Bd., 975 So. 2d 698 (La. App. 2008) (apply continuous trigger in toxic chemical exposure case).

B. Reservation of Rights (“ROR”) – If an insurer has knowledge of facts indicating that there is no coverage under its policy, the insurer must obtain a non-waiver agreement to reserve its rights to disclaim coverage, otherwise it waives policy coverage. Foret v. Terrebonne Towing Co., Inc., 632 So. 2d 344, 347 (La. App. 1993).

C. Insurer’s Ongoing Duties Under ROR – Once the insurer reserves its rights to deny coverage, a conflict of interest arises and the insured is entitled to select its own counsel to take control of the defense at the insurer’s expense if coverage is found. See Smith v. Reliance Ins. Co., 807 So. 2d 1010, 1022 (La. App. 5 Cir. Jan. 15, 2002).

D. Occurrence – Under the manifestation trigger, the term “occurrence” is generally understood to mean the time and/or event when negligence manifests itself by causing actual damages, rather than the commission of the causative negligence. St. Paul Fire & Marine Ins. Co. v. Valentine, 665 So. 2d 43, 46 (La. App. 1995).

E. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – But see Fasullo v. American Druggists’ Ins. Co., 262 So. 2d 810, 814 (La. Ct. App. 4th Cir. 1972) (existence of pro rata clause precluded contribution).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Insurer does not have a right to seek contribution from an additional insured. Adams v. Continental Can Co., Inc., 352 So. 2d 375, 377-378 (La. App. 1977).

C. Subrogation Issues with Insured – Equitable subrogation does not exist at common law in Louisiana, but legal subrogation exists by statute and insurance policies are permitted to contain provision providing for equitable or contractual subrogation. Great Southwest Fire Ins. Co. v. CNA Ins. Companies, 547 So. 2d 1339, 1343 (La. App. 3 Cir. 1989). The insurer-subrogee’s rights, however, rise no higher than the insured’s rights. Pace v. Cage, 419 So. 2d 443, 444 (La. 1982).

D. Targeted Tender – Research did not reveal Louisiana cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues

A. Obligations between Primary and Excess Carrier – The primary insurer does not owe a duty of care or good faith performance to the excess insurer of its insured. Travelers Indem. Co. of Ill. v. Western American Specialized Transportation Services, Inc., 409 F.3d 256, 260 (5th Cir. 2005).

B. Pro Rata Obligations and Who is Excess Issues – In an environmental law case, the Louisiana Court of Appeals allocated a pro rata share of liability to each insurer for ongoing environmental damage based on the total number of years that the contaminating activities took place. Norfolk Southern Corp. v. California Union Ins. Co., 859 So. 2d 201 (La. App. 2003), writ denied, 861 So.2d 580 (La. 2003) (each insurer was liable for groundwater contamination over a period of 80 years because the releases, drips, and spills occurred during each policy period).

Maine

I. Duty to Defend Issues A. Coverage Trigger – Maine applies both the injury-in-fact and continuous trigger theories. Travelers Indem. Co. v. Acadia Ins. Co., Slip Copy, 2009 WL 1320965, *7 (D. Vt. May 08, 2009) (interpreting Maine law) (under Maine law, coverage for progressive property damage is triggered under a standard occurrence-based CGL policy when property damage occurs—without regard to when it becomes manifest—and continuously thereafter while the damage is ongoing.).

B. Reservation of Rights (“ROR”) – Yes; insurers may defend under a reservation of rights. See Patrons Oxford Ins. Co. v. Harris, 905 A.2d 819 (Me. 2006).

C. Mechanics of a ROR – “[A]n insured being defended under a reservation of rights is entitled to enter into a reasonable, noncollusive, nonfraudulent settlement with a claimant, after notice to, but without the consent of, the insurer.” Patrons Oxford Ins. Co. v. Harris, 905 A.2d 819, 828 (Me. 2006). Maine law has not yet been settled as to (1) whether a liability insurer waives all its coverage defenses by proceeding with the defense of the insured, or (2) whether it may validly elect to defend under a reservation of its rights to refuse later to indemnify on the ground of noncoverage, but if an insurer commences a declaratory judgment action in bad-faith, the insured is entitled to reasonable attorney’s fees in defending the declaratory judgment action. Union Mut. Fire Ins. Co. v. Topsham, 441 A.2d 1012, 1018-1019 (Me. 1982).

D. Right to Repair – No statute

II. Contribution Issues

A. Primary Carrier Ability to Pursue Each – There is a right of contribution among primary carriers where a carrier failed to provide a defense despite having a duty to do so. State Farm Mut. Auto. Ins. Co. v. Universal Underwriters Ins. Co., 513 A.2d. 283, 286- 287 (Me. 1986).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not locate any Maine cases discussing this issue.

C. Subrogation Issues with Insured – An insurer will likely be subrogated to the rights of the insured and be permitted to bring an action for recovery of money paid. However, public policy favors enforcement of a waiver of insurer’s subrogation rights to extent loss is covered by insurance even in the face of claims of gross negligence or willful and wanton misconduct. Reliance National Indem. v. Knowles Industrial Services, Corp., 868 A.2d 220 (Me. 2005).

D. Targeted Tender – Research did not reveal Maine cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Research did not locate any Maine cases discussing this issue in the context of construct defect cases.

B. Pro Rata Obligations and Who is Excess Issues – There are no federal or state cases in Maine specifically addressing the issue of how liability is allocated among insurers for ongoing property damage.

C. Other Insurance Clauses – Where an excess clause and a pro rata clause appear in concurrently effective policies, the pro rata clause is disregarded and full effect is given to the excess clause, making the pro rata policy the primary insurance. Royal Globe Ins. Co. v. Hartford Acc. and Indem. Co., 485 A.2d 242 (Me. 1984). In those instances where the policies in question do not contain pro rata clauses, Maine courts will likely hold that policies with mutually repugnant excess other insurance clauses contribute equally to the loss, rather than pro rate. York Mut. Ins. Co. v. Continental Ins. Co., 560 A.2d 571 (Me. 1989).

Maryland

I. Duty to Defend Issues A. Coverage Trigger – The continuous trigger theory is applied in Maryland. This trigger was applied in a case involving lead-based poisoning that continued for several years, triggering coverage under multiple policies. Maryland Cas. Co. v. Hanson, 902 A.2d 152 (Md. App. 2006). Maryland courts have also applied a manifestation trigger of coverage. See, Mraz v. Canadian Universal Ins. Co., 804 F.2d 1325 (4th Cir. 1986) (holding that the occurrence is the time the damage is first discovered).

B. Reservation of Rights (“ROR”) – If an insurer does not expressly reserve the right for reimbursement of defense fees and there is no duty to indemnify, the “insurer cannot withdraw its agreement to pay the defense fees incurred by an insured.” Applied Signal & Image Tech., Inc. v. Harleysville Mut. Ins. Co., 252 F. Supp. 2d 215 (D. Md. 2003).

C. Insurer’s Ongoing Duties Under ROR – Maryland courts have held that a conflict of interest will not exist simply because an insurer defends the insured under a reservation of rights. Driggs Corp. v. Pennsylvania Manufacturers' Ass'n Ins. Co., 1999 U.S. App. LEXIS 9182 (4th Cir. 1999) (insured not entitled to select their own counsel at insurer’s expense). The Maryland insurance code provides, however, an insurer does not waive its right to any coverage defense simply by: (1) acknowledging the receipt of notice of a claim; (2) providing forms for reporting a loss or a claim or for proof of loss (3) investigating a claim; or (4) negotiating a settlement for a claim. MD. INS. CODE ANN. § 12-105.

D. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Research did not locate any Maryland cases discussing the issue of primary carriers pursuing each other for contribution.

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any Maryland cases discussing a primary carrier’s right to seek contribution from an additional insured’s own carrier in the construction defect context.

C. Subrogation Issues with Insured – Excess insurer is subrogated to the rights of the insured against the primary insurer where the primary insurer breaches its duty to settle owed to the insured and thus forcing the excess to pay the claim. Fireman's Fund Ins. Co. v. Continental Ins. Co., 519 A.2d 202, 204–05 (1987).

D. Targeted Tender – Research did not reveal Maryland cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Maryland courts allow an excess carrier to sue a primary carrier for bad faith refusal to settle within the primary policy limits; this effectively creates a duty on the part of the primary insurer to the excess insurer. Fireman's Fund Ins. Co. v. Continental Ins. Co., 519 A.2d 202 (Md. 1987).

B. Pro Rata Obligations and Who is Excess Issues – Time on the risk; the Maryland Court of Appeals has found that the “joint and several” or “all sums” allocation method is incompatible with the injury-in-fact and continuous trigger theories, and therefore held

that the damage should be allocated amongst the insurers based on their time on the risk. Mayor & City Council of Baltimore v. Utica Mut. Ins. Co., 802 A.2d 1070, 1102 (Md. App. 2002). An insured is liable on a pro rata basis for any non-insured period. Aetna Cas. & Sur. Co. v. Wallace & Gale Co. (In re Wallace & Gale Co.), 284 B.R. 557, 559 (D. Md. 2002) (asbestos specific).

C. Other Insurance Clauses – Where an excess clause and a pro rata clause appear in concurrently effective policies, the pro rata clause is disregarded and full effect is given to the excess clause, making the pro rata policy the primary insurance. Nolt v. U.S. Fidelity and Guaranty Co., 329 Md. 52, 617 A.2d 578 (1993). Where two primary policies both contain excess “other insurance” clauses, the excess clauses are generally treated as mutually repugnant and the loss is pro rated between the insurers. Universal Underwriters Ins. Co. v. Allstate Ins. Co., 638 A.2d 1220 (1994).

Massachusetts

I. Duty to Defend Issues A. Coverage Trigger – Massachusetts courts have utilized the injury-in-fact, manifestation, and exposure theories at different times to determine when covergage will be triggered. Injury-in-fact: Generally, within the meaning of a comprehensive liability policy, it is the time of damage that is material; thus, the occurrence takes place when the complaining party actually is injured. Smartfoods, Inc. v. Northbrook Property and Cas. Co., 618 N.E.2d 1365, 1369 (Mass. App. 1993). Cf. Trustees of Tufts Univ. v. Commercial Union Inc. Co., 616 N.E.2d 68 (Mass. 1993) (holding coverage may be triggered before discovery or manifestation of the damage, and thus application of the manifestation trigger was inappropriate). Manifestation: Massachusetts applied a manifestation trigger in bodily injury/exposure cases. But the courts have used the trigger to find the most coverage available to the insured, not to adopt a consistent trigger. See Eagle Picher Ind., Inc. v. Liberty Mut. Ins. Co., 523 F.Supp. 110, 118 (D.C. Mass 1981). Exposure Theory: Applied in asbestos cases; exposure to, or inhalation of, asbestos, which results in injury, and not the injury itself, were the triggering event under excess indemnity policies issued to manufacturer of asbestos containing products and that included provision that insurer would pay claims “caused by occurrence anywhere during the policy period.” A.W. Chesterton Co. v. Massachusetts Insurers Insolvency Fund, 838 N.E.2d 1237, 1252 (Mass. 2005).

B. Reservation of Rights (“ROR”) – Where upon assuming a defense, an insurer learns more about a case, the insurer may disclaim coverage within a reasonable time. If an insurer assumes a defense without a reservation of rights and the insured detrimentally relies on what the insurer did, the insurer may be estopped from later denying coverage. TransAmerica Ins. Group v. Turner Constr. Co., 601 N.E.2d 473, 477 (Mass. App. Ct. 1992).

C. Mechanics of a ROR – An insurer will only be obligated to pay the “reasonable” costs incurred in the defense of the insured. Magoun v. Liberty Mut. Ins. Co., 195 N.E.2d 514, 519 (Mass. 1964).

D. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Massachusetts courts have never recognized the existence of a direct duty between concurrent primary insurers. The general rule is that concurrent primary insurers of the same insured are only permitted recovery under theories of equitable contribution, subrogation or assignment. Aetna Casualty & Surety Co. v. Chicago Insurance Co., 994 F.2d 1254, 1257 (7th Cir.1998).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Where a contractor was named as an “additional insured” in policy A, but the contractor also had its own CGL coverage through policy B, a clause in policy B stating that policy B would not have to contribute to cover any losses where the contractor was covered as an additional insured, a Massachusetts appellate court enforced the policy B provision. Transamerica Ins. Group v. Turner Const. Co., 601 N.E.2d 473, 476-7 (Mass. App. Ct. 1992).

C. Subrogation Issues with Insured – Insurer is entitled to seek subrogation of the insured’s rights, and this subrogation includes prejudgment interest if otherwise available. Neitlich v. Amica Mut. Ins. Co., 7 Mass. App. Ct. 661, 389 N.E.2d 1017, 1019 (1979).

D. Targeted Tender – Research did not reveal Massachusetts cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Massachusetts Supreme Judicial Court has been trending away from a finding that excess policies have a duty to drop down to provide coverage where the excess policies state they do not provide coverage until the underlying policy has been “exhausted.” See Massachusetts Bay Transportation Authority v. Allianz Insurance Company, 597 N.E.2d 439 (1992); Vickodil v. Lexington Ins. Co., 587 N.E.2d 777 (1992) (no duty to drop down absent obligatory language). See also Barrett v. Chin, 843 F.Supp. 783 (D. Mass. 1994).

B. Pro Rata Obligations and Who is Excess Issues – Insurers are jointly and severally liable for continuing environmental pollution damage. See Rubenstein v. Royal Ins. Co. of Amer., 694 N.E.2d 381, 388 (Mass. App. 1998). Yet, in Boston Gas Co. v. Century Indemnity Co., 910 N.E.2d 290 (Mass. 2009), the Supreme Judicial Court refused to apply Rubenstein and instead applied a pro-rata allocated based upon time-on-the-risk. See also Kleenit, Inc. v. Sentry Ins. Co., No. 2004-10351 (D. Mass. July 30, 2007) (under

Massachusetts “joint and several” approach, non-settling insurer is obligated to pay 100% of defense costs; insurer may seek post-judgment credit for settling insurer’s payments).

C. Other Insurance Clauses – Where two excess policies contain “other insurance” clauses, the clauses are mutually repugnant and courts should attempt to reconcile the policies as though they were primary policies. Aetna Cas. & Sur. Co. v. Home Ins. Co., 689 N.E.2d 1355, 1358-59 (Mass. App. Ct. 1998) (ordering proration).

Michigan

I. Duty to Defend Issues A. Coverage Trigger – Michigan has adopted the injury-in-fact theory, and under this theory coverage is triggered when actual property damage first occurs. Inland Waters Pollution Control, Inc. v. National Union Fire Ins. Co., 997 F.2d 172 (6th Cir. 1993).

B. Reservation of Rights (“ROR”) – Michigan allows insurers to contest coverage of a claim by proceeding in one of two different ways: first, the insurer can defend the insured and reserve its right by providing notice to the insured; or, secondly, the insurer can deny coverage and refuse to defend the insured.

C. Mechanics of a ROR – If an insurer reserves its right to deny coverage, the same attorney cannot represent both insurer and insured. Cent. Mich. Bd. of Trs. v. Emplrs Reinsurance Corp., 117 F. Supp. 2d 627, 632-633 (D. Mich. 2000). “[T]he insured has no absolute right to select the attorney himself, as long as the insurer exercises good faith in its selection and the attorney selected is truly independent.” Id. (emphasis added).

D. Occurrence – A construction defect will not be considered an “occurrence” under a CGL policy. Hawkeye-Security Ins. Co. v. Vector Construction Co., 460 N.W.2d 329 (Mich. Ct. App. 1990).

E. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Where there are two primary insurers, an insurer should be entitled to contribution from another insurer with regard to the defense costs incurred before such other insurer was put on notice. See Celina Mut. Ins. Co. v. Citizens Ins. Co. of America, 349 N.W.2d 547, 551 (Mich. 1984).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any Michigan cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – Insurers are entitled to subrogation but the insurer-subrogee’s rights rise no higher than those of the insured. Foremost Life Ins. Co.

v. Waters, 278 N.W.2d 688, 690 (Mich. App. Ct. 1979), judgment rev'd on other grounds, 329 N.W.2d 688 (Mich. 1982).

D. Targeted Tender – Research did not reveal Michigan cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Primary insurer is entitled to contribution from excess insurer if the amount plaintiff originally sought exceeded the primary insurer’s limits. Celina Mut. Ins. Co. v. Citizens Ins. Co. of America, 349 N.W.2d 547, 550-551 (Mich. 1984). Primary and excess insurers should pro rate costs of defense among primary and excess insurers, based upon their exposure because this leads to a more equitable distribution of the cost of litigation among the insurers. Celina Mutual Insurance Co. v. Citizens Insurance Co., 349 N.W.2d 547, 550 (Mich. 1984) A primary insurer owes an excess insurer a direct duty of good faith and fair dealing. Frankenmuth Mut. Ins. Co. v. Cont'l Ins. Co., 537 N.W.2d 879, 881 n.6 (Mich. 1995).

B. Pro Rata Obligations and Who is Excess Issues – Michigan uses the pro-rata method of allocation where there is “incremental environmental degradation.” City of Sterling Heights v. United Nat’l. Ins. Co., 2007 WL 2225883 at *3 (E.D. Mich., Aug. 1, 2007); Arco Indus. Corp. v. American Motorists Ins. Co., 232 Mich. App. 146, 169 (Mich. App. 1998). However, where there is ongoing environmental damage over many years, the “time on the risk” method is used to allocate liability. Wolverine World Wide, Inc. v. Liberty Mut. Ins. Co., 2007 WL 705981, *3 (Mich. App. 2007). For uninsured periods, the insured is responsible for that pro-rata share of the damages. Indiana Ins. Co. v. Maul, No. 02-043886-CZ-1 (Mich. Cir. Ct., Saginaw County 2003) (holding that insurer was entitled to reimbursement from insured on a pro-rata basis for uninsured periods in a lead poisoning case).

C. Other Insurance Clauses – Primary policy’s excess “other insurance” clause will have no effect on coverage under excess policy; excess policies are regarded as true excess coverage over and above all primary policies. Bosco v. Bauermeister, 571 N.W.2d 509, 519 (Mich. 1997).

Minnesota

I. Duty to Defend Issues A. Coverage Trigger – Minnesota follows the actual injury theory for triggering coverage. Donnelly Brothers Construction Co. v. State Auto Property & Casualty Ins. Co., 759 N.W.2d 651 (Minn. App. Ct. 2009); See also SCSC Corp. v. Allied Mut. Ins. Co., 536 N.W.2d 305 (Minn. 1995).

B. Reservation of Rights (“ROR”) – Where an insurer defends a claim with full knowledge of the facts and does not reserve its rights, the insurer may be estopped from later denying coverage. Mut. Serv. Cas. Ins. Co. v. Luetmer, 474 N.W.2d 365, 368 (Minn. App. 1991) (citation omitted).

C. Mechanics of a ROR – The Minnesota Supreme Court has indicated that absent prejudice to the insured, a late reservation of rights will not result in a waiver of the insurer’s right to assert a policy exclusion. St. Paul School District v. Columbia Transit Corporation, 321 N.W.2d 41, 47 (Minn. 1982) (notice not given until shortly before trial). In another case, an insurer was not estopped from denying coverage based on a policy exclusion it did not include in its initial reservation of rights letter but that it referred to in a later letter. Malakowsky v. Johannsen, 374 N.W.2d 816, 817-18 (Minn. Ct. App. 1985).

D. Occurrence – An occurrence takes place not when the policyholder engages in the wrongful act, but at the time the complaining party was actually damaged. Parr v. Gonzalez, 669 N.W.2d 401, 406 (Minn. App. 2003). Where the work of a subcontractor causes damages, the faulty workmanship of the subcontractor will be attributed to the general contractor thus the exclusion for damage caused by the insured-general contractor’s work will apply to bar coverage. See Knutson Constr. Co. v. St. Paul Fire and Marine Ins. Co., 396 N.W.2d 229, 236-37 (Minn. 1986) (“whether the work was ‘done by’ or ‘on behalf of’ the general contractor is irrelevant to the analysis. The completed product is to be viewed as a whole, not as a ‘grouping’ of component parts. . . .”) (interpreting a Broad Form Property Damage endorsement excluding coverage for “your work”). For a more recent case reaching the opposite conclusion, see Westfield Ins. Co. v. Weis Builders, Inc., 2004 U.S. Dist. LEXIS 13658 (D. Minn. July 1, 2004) (the “your work” exclusion does not apply to exclude coverage for those claimed damages that involve damaged work or work out of which the damage arises if that work was performed by a subcontractor on the general contractor’s behalf).

E. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – An insurance carrier should not be able to seek contribution from another co-insurer since both companies have independent obligations to defend the assured. See Iowa Nat'l Mutual Ins. Co. v. Universal Underwriters Ins. Co., 150 N.W.2d 233 (Minn. 1967).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any Minnesota cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – Primary policy’s excess “other insurance” clause will have no effect on coverage under excess policy; excess policies are regarded as true excess coverage over and above all primary policies. Smith v. Wausau

Underwriters Ins. Co., 977 S.W.2d 291, 293-95 (Mo. Ct. App. 1998).

D. Targeted Tender – Research did not reveal Minnesota cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Excess insurer is not obligated to contribute to the defense of the insured so long as the primary insurer is required to defend. Nordby v. Atlantic Mut. Ins. Co., 329 N.W.2d 820, 824 (Minn. 1983). Absent obligatory language in the policy, excess insurer is not required to drop down and cover that portion of a loss once within an insolvent primary insurer’s coverage. Am. Hoist & Derrick Co. v. Employers' of Wausau, 454 N.W.2d 462, 467 (Minn. Ct. App. 1990) (citation omitted).

B. Pro Rata Obligations and Who is Excess Issues – When damages are continuous and indivisible, damages will be allocated pro rata by each insurer’s time on the risk, from the closing date of the sale of the property to the date the insured received notice of the claim. St. Paul Fire & Marine Ins. Co. v. A.P.I., Inc., 738 N.W.2d 401, 410 (Minn. App. 2007); SCSC Corp. v. Allied Mut. Ins. Co., 536 N.W.2d 305, 318 (Minn. 1995); see also Wooddale Builders, Inc. v. Md. Cas. Co., 722 N.W.2d 283, 283 (Minn. 2006). In order to do so, the Minnesota Supreme Court created an equation: A/B x C = D; where A is each insurer’s time on the risk, B is the total period over which liability is allocated, C is the total damages to be allocated, and D is the damages allocated to each individual insurer. Wooddale, 722 N.W.2d at 291. However, where there was no insurance coverage available, the liability period ends with the end of the policy year in which the insured received notice of the claim or with the end of the last period of insurance coverage, whichever is earlier. Id.

C. Other Insurance Clauses – Order of primary policy coverage is determined by looking to each policies’ “other insurance” provisions. See N. Star Mut. Ins. Co. v. Midwest Family Mut. Ins. Co., 634 N.W.2d 216, 222 (Minn.Ct.App.2001). If the “other insurance” clauses conflict, then the court looks beyond the language and assigns primary coverage to the policy that more closely contemplated the risk. Christensen v. Milbank Ins. Co., 658 N.W.2d 580, 587 (Minn.2003). Where the policies equally contemplate the risk, Minnesota courts pro rate the loss among the applicable policies. See Cargill, Inc. v. Commercial Union Ins. Co., 889 F.2d 174, 179-80 (8th Cir.1989) (applying Minn. law).

Mississippi

I. Duty to Defend Issues A. Coverage Trigger – While potentially leaning towards a manifestation trigger, Mississippi courts have not directly addressed the trigger issue. In determining whether there has been an occurrence to trigger coverage under a liability policy, courts consider

whether the chain of events leading to the injuries were set in motion by the insured without the intervention of third parties. Rogers v. Allstate Ins. Co., 938 So.2d 871 (Miss. App. 2006).

B. Reservation of Rights (“ROR”) – Yes; an insurer may subsequently deny coverage if it defends its insured under a reservation of rights. Moeller v. American Guar. & Liab. Ins. Co., 707 So. 2d 1062, 1069–71 (Miss. 1996).

C. Mechanics of a ROR – When reserving its rights to deny coverage, the insurer has the special obligations of (1) providing the insured with the opportunity to select his own counsel, and (2) paying the legal fees that are reasonably incurred in the defense. See Moeller v. American Guar. & Liab. Ins. Co., 707 So. 2d 1062, 1069–71 (Miss. 1996). Under Mississippi law, an insurer defending an insured under a reservation of rights has a duty to provide independent counsel to the insured. Moeller, 707 So. 2d at 1069.

D. Occurrence – A construction defect will not be considered an “occurrence” under a CGL policy. ACS Construction Co. Inc. v. CGU Ins. Co., 332 F.3d 885 (5th Cir. 2003).

E. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Insurers can recover contribution from another insurer by showing the other insurer was legally obligated to settle, did not do so and that the amount to the injured party was reasonable. Guidant Mut. Ins. Co. v. Indemnity Ins. Co. of North America, 13 So.3d 1270 (Miss. 2009). Insurer who voluntarily pays cannot recover contribution from other insurers if the payment was made without being due unless payment was made under compulsion, fraud or mistake of fact. McDaniel Bros. Const. Co. v. Burk-Hallman Co., 175 So. 2d 603, 605 (Miss. 1965). Payments made by virtue of legal obligation, however, are not voluntary and are fully recoverable. Genesis Ins. Co. v. Wausau Ins. Co., 343 F.3d 733, 736 (5th Cir. 2003).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – An insurer owes the same duty to both a name insured and an unnamed insured when they are covered by the same policy. Grange Mut. Cas. Co. v. U.S. Fidelity & Guar. Co., 853 So. 2d 1187 (Miss. 2003).

C. Subrogation Issues with Insured – Insurer is permitted to exercise the right of subrogation, but an insurer has no right of subrogation against its own insured for a claim arising from the very risk for which the insured was covered. Hutson v. State Farm Fire & Cas. Co., 954 So. 2d 514 (Miss. App. 2007) (citing Prof. Jeffrey Jackson, Miss. Ins. L. & P. § 13:14 (MLI Press 2001)). The insured must also be “made whole” before an insurer can exercise its contractual right to subrogation. Federated Mut. Ins. Co. v. McNeal, 943 So. 2d 658 (Miss. 2006).

D. Targeted Tender – Although a recent federal court case arising from the northern district of Mississippi briefly passes on the issue of “targeted tender,” research did not reveal any Mississippi cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers. See Estate of Bradley v. Royal Surplus Lines Ins. Co., 2010 U.S. Dist. LEXIS 67466, 32-33 n. 15 (N.D. Miss. July 6, 2010).

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Primary insurer does not have a duty of good faith to an excess carrier. Nat’l Union Fire Ins. Co. of Pittsburgh v. Blasio, 2008 WL 2224886 (N.D. Miss. May 27, 2008). There is no duty for an excess to drop down and replace an insolvent primary. National Union Fire Ins. Co. v. Mississippi Ins. Guar. Ass’n, 990 So. 2d 174 (Miss. 2008).

B. Pro Rata Obligations and Who is Excess Issues – Competing primary insurers are apportioned liability on a pro rata basis based on the policy limits unless an operable “other insurance” clause dictates otherwise. Allstate Ins. Co. v. Chicago Ins. Co., 676 S. 2d 271 (Miss. 1996).

C. Other Insurance Clauses – Competing “other insurance” clauses are mutually repugnant and must be disregarded; once the clauses are disregarded, the amount of liability insurance will be on a pro rata basis. Travelers Indem. Co. v. Chappell, 246 So. 2d 498 (Miss. 1971).

Missouri

I. Duty to Defend Issues A. Coverage Trigger – Missouri follows the injury-in-fact theory. Independent Petrochemical Corp. v. Aetna Casualty & Sur. Co., 654 F. Supp. 1334 (D.D.C. 1986) (interpreting Missouri law). See also, Monsanto Co.v. Aetna Cas. And Surety Co., Del Super., C.A. 88C-JA-118 (unpublished) (interpreting Missouri law and finding that “injury-in-fact” is applicable). Coverage will likely be lost where the insured fails to cooperate by way of taking his Fifth Amendment right not to provide information to his insurer or the defense counsel hired by the insurer. See Medical Protective Co. v. Bubenik, 594 F.3d 1047, 1052-1053 (8th Cir. 2010) (applying Missouri law).

B. Reservation of Rights (“ROR”) – An insurer must enter a reservation of rights agreement with the insured to preserve its coverage defenses, or else it waives them. Missouri Managerial Corp. v. Pasqualino, 323 S.W.2d 244, 250 (Mo.App. 1959).

C. Mechanics of a ROR – To effect a proper reservation of rights, the insurer must notify its insured that its defense of the action should not be construed as a waiver of any policy defense, and the insured must accept the defense of the action without protest and with full knowledge of the insurer’s position as to its right to assert non-liability. Atlanta Cas. Co. v. Stephens, 825 S.W.2d 330, 333 (Mo. App. 1992) (citing Brooner & Assoc. v.

Western Cas. & Sur. Co., 760 S.W.2d 445, 447 (Mo. App. 1988)). Under Missouri law, an insurer cannot force an insurer to accept a reservation of rights defense. United Fire & Cas. Co. v. Gravette, 182 F.3d 649, 657 (8th Cir. 1999) (en banc) (applying Missouri law). “When an insured exercises the right to reject a defense with reservation of rights by the insurer, an insurer can proceed in one of only three ways: first, represent the insured without a reservation of rights; second, withdraw from representing the insured altogether; or, lastly, file a declaratory judgment action to determine the scope of the policy's coverage.” Id. (citation omitted).

D. Occurrence – A construction defect will not be considered an “occurrence” under a CGL policy. Hawkeye-Security Ins. Co. v. Davis, 6 S.W.3d 419 (Mo. Ct. App. 1999).

E. Right to Repair – MO. REV. STAT. § 436.356.1 requires that before commencing an action against a contractor regarding a construction defect, a claimant must deliver written notice to the contractor, thereby giving the contractor an opportunity to cure the alleged defect. MO. REV. STAT. § 436.353.1 provides further the contractor shall give notice to each homeowner upon entering into a contract for sale, construction, or substantial remodel of a residence of the contractor’s right to offer to cure alleged construction defects.

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – No right to contribution where each of several insurers contracts to pay the proportion of the loss that the amount insured by the insurer bears to all the insurance of the property. The payment of the whole loss by any one of them will not discharge the liability of the other insurers because each insurance contract is independent of each other. Commercial Union Ins. Co. of New York v. Farmers Mut. Fire Ins. Co. of St. Louis County, 457 S.W.2d 224 (Mo. Ct. App. 1970).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any Missouri cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – “An insurer, upon paying a loss, is subrogated to the insured's right of action against any other person responsible for the loss.” Borserine v. Maryland Cas. Co., 112 F.2d 409, 414 (8th Cir. 1940). “[A]llow[ing] an insurer to sue for recovery against one of its own insured would violate the basic principles of subrogation and equity, as well as violate sound public policy.” Jos. A. Bank Clothiers, Inc. v. Brodsky, 950 S.W.2d 297, 303 (Mo. Ct. App. 1997).

D. Targeted Tender – An insured’s failure to request the insurer to participate in a claim will preclude a participating insurer from subsequently seeking apportionment of loss or contribution from the non-participating insurer even if that policy covers the same risk. See Greer v. Zurich Ins. Co., 441 S.W.2d 15, 34 (Mo. 1969).

III. Horizontal versus Vertical Issues

A. Obligations between Primary and Excess Carrier – Missouri does not recognize a direct duty between primary and excess insurers. Reliance Ins. Co. v. Chitwood, 433 F.3d 660, 664 (8th Cir.2006). Missouri does not recognize a duty of good faith owed by an excess insurer to a primary insurer. West American Insurance Company v. RLI Insurance Company, 2007 WL 3376878 (W.D.Mo. Nov.6, 2007). But see Allstate Ins. Co. v. Hartford Accid. & Indemnity Co., 311 S.W.2d 41 (Mo.Ct.App.1958) (court held, without discussion, that the primary carrier was obligated to indemnify completely the secondary carrier for the expenses the latter incurred in defending the assured).

B. Pro Rata Obligations and Who is Excess Issues – There are no federal or state cases in Missouri specifically addressing the issue of how liability is allocated among insurers for ongoing property damage.

C. Other Insurance Clauses – Excess “other insurance” clauses in primary policy will be disregarded when placed against an excess insurance policy. See Smith v. Wausau Underwriters Ins. Co., 977 S.W.2d 291, 293-95 (Mo. Ct. App. 1998). Absent obligatory language in the policy, excess insurer is not required to drop down and cover that portion of a loss once within an insolvent primary insurer’s coverage. Fred Weber, Inc. v. Granite State Ins. Co., 829 S.W.2d 589, 590-91, 593 (Mo. Ct. App. 1992).

Montana

I. Duty to Defend Issues A. Coverage Trigger – Montana applies the injury-in-fact trigger. See Travelers Ins. Co. v. Western Fire Ins. Co., 709 P.2d 639, 641 (Mont. 1985); Swank Enterprises, Inc. v. All Purpose Services, Ltd., 154 P.3d 52 (Mont. 2007).

B. Reservation of Rights (“ROR”) – Where an insurer defends a claim against the insured without a reservation of rights and with actual or presumed knowledge of the relevant facts, it cannot then withdraw and deny coverage under the policy. Portal Pipe Line Co. v. Stonewall Ins. Co., 845 P.2d 746, 750 (Mont. 1993). It is assumed in this situation that the insured is prejudiced by this non-action by the insurer. Id.

C. Mechanics of a ROR – An insurer may recover its defense costs if the insurer did not have a duty to defend the claims under the policy where it (1) timely and explicitly reserved the right to recoup costs; and (2) provided specific and adequate notice to the insured of the possibility of reimbursement. Travelers Cas. & Sur. Co. v. Ribi Immunochem Research, 108 P.3d 469, 480 (Mont. 2005).

D. Occurrence – When dealing with an “occurrence” policy, liability is determined at the time the injury occurred. Travelers Ins. Co. v. Western Fire Ins. Co., 709 P.2d 639, 641 (Mont. 1985).

E. Right to Repair – Montana requires that the construction professional be provided notice of a construction dispute prior to commencing an action for a construction defect.

The statute’s procedures include an opportunity for the construction professional to inspect the premises and submit a written offer to, for example, remedy the construction defect at no cost to the claimant or to offer to compromise and settle the claim through a combination of repair and monetary payment. Mont. Code Ann. §70-19-427. Damages available in construction defect suits are set forth in Mont. Code Ann. §70- 19-428. They include the reasonable costs of repair, reasonably necessary expenses of temporary housing, and reasonable costs and attorneys’ fees.

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – The insurer paying the whole loss has a right of contribution as to a ratable proportion of the amount paid by the insurer. Casualty Indem. Exchange Ins. Co. v. Liberty Nat. Fire Ins. Co., 902 F.Supp. 1235 (D. Mont. 1995 (applying Montana law). Insurer also has a right of contribution where a concurrent insurer failed to provide a defense despite having an obligation to do so. Liberty Mut. Ins. Co. v. U. S. Fidelity & Guaranty Co., 232 F. Supp. 76 (D.C. Mont. 1964) (applying Montana law).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any Montana cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – The insurer’s subrogation rights do not rise any higher than those of the insured. St. Paul Fire & Marine Ins. Co. v. Glassing, 887 P.2d 218, 220–21 (Mont. 1994). Where an insurance policy contains a subrogation provision and this provision somehow limits the insurer’s right to subrogation, the insurer will not be entitled to equitable subrogation in contravention of the terms of the policy. Skauge v. Mountain States Tel. & Tel. Co., 565 P.2d 628, 630 (Mont. 1977).

D. Targeted Tender – Predicting how the Montana Supreme Court would rule, a federal court in Montana found that Montana courts would follow the “targeted tender” rule and allow an insured to select one of its multiple insurers to defend, and the remaining insurers who were not tendered would have neither a duty to defend nor to contribute to any settlement. Casualty Indem. Exch. Ins. Co. v. Liberty Nat’l Fire Ins. Co., 902 F. Supp. 1235, 1239 (D. Mont. 1995).

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Primary carrier does not have an independent duty to the excess insurer. Royal Indem. Co. v. Colmore, 2006 WL 2382465, *2 (D. Mont. July 14, 2006). Contribution from excess policy is allowed where the amount plaintiff originally sought exceeded the primary policy’s limits. American States Ins. Co. v. Angstman Motors, Inc., 343 F.Supp. 576 (D.C. Mont. 1972).

B. Pro Rata Obligations and Who is Excess Issues – Where two primary policies are primary, the policy that is made “excess” by virtue of its “other insurance” can be required to contribute to defense, but this is not the case when the other policy is a “true

excess” policy. Guaranty Nat. Ins. Co. v. American Motorists Ins. Co., 758 F.Supp. 1394 (D. Mont. 1991)

C. Other Insurance Clauses – Where an excess clause and a pro rata clause appear in concurrently effective primary policies, the pro rata clause is disregarded and full effect is given to the excess clause, making the pro rata policy the primary insurance. Mountain West Farm Bureau Mut. Ins. Co. v. Credit General Ins. Co., 805 P.2d 569 (Mont. 1991).

Nebraska

I. Duty to Defend Issues A. Coverage Trigger – Nebraska applies the injury-in-fact trigger. See Farr v. Designer Phosphate & Premix Int'l, 570 N.W.2d 320 (Neb. 1997).

B. Reservation of Rights (“ROR”) – “Reservation of rights is a means by which prior to determination of the liability of the insured, the insurer seeks to suspend the operation of waiver and estoppel. When coverage is in doubt, the insurer may offer to defend the insured, reserving all of its policy defenses in case the insured is found liable. Upon such notification the insured may either accept the reservation of rights and allow the company to defend or it may reject the reservation of rights and take over the defense itself.” Nat'l Am. Ins. Co. v. W&G, Inc., 2005 U.S. Dist. LEXIS 4264 (D. Neb. Mar. 8, 2005) (citation omitted).

C. Mechanics of a ROR – Where there is a conflict of interest between the insurer and the insured once the insurer has reserved its rights, the insured has the option of taking over its own defense. See First United Bank v. First American Title Ins. Co., 496 N.W.2d 474, 481 (Neb. 1993). An insurer is estopped from asserting non-coverage, despite an applicable exclusion in the policy, if the insured can satisfy a three part test: 1) the insurer had sufficient knowledge of facts or circumstances indicating non-coverage; 2) the insurer assumed or continued defense of the insured without a reservation of rights; and 3) the insured suffered some type of harmed or prejudiced as a result of the insurer’s actions. First United Bank of Bellevue, 496 N.W.2d 474, 480 (Neb. 1993).

D. Occurrence – The time of the occurrence of an accident, within the meaning of a liability indemnity policy, is the time when the complaining party was actually damaged as opposed to the time when the wrongful act was committed. Farr v. Designer Phosphate & Premix Int'l, 570 N.W.2d 320 (Neb. 1997).

E. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Research did not reveal any Nebraska cases discussing a primary carrier’s ability to pursue other primary carriers.

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Under Nebraska law, an insurer may not have a right of subrogation against an additional insured. SFH, Inc. v. Millard Refrigerated Services, Inc., 339 F.3d 738 (8th Cir. 2003).

C. Subrogation Issues with Insured – An insurer is entitled to subrogation, but the insurer-subrogee’s rights rise no higher than those of the insured. State Auto. and Cas. Underwriters v. Farmers Ins. Exchange, 282 N.W.2d 601, 603 (Neb. 1979). Under Nebraska law, an insurer does not waive its right to subrogation against another insurer based on the first insurer’s conduct with its own insured. National American Ins. Co. v. W & G, Inc., 439 F.3d 943 (8th Cir. 2006) (where there was no express waiver of subrogation right against primary carrier, excess carrier did not waive subrogation right against primary carrier when primary carrier refused to defend the insured despite having a duty to do so and the excess carrier was forced to defend the insured).

D. Targeted Tender – Research did not reveal Nebraska cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Absent obligatory policy language, an excess insurer is not required to “drop down” and cover that portion of a loss once within an insolvent primary insurer’s coverage. Cent. Waste Sys., Inc. v. Granite State Ins. Co., 437 N.W.2d 496, 498-500 (Neb. 1989). Excess carrier that had a duty to defend is obligated to contribute to defense costs. American Simmental Ass'n v. Coregis Ins. Co., 107 F.Supp.2d 1064, 1078 (D. Neb. 2000).

B. Pro Rata Obligations and Who is Excess Issues – There are no federal or state cases in Nebraska specifically addressing the issue of how liability is allocated among insurers for ongoing property damage.

Nevada

I. Duty to Defend Issues A. Coverage Trigger – Nevada courts apply the manifestation trigger theory of coverage in first-party insurance claims. Jackson v. State Farm Fire & Cas. Co., 835 P.2d 786 (Nev. 1992).

B. Reservation of Rights (“ROR”) – NEVADA REVISED STATUTE § 687B.240 allows insurers to acknowledge notice of a claim, provide forms for reporting a claim, and to

investigate a claim without waiving any defenses or rights. Additionally, Nevada case law states that insurers can avoid waiving a defense by sending an insured a reservation of rights letter. Gary G. Day Const. Co. v. Clarendon Amer. Ins. Co., 459 F. Supp. 2d 1039, 1049-50 (D. Nev. 2006).

C. Mechanics of a ROR – Even where a reservation of rights letter does not list all the possible defenses to coverage, the insurer can still overcome a waiver and estoppel argument by showing that it has a defense to coverage. Gary G. Day Const., 459 F. Supp. 2d at 1049-50.

D. Right to Repair – N.R.S. 40.647 provides: Claimant is required to allow inspection of and reasonable opportunity to repair defect. (1) Except as otherwise provided in NRS 40.645, before a claimant may commence an action or amend a complaint to add a cause of action for a constructional defect against a contractor, subcontractor, supplier or design professional, the claimant must: (a) Allow an inspection of the alleged constructional defect to be conducted pursuant to NRS 40.6462; and (b) Allow the contractor, subcontractor, supplier or design professional a reasonable opportunity to repair the constructional defect or cause the defect to be repaired if an election to repair is made pursuant to NRS 40.6472. (2) If claimant commences action without complying with the above, the court shall: (a) Dismiss the action without prejudice and compel the claimant to comply with those provisions before filing another action; or (b) If dismissal of the action would prevent the claimant from filing another action because the action would be procedurally barred by the statute of limitations or statute of repose, the court shall stay the proceeding pending compliance with those provisions by the claimant.

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Contribution among primary carriers is permitted under Nevada law. See Vigilant Ins. Co. v. Lincoln General Ins. Co., Slip Copy, 2010 WL 228877 (9th Cir. January 22, 2010). Predicting Nevada law, a federal district court has held that an insurer was entitled to equitable contribution from second insurer of mutual insured for costs of defense in direct ratio to portion each insurer’s coverage bore to total coverage provided. Great American Ins. Co. of New York v. North American Specialty, 542 F.Supp.2d 1203 (D. Nev. 2008)

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any Nevada cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – The two forms of subrogation, contractual and equitable, are equally effective. See Duboise v. State Farm Mut. Auto. Ins. Co., 619 P.2d 1223, 1224 (Nev. 1980). Subrogation, however, will not be permitted with respect to

medical payments made by the insurer under the insured’s policy. Maxwell v. Allstate Insurance Companies, 102 Nev. 502, 728 P.2d 812 (1986).

D. Targeted Tender – Research did not reveal Nevada cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – An excess insurer has an equitable duty to share in the defense costs, on a pro rated basis, where the claim exceeds the primary coverage. See American Excess Insurance Co. v. MGM Grand Hotels, Inc., 729 P.2d 1352 (Nev.1986).

C. Other Insurance Clauses – The Nevada Supreme Court has stated that an insurance company could not seek to ‘defer or limit its liability’ on the basis of the availability of other insurance. Yosemite Ins. v. State Farm Mut., 653 P.2d 149, 150 (Nev. 1982).

New Hampshire

I. Duty to Defend Issues A. Coverage Trigger – New Hampshire applies the injury-in-fact trigger. Peerless Ins. Co. v. Clough, 193 A.2d 444, 446 (N.H. 1963). But see, Energy North Natural Gas, Inc. v. Underwriters At Lloyd’s, 848 A.2d 715, 725 (adopting an exposure trigger in situation where hazardous contaminants leaked onto site over time).

B. Reservation of Rights (“ROR”) – An investigation conducted under a non-waiver agreement will not support a future claim for waiver or estoppel. Forbes Farm Partnership v. Family Farm Mut. Ins. Co., 2001 N.H. Lexis 52 (N.H. 2001). However, if the insured reasonably relies upon the acts, conduct, or non-action of the insurer, and the insured is prejudiced by that reliance, then the insurer may be estopped from asserting its defenses. Johnson v. Liberty Mut. Ins. Co., 300 A.2d 57, 59 (N.H. 1973), (reversed on other grounds).

C. Mechanics of a ROR – If the insured refuses to sign the reservation of rights agreement posed by the insurer, the insurer’s duty to defend will be negated. White Mountain Cable Constr. Corp. v. Transamerica Ins. Co., 137 N.H. 478, 484 (N.H. 1993) (noting in special circumstance where insured refuses to sign reservation of rights agreement the duty to defend is negated).

D. Occurrence – Focus for determining when an occurrence takes place is the time at which the loss or damage resulted as opposed to the time of the negligence.

E. Right to Repair – N.H. Rev. Stat. Ann. § 359-G:4 requires that a homeowner provide at least 60 days notice to a contractor before bringing a lawsuit thereby giving the contractor an opportunity to repair the defect.

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Where one co-insurer performs its duty of defending the insured and another co-insurer does not, the performing co-insurer will have a right of contribution against the non-performing co-insurer. Liberty Mut. Ins. Co. v. Home Ins. Indem. Co., 351 A.2d 891 (N.H. 1976).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any New Hampshire cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – The New Hampshire Supreme Court has held, in the health insurance context, that the only right an insurer has to subrogation is contractual as opposed to equitable. Wolters v. American Republic Ins. Co., 827 A.2d 197, 199-200 (N.H. 2003).

D. Targeted Tender – Research did not reveal New Hampshire cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – The primary insurer does not owe a duty to settle to the excess insured; duty only runs to the insured. Where an excess insurer has obtained an assignment from the insured, however, the excess insurer will have standing to sue a primary insurer based on the primary insurer’s breach of the duty to settle. Allstate Ins. Co. v. Reserve Ins. Co., 373 A.2d 339, 340 (N.H. 1976). The New Hampshire Supreme Court has held there is no relationship between primary insurer and excess insurer which would impose directly upon the primary insurer a duty to exercise due care in regard to excess insurer. Thus, the excess insurer could not maintain action against primary insurer for its alleged negligent failure to settle an action brought against the insured within the primary insurer's policy limit. Allstate Ins. Co. v. Reserve Ins. Co., 373 A.2d 339 (N.H. 1977).

B. Pro Rata Obligations and Who is Excess Issues – New Hampshire employs the pro rata approach. Energy North Nat. Gas, Inc. v. Certain Underwriters at Lloyd’s, 934 A.2d 517, 526 (N.H. 2007).

C. Other Insurance Clauses – Where two primary policies both contain excess “other insurance” clauses, the excess clauses are generally treated as mutually repugnant and the

loss is pro rated between the insurers. Universal Underwriters Ins. Co. v. Allstate Ins. Co., 592 A.2d 515 (N.H. 1991).

New Jersey

I. Duty to Defend Issues A. Coverage Trigger – Continuous trigger theory is applied in cases involving progressive indivisible injury. Owens-Illinois, Inc. v. United Ins. Co., 650 A.2d 974, 995 (N.J. 1994) (applying continuous trigger to an asbestos case). However, New Jersey courts apply an injury-in-fact trigger when the damages are not from a progressive injury. See Aetna Cas. & Surety Co. v. Ply Gem Indus., Inc., 778 A.2d 1132 (N.J. Super. Ct. App. Div. 2001) (court applied the injury-in-fact trigger to damages resulting from defective plywood).

B. Reservation of Rights (“ROR”) – To the extent that an insurer assumes a defense of an insured, non-waiver agreements or reservations of rights letters are required to preserve an insurer’s right to contest coverage under a liability policy. See Griggs v. Bertram, 443 A.2d 163, 167 (N.J. 1982). Without “an effective non-waiver agreement, an insurer who exercises its policy right exclusively to control the handling of a claim against its insured for a substantial period after it knows it has a basis for a denial of coverage will be estopped thereafter to disclaim liability on the policy.” Sneed v. Concord Ins. Co., 237 A.2d 289, 296 (N.J. Super. Ct. App. Div. 1967).

C. Mechanics of a ROR – A reservation of rights letter may be sufficient to constitute a non-waiver agreement where an insured fails to accept or reject the terms of the letter. Sneed, 237 A.2d at 293. However, to “spell out such acquiescence by silence,” the letter must fairly inform the insured that a defense under a reservation of rights may be accepted or rejected. Id. Where the carrier simply reserves rights without requesting a non-waiver agreement or expressly requesting that the policyholder consent to the carrier’s control of the defense, the carrier waives coverage defenses. Selective Ins. Co. v. Allstate Ins. Co., 2005 WL 3839975 (N.J. Super. Ct. App. Div. 2006). If a claim involves covered and excluded claims and an insured does not expressly agree to a reservation of rights, then an insurer cannot control the defense; rather, the insurer may have to cover the costs of defense, subject to the right to reimbursement. Morrone v. Harleysville Mut. Ins. Co., 662 A.2d 562 (N.J.Super.A.D. 1995). An insurer will waive its right to rely on exclusion that is not timely raised. Elizabethtown Water Co. v. Hartford Cas. Ins. Co., 15 F.Supp.2d 561 (D. N.J. 1998).

D. Right to Repair – No statute

D. Occurrence – Applying New Jersey law, the Third Circuit has held New Jersey courts will not find an occurrence where faulty construction of a subcontractor damages other work of the insured-general contractor because the work of the subcontractor will be treated as the work of the insured-general contractor. Pa. Nat'l Mut. Cas. Ins. Co. v. Parkshore Dev. Corp., 2010 U.S. App. LEXIS 25334, 6-7 (3d Cir. Dec. 10, 2010).

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – A right of contribution exists where an insurer fails to provide a defense despite having a duty to do so. Hartford Accident & Indem. Co. v. Ambassador Ins. Co., 394 A.2d 867, 870 (N.J. App. Div. 1978). New Jersey courts, however, have precluded contribution between primary carriers where the primary carrier requesting contribution never requested the non-performing carrier to “participate on some basis.” American Home Assur. Co. v. St. Paul Fire & Marine Ins. Co., 558 A.2d 65, 69 (N.J. App. Div. 1989).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – An insurer may be permitted to receive contribution from an additional insured’s insurer where the latter carrier knew of the claims involving the additional insured and began defending the additional insured but failed to do so reasonably. See Hartford Acc. & Indem. Co. v. Ambassador Ins. Co., 394 A.2d 867 (N.J. App.Div.1978).

C. Subrogation Issues with Insured – Even in the absence of a specific policy provision, an insurer is still entitled to legal or equitable subrogation. Culver v. Insurance Co. of North America, 535 A.2d 15, 19 (N.J. App. Div. 1987). The insurer- subrogee’s rights rise no higher than those of the insured. Colonial Penn Ins. Co. v. Ford, 411 A.2d 736, 737 (N.J. Law Div. 1979).

D. Targeted Tender – Where an insured targets one insurer among concurrent insurers, the targeted insurer is permitted to pursue the concurrent insurers to assist in providing a defense and paying a claim. See Marshall v. Raritan Valley Disposal, 940 A.2d 315, 320 (N J. App. Div. 2008).

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – “The primary carrier owes the excess carrier the same positive duty it owes its insured, to take the initiative and attempt to negotiate a settlement within its policy limits.” Baen v. Farmers Mut. Fire Ins. Co. of Salem County, 723 A.2d 636, 639 (N.J. App. Div. 1999).

B. Pro Rata Obligations and Who is Excess Issues – New Jersey allocates liability based on the time and degree of the risk covered by the policy. Benjamin Moore & Co. v. Aetna Cas. & Sur. Co., 843 A.2d 1094 (N.J. 2004); Owens-Illinois, Inc. v. United Ins. Co., 650 A.2d 974, 995 (N.J. 1994). If an insured does not have insurance for a period of time, the insured will also be allocated some of the damages. Id. In Carter-Wallace, Inc. v. Admiral Ins. Co., 712 A.2d 1116 (N.J. 1998), the New Jersey Supreme Court adopted a pro-rata by years and policy limits allocation method and, after reaching a dollar figure for each year on-the-risk, the figure is vertically allocated through each triggered policy in effect (for that year), starting with the primary policy and proceeding upward through each succeeding layer of excess insurance. Id. at 1123-24.

Additionally, the court has held that when a continuous trigger theory applies, an insurer’s liability is not limited by a noncumulation clause. Spaulding Composites Co., Inc. v. Aetna Casualty & Surety Co., 819 A.2d 410 (N.J. 2003).

C. Other Insurance Clauses – Absent obligatory policy language, an excess insurer is not required to “drop down” and cover that portion of a loss once within an insolvent primary insurer’s coverage. Werner Indus., Inc. v. First State Ins. Co., 548 A.2d 188, 189 (N.J. 1988).

New Mexico

I. Duty to Defend Issues A. Coverage Trigger – This issue is not addressed either in the statutes or in the state’s case law. “New Mexico has not decided which trigger theory of insurance coverage to adopt.” Servants of Paraclete, inc. v. Great American Ins. Co., 857 F. Supp. 822, 830 (D.N.M. 1994).

B. Reservation of Rights (“ROR”) – Coverage defenses may be preserved by a reservation of rights agreement. Am. Employers' Ins. Co. v. Crawford, 533 P.2d 1203, 1208 (N.M. 1975). The insurer’s failure to obtain a reservation of rights with the insured waives its right to later assert that no coverage exists. Am. Gen. Fire & Casualty Co. v. Progressive Casualty Co., 799 P.2d 1113, 1117 (N.M. 1990).

C. Mechanics of a ROR – At least one federal court applying New Mexico law has found that an insurer may be entitled to its fees and costs in defending an insured under a reservation of rights when it turns out coverage was not owed. After being informed of the first lawsuit filed against CDI, Resure retained an attorney to defend CDI's interests. Resure, Inc. v. Chemical Distribs., 927 F. Supp. 190, 194 (M.D. La. 1996) (applying New Mexico law). The court suggested, however, that if the insured disputed the portion of the reservation of rights letter containing the insurer’s claim to reimbursement, then reimbursement may not be allowed. Id.

D. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Primary carriers may be permitted to seek contribution from one another in certain circumstances. Maryland Cas. Co. v. State Farm Mut. Auto. Ins. Co., 419 P.2d 229, 232 (N.M. 1966).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any New Mexico cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – Upon payment of a loss, an insurer generally is entitled to be subrogated to the extent of its payment on the loss to any right of action that

the insured may have against a third person whose negligence caused the loss. Amica Mut. Ins. Co. v. Maloney, 903 P.2d 834 (N.M. 1995). An insured may assign to the insurer the insured’s right to seek excess damages above what the insured was paid by the insurer, but there must be an actual assignment of the insured’s right to the carrier. Southwest Steel Coil, Inc. v. Redwood Fire & Casualty Ins. Co., 148 P.3d 806 (N.M. Ct. App. 2006).

D. Targeted Tender – Although New Mexico courts do not specifically address the issue, there is authority supporting the position that an insured will be permitted to provide actual notice to one insurer among concurrent insurers and affirmatively decline defense from the remaining concurrent insurers. See Garcia v. Underwriters at Lloyd's, London, 182 P.3d 113, 114 (N.M. 2008).

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – An excess insurer which has defended a suit has a right to reimbursement under theory of subrogation against a primary insurer which had refused to defend. American Emp. Ins. Co. v. Continental Cas. Co., 512 P.2d 674 (N.M. 1973)

B. Pro Rata Obligations and Who is Excess Issues – There are no federal or state cases in New Mexico specifically addressing the issue of how liability is allocated among insurers for ongoing property damage.

C. Other Insurance Clauses – Where “other Insurance” sections contain excess clauses that are mutually repugnant, those clauses will be disregarded. American Employers' Ins. Co. v. Continental Casualty Co., 512 P.2d 674 (N.M 1973); Sloan v. Dairyland Ins. Co., 519 P.2d 301 (N.M. 1974). “If, however, two “other insurance” clauses, when read together, do not deny coverage to the insured, the clauses are not mutually repugnant, and the court will honor the language of each insurance policy.” CC Housing Corp. v. Ryder Truck Rental, Inc., 746 P.2d 1109 (N.M. 1987).

New York

I. Duty to Defend Issues A. Coverage Trigger – New York applies the injury-in-fact trigger. See Maryland Cas. Co. v. W.R. Grace and Co., 23 F.3d 617, 625 (2d Cir. 1993) (applying New York law) (stating that, in New York, bodily injury insurance is governed by the injury-in-fact trigger and that property damage insurance should be governed by the same); Cont’l Cas. Co. v. Rapid-American Corp., 609 N.E.2d 506, 511 (N.Y. 1993) (in an insurance coverage dispute for asbestos bodily injury claims, applied the injury-in-fact trigger, “which rests on when the injury, sickness, disease or disability actually began,” whether discovered or not); Cortland Pump & Equip. Inc. v. Firemen's Ins. Co., 604 N.Y.S.2d 633 (N.Y. App. Div. 1993) (adopting injury-in-fact trigger for an insurance contract covering property damage claims). Cont. Cas. Co. v. Employers Ins. Co. of Wausau, 839

N.Y.S.2d 403, 417-418 (N.Y.Sup. 2007) (holding that an occurrence in asbestos case takes place upon exposure). Installation (property damage). Property damage occurs at the time asbestos is installed, triggering insurance coverage. Stonewall Ins. Co. v. Asbestos Claims Management Corp., 73 F.3d 1178 (2d Cir. 1995).

B. Reservation of Rights (“ROR”) – An insurer must reserve its rights before defending an action on behalf of an insured and it is estopped from asserting no coverage if it had knowledge of the facts constituting a defense to coverage. Federated Dept. Stores, Inc. v. Twin City Fire Ins. Co., 28 A.D.3d 32, 36 (N.Y. App. Div. 2006).

C. Mechanics of a ROR –An insurer does not have to know every conceivable defense and the failure to reserve its rights is excused where the insurer lacked knowledge of the available defense. Federated Dept. Stores, 28 A.D.3d at 36. An insurer should, though, set out in its letter every reason of which it is aware, or should then be aware as to why the insured might not ultimately be entitled to coverage. Id.

D. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – A right of contribution exists where an co-insurer fails to provide defense despite having a duty to do so. General Motors Acceptance Corp. v. Nationwide Ins. Co., 828 N.E.2d 959 (N.Y. 2005).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – It may be possible to pursue contribution from the carrier of an additional insured; the court will focus on the specific language of the policies at issue. BP Air Conditioning Corp. v. One Beacon Ins. Group, 821 N.Y.S.2d 1, 9-10 (N.Y.A.D. 1 Dept. 2006).

C. Subrogation Issues with Insured – Even in the absence of such a policy provision, an insurer is still entitled to legal or equitable subrogation. New York Bd. of Fire Underwriters v. Trans Urban Const. Co., Inc., 458 N.Y.S.2d 216, 219 (1st Dep’t 1983).

D. Targeted Tender – Although not discussing the rule regarding “targeted” or “selective” tenders, a New York appellate court has made clear that where two or more insurers are primary and cover the same risk, those “primary insurers will be held to be coinsurers’ who must contribute a ratable portion of the amount paid.” Tops Mkts. v. Maryland Cas., 267 A.D.2d 999, 1000 (N.Y. App. Div. 4th Dep’t 1999) (internal quotes and citation omitted).

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Absent obligatory policy language, an excess insurer is not required to drop down and cover that portion of a loss once within an insolvent primary insurer’s coverage. Ambassador Assocs. v. Corcoran, 562 N.Y.S.2d 507 (N.Y. App. Div. 1990). Although an excess insurer is not obligated to

contribute to the primary insurer’s costs incurred in performing the duty to defend, the court left open the possibility that such contribution might be required under certain circumstances. Mandell Corp. v. Insurance Co. of North America, 479 N.Y.S.2d 452, 453–54 (Sup. 1984).

B. Pro Rata Obligations and Who is Excess Issues – Where a continuous harm spans many years and implicates several successive insurance policies, a pro rata allocation of liability by the time-on-the-risk method will be applied, as long as it is consistent with the language of the policies. Consol. Edison Co. of N.Y. v. Allstate Ins. Co., 774 N.E.2d 687, 695 (N.Y. 2002); Serio v. Pub. Serv. Mut. Ins. Co., 304 A.D.2d 167, 173 (N.Y. App. Div. 2003).

North Carolina

I. Duty to Defend Issues A. Coverage Trigger – North Carolina courts will apply the injury-in-fact trigger. Gaston County Dyeing Mach. Co. v. Northfield Ins. Co., 524 S.E.2d 558 (N.C. 2000) (defective design and manufacture of pressure vessels). See also Miller v. Zurich Corp., 603 S.E.2d 168 (N.C. App. 2004) (construction context); [“where the date of the injury- in-fact can be known with certainty, the insurance policy or policies on the risk on that date are triggered.”]; and Harleysville Mut. Ins. Co. v. Berkley Ins. Co. of Carolinas, 610 S.E.2d 215 (N.C. App. 2005) (even when property damage occurs over time, if court can determine when defect occurred from which all subsequent damages flow, the court must use the date of that defect and trigger the liability coverage applicable on that date). But see, The Home Indemn. v. Hoechst Celanese Corp., 494 S.E.2d 774 (N.C. Ct. App. 1998) (manifestation/discovery). There, contamination was discovered at a North Carolina site and the insured sought coverage under The Home’s policies. The North Carolina Court of Appeals expressly adopted the ‘date of discovery’ rationale as the rule in North Carolina, and the court held that for insurance purposes property damage ‘occurs’ when it is first manifested or discovered.” See also United Brass Works, Inc. v. Am. Guarantee & Liab. Ins. Co., 819 F. Supp. 465 (W.D. Pa. 1992), aff’d without opinion, 989 F.2d 489 (3d Cir. 1993) (applying North Carolina law) (improper dumping contamination context); Peerless Ins. Co. v. Strother, 765 F. Supp. 866 (E.D.N.C. 1990) (applying North Carolina law) [issue analyzed in duty to defend context] (groundwater contamination context).

B. Reservation of Rights (“ROR”) – Where an insurer defends a claim without a reservation of rights, the insurer may be estopped from later denying coverage. Fortune Ins. Co. v. Owens, 526 S.E.2d 463, 467 (N.C. 2000). However, when an insurer refuses to defend without justification, the insurer is estopped from denying coverage and is

obligated to pay a reasonable settlement. Ames v. Cont’l Cas. Co., 340 S.E.2d 479, 485 (N.C. App. 1986).

C. Mechanics of a ROR – Providing a defense under a full reservation of rights does not constitute acknowledgment of coverage. Thus, because the insurer had not acknowledged coverage prior to the insured’s unilaterally settling the claims in the underlying lawsuit, the insured did not breach his duty to cooperate with the insurer. In addition, when an insurer reserves its right to contest coverage, the insurer discharges its duty to defend when it provides independent counsel to the insured. Once the insurer does this and relieves itself of control over the litigation, a reasonable settlement effectuated by the insured does not bar an action for indemnification against the insurer. City of Roxboro v. Gulf Ins. Co., 1996 U.S. Dist. LEXIS 5264, 10-11 (M.D.N.C. Mar. 21, 1996) (applying North Carolina law) (citations omitted).

D. Occurrence – A construction defect will not be considered an “occurrence” under a CGL policy. Wm. C. Vick Construction Co. v. Penn National Mut. Ins. Co., 52 F.Supp.2d 569 (E.D. N.C. 1999).

E. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – As opposed to a contribution theory, North Carolina allows concurrent insurers to recover from one another under equitable subrogation. N.C. Ins. Guar. Ass'n v. Century Indem. Co., 444 S.E.2d 464, 472 (N.C. Ct. App. 1994).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any North Carolina cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – An insurer’s is subrogated to any cause of action its insured may have with respect to a covered loss, and subrogation right “may be either the right of conventional subrogation-that is, subrogation by agreement between the insurer and the insured-or the right of equitable subrogation, by operation of law, upon the payment of the loss.” Milwaukee Ins. Co. v. McLean Trucking Co., 125 S.E.2d 25, 29 (N.C. 1962). Contractual and equitable subrogation are equally effective. E.J. Shambley v. Jobe-Blackley Plumbing & Heating Co., 142 S.E.2d 18, 20 (N.C. 1965).

D. Targeted Tender – Research did not reveal North Carolina cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues

A. Obligations between Primary and Excess Carrier – Absent obligatory policy language, an excess insurer is not required to drop down and cover that portion of a loss once within an insolvent primary insurer’s coverage. N.C. Ins. Guar. Ass'n v. Century Indem. Co., 444 S.E.2d 464, 467, 471 (N.C. Ct. App. 1994).

B. Pro Rata Obligations and Who is Excess Issues – There are no federal or state cases in North Carolina specifically addressing the issue of how liability is allocated among insurers for ongoing property damage.

C. Other Insurance Clauses – Where an excess clause and a pro rata clause appear in concurrently effective policies, the pro rata clause is disregarded and full effect is given to the excess clause, making the pro rata policy the primary insurance. United Services Auto. Ass'n v. Universal Underwriters Ins. Co., 420 S.E.2d 155 (1992).

North Dakota

I. Duty to Defend Issues A. Coverage Trigger The injury-in-fact trigger is applied by North Dakota courts. Friendship Homes. Inc. v. American States Ins. Co., 450 N.W. 2d 778 (N.D. 1990). See also, Grinnell Mut. Reinsurance Co. v. Thies, 755 N.W.2d 852 (N.D. 2008) (reaffirming that, in the context of third-party claims, the damage occurs when the complaining party was actually injured). Kief Farmers Coop Elevator Co. v. Farmland Mut. Ins. Co., 534 N.W. 2d 28 (N.D. 1995). Under policy covering “loss or damage commencing . . . during the policy period,” coverage is triggered in “first-party” context if progressive property loss or damage begins during policy period. Court declined to impute “manifestation” trigger in absence of express language in the policy.

B. Reservation of Rights (“ROR”) – When an insurer defends its insured without a reservation of rights after having gained knowledge of facts upon which it may base a denial of coverage, the insurer waives its right to deny coverage and will be disallowed thereafter from either abandoning the defense or disclaiming as to the liability of the insured. See National Farmers Union Property & Casualty Co. v. Michaelson, 110 N.W.2d 431, 438 (N.D. 1961).

C. Mechanics of a ROR – Once an insurer forwards a reservation of rights letter to the insured, the insurer can then proceed to filing a declaratory judgment action and very quickly obtain an answer and a decision on its duty to defend. Farmers Union Mut. Ins. Co. v. Decker, 2005 ND 173, P35 (N.D. 2005) (citing N.D.C.C. § 32-23-06).

D. Occurrence – Under an “occurrence” policy, the “occurrence” took place on the date the insured sustained damages rather than the date of the wrongful or negligent act which caused the damages. Friendship Homes. Inc. v. American States Ins. Co., 450 N.W. 2d 778 (N.D. 1990).

E. Right to Repair – Before undertaking repair or instituting an action, the owner must give the contractor written notice by mail within six months of discovering the defect advising the contractor of the defect and affording the contractor an opportunity to cure within 30 days from the mailing of the notice. Contractor must respond within 30 days of the date the letter was mailed. N.D. Cent. Code, § 43-07-26.

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Upon payment of a loss, an insurer generally is entitled to be subrogated to the extent of its payment on the loss to any right of action that the insured may have against a third person whose negligence caused the loss. American Nat. Fire Ins. Co. v. Hughes, 658 N.W.2d 330 (N.D. 2003).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any North Dakota cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – Under North Dakota law, right of action against wrongdoer who caused loss remains with insured as long as insurer has only covered portion of insured's losses. Torske v. Bunn-O-Matic Corp., 216 F.R.D. 475 (D. N. D. 2003).

D. Targeted Tender – Research did not reveal North Dakota cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Research did not reveal any North Dakota cases discussing the duties between a primary carrier and an excess carrier.

B. Pro Rata Obligations and Who is Excess Issues – Predicting North Dakota law would follow the view that a policy with a pro rata clause is the primary policy and full effect would be given the excess clause contained in the other policy. State Farm Mut. Auto. Ins. Co. v. American Cas. Co., 433 F.2d 1007 (8th Cir. 1970); State Farm Mut. Auto. Ins. Co. v. Northwest Leasing Corp., 299 F.Supp. 630 (D.C. N.D. 1969).

Ohio

I. Duty to Defend Issues A. Coverage Trigger – Ohio courts will likely apply the continuous-coverage trigger. The continuous-coverage trigger, not the manifestation trigger, is applied when

determining when coverage was triggered under occurrence-based liability insurance policy concerning homeowners’ claims against the insured developer of a subdivision, for breach of contract and negligent or fraudulent failure to disclose existence of geotechnical survey performed on property. Plum v. W. Am. Ins. Co., 2006 WL 256881 (Ohio App. 2006). The continuous-coverage trigger applied because the property damage manifested itself long after policy had been in effect such that applying the manifestation trigger would have rendered coverage illusory and because the policy was triggered if damage occurred during policy period, not only if damage was discovered or manifested itself during policy period. Id. But see, Cleveland Bd. of Educ. v. R.J. Stickle Int’l., 76 Ohio App. 3d 432 (1991) (manifestation trigger applied in construction defect context). “We, therefore, hold that in a situation where the damage manifests itself immediately and continues unabated into a successive carrier’s coverage period, there is no occurrence under the stipulated definition [of occurrence] because knowledge of the continuous damage is no longer unforeseen, and, therefore, not an accident.” Id. See also, Lincoln Electric Co. v. St. Paul Fire & Marine, 210 F.3d 672 (6th Cir. 2000)(in case dealing with exposure to asbestos, manganese and welding fumes, the court applied a hybrid exposure/injury-in-fact trigger). The court found that there was a rebuttable presumption that the injury occurred throughout exposure and manifestation. Id.

B. Reservation of Rights (“ROR”) – The insurance company does not need to enter into a formal non-waiver agreement with the insured in order to preserve its right to deny coverage after it has assumed the insured’s defense. It can protect its rights by means of a unilateral reservation of rights letter. Motorists Mut. Ins. Co. v. Trainor, 294 N.E.2d 874, 877 (1973).

C. Mechanics of a ROR – The letter reserving the insurer’s rights to decline coverage should be a timely and explicit reservation of rights and specific and adequate notice to the insured. In such a circumstance, the insurer may be able to successfully seek reimbursement for defense costs pursuant to an implied contract theory. Am. Motorist Ins. Co. v. Custom Rubber Extrusions, Inc., 2006 U.S. Dist. LEXIS 59436, 17-18 (N.D. Ohio Aug. 23, 2006) (applying Ohio law). A reservation of rights creates the potential for a conflict of interest, and a “reservation of rights letter puts the insured on notice that it may be in his best interest to retain personal counsel.” Patitucci v. McNeal, Schick, Archibald & Biro, 2006 Ohio 5727, P19 (Ohio Ct. App., Cuyahoga County Nov. 2, 2006) (applying Ohio law).

D. Occurrence – A construction defect will not be considered an “occurrence.” Heile v. Herman, 736 N.E.2d 566 (1999).

E. Right to Repair – Owner must give a residential contractor 60 days’ notice before filing a lawsuit against that contractor, thereby giving the contractor the right to repair the alleged defect. Ohio Rev. Code Ann. § 1312.04. The contractor must give notice of this

right to the owner before entering into a contract for construction with the owner. Ohio Rev. Code Ann. § 1312.03.

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Where each of several carriers contract to pay that amount insured by the carrier bears to all the insurance on the property, a carrier that pays any sum beyond its obligation acts as a mere volunteer, and the payment will not create a right of contribution. Farm Bureau Mut. Auto. Ins. Co. v. Buckeye Union Cas. Co., 67 N.E.2d 906 (Ohio 1946).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any Ohio cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – Even in the absence of a contractual subrogation provision, an insurer is entitled to legal or equitable subrogation. Travelers Indem. Co. v. Brooks, 395 N.E.2d 494, 495 (6th Dist. Lucas County 1977).

D. Targeted Tender – Ohio cases allow an insured to target an insurer among co- insurers and that targeted insurer must defend and pay, but the insured’s decision does not preclude the targeted insurer from seeking contribution from the non-targeted concurrent insurers. See Pa. Gen. Ins. Co. v. Park-Ohio Indus., Inc., 902 N.E.2d 53, 60- 61 (Ohio Ct. App. 2008).

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Absent obligatory policy language, an excess insurer is not obligated to drop down and cover that portion of a loss once within an insolvent primary insurer’s coverage. Revco D.S., Inc. v. Gov't Employees Ins. Co., 791 F. Supp. 1254, 1265 (N.D. Ohio 1991). The duty to settle that a primary insurer owes to an excess insurer derives from the the primary insurer’s duty to the insured such that an aggrieved excess insurer may sue for breach on an equitable subrogation theory. Ins. Co. of N. Am. v. Travelers Ins. Co., 692 N.E.2d 1028, 1035-36 (Ohio Ct. App. 1997).

B. Pro Rata Obligations and Who is Excess Issues – Ohio follows the joint and several or “all sums” method of allocation with respect to environmental pollution claims. Goodyear Tire & Rubber Co. v. Aetna Cas. & Surety Co., 769 N.E.2d 835, 840 (Ohio 2002). See also, Penn. Gen. Ins. Co. v. Park-Ohio Ind. Inc., 902 N.E.2d 53, 58 (Ohio App. 2008).

C. Other Insurance Clauses – “Other insurance” clauses in concurrent policies do not create a contractual right allowing insurers to recover from one another. See State Farm Ins. Co. v. Atl. Mut. Ins. Co., 672 N.E.2d 708, 713 (Ohio Ct. App. 1996).

Oklahoma

I. Duty to Defend Issues A. Coverage Trigger – Oklahoma courts have not specifically addressed the question of trigger of coverage but appear to follow an injury in fact trigger, relying upon Alabama case law. Harbour v. Mid-Continent Casualty Co., 752 P.2d 258 (Okla. Ct. App. 1987). See also Bituminous Cas. Corp. v. Cowen Const., Inc., 55 P.3d 1030 (Okla. 2002) (court recognizes but does not answer which trigger of coverage is the law in Oklahoma).

B. Reservation of Rights (“ROR”) – In Oklahoma, “[a]n insurer who disputes the insured's demand to defend has three options. It can (1) seek declaratory relief that would define the insurer's rights and obligations; (2) defend the insured under a reservation of rights, or (3) refuse to take any action at the peril of later being found in breach of its duty to defend.” First Bank of Turley v. Fidelity and Deposit Ins. Co. of Maryland, 1996 OK 105, 928 P.2d 298, 303 (Okla. 1996). The insurer has a right to insist upon an agreement to defend with a reservation of rights under the insurance policy without prejudice to its asserted position of non-liability. Traders & General Ins. Co. v. Rudco Oil & Gas Co., 129 F.2d 621, 628 (10th Cir. 1942).

C. Mechanics of a ROR – An insurer may by action or conduct be estopped from denying coverage despite a reservation of rights. Sec. Ins. Co. of New Haven v. Greer, 437 P.2d 243, 244 (Okla. 1968).

D. Occurrence – “[T]he time of the occurrence of an accident within the meaning of an indemnity policy is not the time the wrongful act was committed but the time the complaining party was actually damaged.” Harbour v. Mid-Continent Casualty Co., 752 P.2d 258 (Okla. Ct. App. 1987).

E. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – No right to contribution exists because no common obligation existed between the insurer and the insured based on the fact that the duty to defend is personal to each insurer; the insurer providing the defense did nothing more than what it was obligated to do under its insurance contract. Fidelity & Cas. Co. of New York v. Ohio Cas. Ins. Co., 482 P.2d 924, 926 (Okla. 1971).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any Oklahoma cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – Even in the absence of a policy provision for contractual subrogation, an insurer is still entitled to legal or equitable subrogation. Republic Underwriters Ins. Co. v. Fire Ins. Exchange, 655 P.2d 544, 546 (Okla. 1982). Upon payment of a loss, an insurer generally is entitled to be subrogated to the extent of its payment on the loss to any right of action that the insured may have against a third

person whose negligence caused the loss. U.S. Fidelity and Guar. Co. v. Federated Rural Elec. Ins. Corp., 37 P.3d 828 (Okla. 2001).

D. Targeted Tender – While not specifically addressing the issue, Oklahoma cases suggest that where an insured requests a defense from only one insurer among concurrent insurers, the concurrent insurers will not have a duty to defend. See First Bank of Turley v. Fid. & Deposit Ins. Co., 928 P.2d 298, 304 (Okla. 1996) (absent a request to provide a defense, an insurer will not have a duty to defend).

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – In the absence of an agreement, there is generally no right of contribution between a primary and excess insurer because they do not share a common obligation with common rights. U.S. Fidelity and Guar. Co. v. Federated Rural Elec. Ins. Corp., 37 P.3d 828 (Okla. 2001).

B. Pro Rata Obligations and Who is Excess Issues – There are no federal or state cases in Oklahoma specifically addressing the issue of how liability is allocated among insurers for ongoing property damage.

C. Other Insurance Clauses – Where an excess clause and a pro rata clause appear in concurrently effective policies, the pro rata clause is disregarded and full effect is given to the excess clause, making the pro rata policy the primary insurance. Equity Mut. Ins. Co. v. Spring Valley Wholesale Nursery, Inc., 1987 OK 121, 747 P.2d 947 ( Okla. 1987).

Oregon

I. Duty to Defend Issues A. Coverage Trigger – Trigger of coverage under comprehensive general liability (CGL) insurance policies providing coverage for occurrences or accidents was actual injury or accidents or occurrences taking place during policy period. The coverage trigger was not manifestation of injury or fixing of insured’s liability. The trigger-of- coverage clauses provided coverage for accidents or occurrences during policy period or for property damage sustained during policy period, and policies did not make the “occurrence” depend on fixing of financial responsibility or damages. St. Paul Fire & Marine Ins. Co, v. McCormick & Baxter Creosoting, Inc., 923 P.2d 1200 (Or. 1996).

B. Reservation of Rights (“ROR”) – Yes, under Oregon law, an insurer can investigate whether coverage is due while simultaneously providing a defense of the insured via a reservation of rights. See Ferguson v. Birmingham Fire Ins., 460 P.2d 342 (Ore. 1969).

C. Mechanics of a ROR – Oregon courts have found that if an insurer defends an insured while under a reservation of rights, “a conflict of interest exists between the insurer and the insured, and therefore the doctrine of estoppel by judgment should not be applied to a judgment rendered in an action against the insured.” Carr Chevrolet v. Am.

Hardware, 2004 U.S. Dist. LEXIS 21056 (D. Or. 2004). Also, Oregon courts allow an insurer to withdraw a defense to an action if the insurer expressly reserved the right to withdraw because the insured cannot claim prejudice since it was aware of the possible withdrawal. United Pacific Ins. Co. v. Pacific N.W. Research Found., 593 P.2d 1278 (Or. App. 1979).

D. Right to Repair – Or. Rev. Stat. §§ 701.560 to 701.595 require owners of residences, prior to filing lawsuits or arbitration, to give notice of construction defects to contractors, thereby giving contractors an opportunity to inspect and cure the alleged defects.

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – A right of contribution exists between insurers where one insurer failed to provide a defense despite having a duty to do so. Burnett v. Western Pac. Ins. Co., 469 P.2d 602, 606 (Or. 1970).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any Oregon cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – Even in the absence of a policy provision for contractual subrogation, an insurer is still entitled to legal or equitable subrogation. State v. Divers, 626 P.2d 681, 683 (Or. 1981).

D. Targeted Tender – An insured’s failure to request the insurer to participate in a claim will preclude a participating insurer from subsequently seeking apportionment of loss or contribution from the non-participating insurer even if that policy covers the same risk. See American Star Ins. Co. v. Allstate Ins. Co., 508 P.2d 244, 249 (Or. Ct. App. 1973).

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – A duty to exercise care in attempting to settle third-party claims within policy limits exists on the part of the primary insurer and runs to both the insured and the excess insurer. Onita Pacific Corp. v. Trustees of Bronson, 843 P.2d 890, 896-897 (Or. 1992). Under Oregon law, a primary insurer also has a duty to keep the excess insurer informed of the progress of litigation. See Bohemia, Inc. v. Home Insurance Co., 725 F.2d 506, 513-14 (9th Cir.1984).

B. Pro Rata Obligations and Who is Excess Issues – Although Oregon cases have not directly addressed the issue, Oregon has a statute that sets allocation for insurance in environmental claims. Or. Rev. Stat. § 465.480 provides that the court will allocate the damages based on the total time period of each policy, the policy limits, the policy that provides the most appropriate coverage, and if the insured is uninsured for a portion of time, then the insured will be considered an insurer for allocation purposes.

C. Other Insurance Clauses – Where two primary policies have provisions limiting the extent of the insurer’s liability if the insured had other applicable insurance, those provisions are repugnant and are disregarded under the Lamb-Weston rule. Lamb- Weston, Inc. v. Oregon Auto. Ins. Co., 219 Or. 110, 341 P.2d 110 (1959). The parties must share liability in proportion to the limits of coverage carried by each. Northwest Agric. Coop. Assoc., Inc. v. Cont'l Ins. Co., 769 P.2d 218, 220 (Or. Ct. App. 1989) (disregarding excess clause from one policy and pro-rata clause from another policy).

Pennsylvania

I. Duty to Defend Issues A. Coverage Trigger – Pennsylvania courts apply the manifestation trigger. See, e.g., West American Ins. Co. v. Lindepuu, 128 F.Supp.2d 220 (E.D. Pa. 2000); Bostick v. ITT Hartford Group, Inc., 56 F.Supp.2d 580, 585 (E.D. Pa. 1999); Keystone Automated Equip. v. Reliance Ins. Co., 535 A.2d 648, 651 (Pa. Super. 1988); and D’Auria v. Zurich Ins. Co., 507 A.2d 857, 862 (Pa.Super. 1986).

B. Reservation of Rights (“ROR”) – Where an insurer assumes a defense without reserving its rights, the insurer may be estopped from later denying coverage. Draft Systems, Inc. v. Alspach, 756 F.2d 293, 296 (3d Cir. 1985).

C. Mechanics of a ROR – The reservation of rights letter should fairly and specifically inform the insured of the position the insurer is taking with regard to the coverage question, and, going forward, the insurer should not conduct itself in a way that would lead the insured to believe the insurer was implicitly waiving its reservation of rights. See Western World Ins. Co. v. Delta Prop. Mgmt., 2010 U.S. Dist. LEXIS 125296, 7-8 (W.D. Pa. Nov. 29, 2010) (applying Pennsylvania law and finding the insurer did not waive its reservation of rights).

D. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – A primary carrier has a right to contribution from a non-performing primary carrier who failed to defend the insured despite having a duty to do so. Twin City Fire Ins. Co. v. Home Indem. Co., 650 F.Supp. 785, 792 (E.D. Pa. 1986) (applying Pennsylvania law).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any Pennsylvania cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – Insurer has a subrogation right, but the insurer is only entitled to sue for an amount of money necessary to make it whole. Associated Hospital Service of Philadelphia v. Pustilnik, 439 A.2d 1149, 1152 (Pa. 1981) (health insurance context). With regard to a wrongful failure to settle on the part of a primary

insurer, on payment of the insured’s liability to the injured claimant, the excess insurer is equitably subrogated to the rights of the insured against the primary insurer, including the insured’s right of action for wrongful failure to settle. U.S. Fire Ins. Co. v. Royal Ins. Co., 759 F.2d 306, 309 (3d Cir. 1985) (applying Pennsylvania law).

D. Targeted Tender – Research did not reveal Pennsylvania cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Absent obligatory policy language, an excess insurer is not obligated to drop down and cover that portion of a loss once within an insolvent primary insurer’s coverage. J. Kinderman & Sons, Inc. v. United Nat'l Ins. Co., 593 A.2d 857, 860 (Pa. Super. Ct. 1991), aff’d, 619 A.2d 1058 (Pa. 1993). There is no direct duty to settle on the part of the primary carrier owing to the excess carrier. Greater N.Y. Mut. Ins. Co. v. N. River Ins. Co., 872 F. Supp. 1403, 1409 (E.D. Pa. 1995) (applying Pennsylvania law), aff'd, 85 F.3d 1088 (3d Cir. 1996).

B. Pro Rata Obligations and Who is Excess Issues – With respect to asbestosis claims, Pennsylvania has applied the joint and several or “all sums” method of apportionment. See J.H. France v. Allstate, 626 A.2d 502, 508 (Pa. 1993).

C. Other Insurance Clauses – “Other insurance” clause in policy does not create a right between concurrent insurers to recover from one another; rather, concurrent insurers recover from one another based on a contribution theory. J. H. France Refractories Co. v. Allstate Ins. Co., 626 A.2d 502, 509 (Pa.1993). Pennsylvania courts will likely attempt to reconcile competing “other insurance” clauses in excess policies just as though the policies were primary policies. See Am. Cas. Co. v. PHICO Ins. Co., 702 A.2d 1050, 1053-65 (Pa. 1997) (deeming “other insurance” clauses in excess policies mutually repugnant and prorating loss by equal shares)

Rhode Island

I. Duty to Defend Issues A. Coverage Trigger – Rhode Island courts apply a manifestation trigger theory. However, in the absence of discovery, the court may also recognize an occurrence trigger if a claimant can prove the damage occurred during the policy period. Textron, Inc. v. Aetna Cas. & Sur. Co., 723 A.2d 1138, 1142 (R.I. 1999). See also, Emhart Ind., Inc. v. Century Indem. Co., 559 F.3d 57 (R.I. App. 2009) (citing CPC Int’l, Inc. v. Northbrook Excess & Surplus Ins. Co., 668 A.2d 647 (R.I. 1995)).

B. Reservation of Rights (“ROR”) – Non-waiver agreements and reservations of rights afford similar protection to the insurer. To avoid obligations to pay damages and to avoid breaching its duty, an insurer has two options: (1) the insurer can enter into a non- waiver agreement with the insured; (2) the insurer can bring a declaratory judgment

action on the question of coverage. Conanicut Marine Servs., Inc. v. Insurance Co. of North America, 511 A.2d 967, 971 (1986). See also De Pasquale v. Union Indem. Co., 149 A. 795 (R.I. 1930).

C. Mechanics of a ROR – An insured may request independent counsel if an insurer has a reservation of rights due to the potential conflict of interest in allowing an insurer to defend an insured under a reservation of rights. Hartford Cas. Ins. Co. v. A&M Assocs., 200 F. Supp. 2d 84, 89 (D.R.I. 2002).

D. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Where primary policies offered concurrent coverage, a Rhode Island court has held the carriers may seek contribution from one another. Peloso v. Rhode Island Sand & Gravel Co., Inc., 1978 WL 196123 (R.I. Super. 1978).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any Rhode Island cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – Under Rhode Island law, an insurer, by a right of subrogation, steps into the shoes of the insured and can recover only if the insured could have recovered. The insurer-subrogee has no greater rights against a third party by virtue of its status as the insurer. Also, the insurer-subrogee is bound by any litmitation of liability clause that would bind the insured if the insured were to bring the claim herself. E.H. Ashley & Co., Inc. v. Wells Fargo Alarm Services, 907 F.2d 1274, 1277 (1st Cir. 1990).

D. Targeted Tender – Research did not reveal Rhode Island cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – The excess carrier is not obligated to provide a defense until the primary carrier’s policy limits have been actually exhausted as opposed to merely defending a claim that is greater than those policy limits. See Emhart Industries, Inc. v. Home Ins. Co., 515 F.Supp.2d 228 (D. R.I. 2007).

B. Pro Rata Obligations and Who is Excess Issues – Excess policies are regarded as true excess coverage over and above all primary policies, including those with excess “other insurance” clauses. Liberty Mut. Ins. Co. v. Harbor Ins. Co., 603 A.2d 300, 302- 303 (R.I. 1992).

C. Other Insurance Clauses – Where two primary policies both contain excess “other insurance” clauses, the excess clauses are generally treated as mutually repugnant and the loss is pro rated between the insurers. Ryan v. Knoller, 695 A.2d 990 (R.I. 1997). Excess “other insurance” clauses in primary policy will be disregarded when placed against an excess insurance policy. See Liberty Mut. Ins. Co. v. Harbor Ins. Co., 603 A.2d 300, 302-303 (R.I. 1992).

South Carolina

I. Duty to Defend Issues A. Coverage Trigger – The injury-in-fact and continuous trigger hybrid has been applied in South Carolina in a construction defects context. See Joe Harden Builders v. Aetna Cas. & Sur. Co., 486 S.E.2d 89 (S.C. 1997). There, the U.S. District Court certified a question to the South Carolina Supreme Court, asking whether the property damage occurred when the concrete frame was constructed, when the masonry contractor knowingly built the defective brick wall, when the cracks in the wall were manifest, or when the owner discovered the cracks. The Supreme Court modified the continuous injury theory by combining it with the injury-in-fact theory, so coverage is triggered when the damage is shown in fact to have first occurred, even if it is before the damage became apparent. See also, Stonehenge Engineering Corp. v. Employers Ins. of Wausau, 201 F.3d 296 (4th Cir. 2000); Century Indem. Co. v. Golden Hills Builders, Inc., 561 S.E.2d 355 (S.C. 2002). Spartan Petroleum Co. v. Federated Mutual Ins. Co., 162 F.3d 805 (4th Cir. 1998) (applying South Carolina law to underground storage tank context). Court applied the injury-in-fact trigger; coverage under all policies in effect from the time of the injury-in- fact during the progressive damages.

B. Reservation of Rights (“ROR”) – In order for an insured to claim that an insurer waived its rights to contest coverage, the insured must prove that the insurer did so voluntarily and intentionally. A repeated reservation of rights will undermine an insured’s waiver argument. Laidlaw Envtl. Serv. Inc. v. Aetna Cas. & Sur. Co. of Ill., 524 S.E.2d 847, 852 (S.C. App. 1999).

C. Mechanics of a ROR – Interpreting and predicting South Carolina law, the Fourth Circuit has rejected the notion that, under South Carolina law, a reservation of rights letter issued to the insured creates a per se conflict that must be remedied through the insured selecting counsel and having the insurance companies pay the legal fees. Twin City Fire Ins. Co. v. Ben Arnold-Sunbelt Bev. Co. of S.C., LP, 433 F.3d 365, 372 (4th Cir. 2005).

D. Occurrence – A recent decision handed down by the South Carolina Supreme Court indicates general contractors will have a difficult time overcoming the “your work” exclusion when the work of their subcontractors causes damages to other portions of the construction. See Crossmann Cmtys. of N.C., Inc. v. Harleysville Mut. Ins. Co., 2011 S.C. LEXIS 2 (S.C. Jan. 7, 2011) (“where the damage to the insured's property is no more than

the natural and probable consequences of faulty workmanship such that the two cannot be distinguished, this does not constitute an occurrence”). A construction defect will likely be considered an “occurrence” under a CGL policy. Auto-Owners Ins. Co. v. Newman, 684 S.E.2d 541 (2009).

E. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – The duty to defend is personal to each insurer thus there is no common obligation between multiple primary insurers and thus no contribution allowed. Sloan Construction Co., Inc. v. Central Nat. Ins. Co. of Omaha, 236 S.E.2d 818, 820-821 (S.C. 1977). As far as the payment of a loss, an insurer which pays more than its proportionate share of a debt which is equally and concurrently due by another insurer, or other insurers, has a right to contribution from the others, based upon the equitable principle that those who insure the same duty ought to share equally in the results of a default. See Travelers Ins. Co. v. Allstate Ins. Co., 155 S.E.2d 591 (S.C. 1967).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any South Carolina cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – An insurer’s right to subrogation exists regardless of whether the insured has formally subrogated his right to the insurer or whether the insurance contract contained a clause subrogating the right. Globe & Rutgers Fire Ins. Co. v. Foil, 189 S.C. 91, 200 S.E. 97, 101 (S.C. 1938). In partial subrogation cases, the insured’s right of action against the wrongdoer is “single and indivisible, even though the insurer is subrogated to the rights of the insured to the extent of the loss paid.” See Pringle v. Atl. Coast Line R.R., 47 S.E.2d 722, 724 (S.C.1948). With regard to subrogation between co-insurers, “South Carolina state courts have not yet weighed in on the issue of whether or not the doctrine of equitable subrogation can apply in a case between co-insurers.” Liberty Mut. Ins. Co. v. Westport Ins. Corp., 664 F.Supp.2d 587 D. S.C. 2009).

D. Targeted Tender – Research did not reveal South Carolina cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Excess liability insurer will be obligated to defend if the plaintiff’s complaint against the insured seeks an amount greater than the primary insurer’s policy limits. Royal Ins. Co. of America v. Reliance Ins. Co., 140 F.Supp.2d 609 (D. S.C. 2001). The primary insurer does not owe a duty to the excess insurer to maintain united insurance front against a plaintiff suing the insured,

and thus the primary insurer may tender its policy limits in the underlying action. Royal Ins. Co. of America v. Reliance Ins. Co., 140 F.Supp.2d 609 (D. S.C. 2001).

B. Pro Rata Obligations and Who is Excess Issues – Where damage begins during the policy period and continues, the insurers share liability pro rata based on the time period its policy covered. Auto-Owners Ins. Co., Inc. v. Zurich USA, 377 F.Supp. 2d 496 (D.S.C. 2004); Spartan Petroleum Co., Inc. v. Federated Mut. Ins. Co., 162 F.3d 805, 812 (4th Cir. 1998) (interpreting S.C. law and allocating damages pro-rata time on risk). See also State Auto. Prop. & Cas. Ins. Co. v. Gibbs, 444 S.E.2d 504, 507 (S.C. 1994) (allocation of liability is not determined by equity; rather it is determined by the terms of the policies).

C. Other Insurance Clauses – Although the general rule regarding the application of repugnant “other insurance” clauses mandates that the coverage be prorated as both policies are treated as primary, this rule should not apply when its use would distort the meaning of the terms of the policies involved; rather, the total policy insuring intent of the parties always remains the central issue in determining the proper apportionment of coverage among multiple insurance carriers. South Carolina Farm Bur. Mut. Ins. Co. v. S.E.C.U.R.E. Underwriters Risk Retention Group, 554 S.E.2d 870 (S.C. Ct. App. 2001).

South Dakota

I. Duty to Defend Issues A. Coverage Trigger – This issue is not addressed either in statutes or in the state’s case law.

B. Reservation of Rights (“ROR”) – An insurer can assert a non-coverage defense if timely notice was given to the insured. See St. Paul Fire & Marine Ins. Co. v. Engelmann, 639 N.W.2d 192, 201 (S.D. 2002).

C. Mechanics of a ROR – Once an insurer reserves its rights via a letter to the insured, the insurer no longer has the right to determine who will represent the insured as counsel in the underlying lawsuit. See Connolly v. Standard Casualty Co., 73 N.W.2d 119, 122 (S.D. 1955), (South Dakota Supreme Court held defendant insurer had no right, without consent of insured, to retain control of the defense and at the same time reserve its right to disclaim liability). See also State Farm Mut. Auto. Ins. Co. v. Armstrong Extinguisher Service, Inc., 791 F. Supp. 799, 801 (D.S.D. 1992) (recognizing this rule).

D. Right to Repair – No statute

Marine Ins. Co., 110 N.W.2d 344 (S.D. 1961). But see Am. Concept Ins. Co. v. Certain Underwriters at Lloyds of London, 467 N.W.2d 480, 482 (S.D. 1991) (to determine whether contribution exists among concurrent insurers, look to the language of the policy).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any South Dakota cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – An insurer need not include a contractual subrogation clause in the insured’s policy in order to be subrogated to the insured’s rights. Maryland Cas. Co. v. Delzer, 283 N.W.2d 244, 248 (S.D. 1979) (insurer has legal or equitable subrogation).

D. Targeted Tender – Research did not reveal South Dakota cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Absent obligatory policy language, an excess insurer is not obligated to “drop down” and provide coverage for that portion of a loss once within an insolvent primary insurer’s coverage. Rapid City Reg’l Hosp., Inc. v. S.D. Ins. Guar. Ass’n., 436 N.W.2d 565, 567 (S.D. 1989).

B. Pro Rata Obligations and Who is Excess Issues – There are no federal or state cases in South Dakota specifically addressing the issue of how liability is allocated among insurers for ongoing property damage.

Tennessee

I. Duty to Defend Issues A. Coverage Trigger – The trigger coverage for occurrence based liability policies under Tennessee law is, for now, an open question. Although, there are two Tennessee cases that discuss trigger issues and appear to be leaning towards a continuous trigger theory, neither case deals with construction defect nor adopts the continuous trigger theory. See United States Fire Ins. Co. v. Vanderbilt University, 82 F.Supp.2d. 788 (M.D. Tenn. 2000); Osborne v. Hartford Acc. And Indem. Co., 476 S.W.2d 256 (Tenn. App. 1971).

B. Reservation of Rights (“ROR”) – If an insurer undertakes the defense of its insured without first disclaiming liability and providing a reservation or rights, and does so with knowledge of a noncoverage defense, it is subsequently precluded from asserting forfeiture or noncoverage. American Home Assurance Co. v. Ozburn-Hessey Storage Co., 817 S.W.2d 672, 675 (Tenn. 1991).

C. Mechanics of a ROR – To prevent this waiver, the insurer is required to fairly and clearly communicate and inform the insured of the insurer’s position regarding the existence or nonexistence of coverage. However, the legal reasons for the insurer’s position need not be correctly communicated to the insured. Richards Mfg. Co. v. Great American Ins. Co., 773 S.W.2d 916, 919 (Tenn. App. 1988). An insurer's decision to provide a defense subject to a reservation of rights cannot be taken as an admission of ambiguity in the policy absent any other evidence of ambiguity. Tenn. Risk Mgmt. Trust v. Yancey, 2010 Tenn. App. LEXIS 17, 11-12 (Tenn. Ct. App. Jan. 19, 2010)

D. Occurrence – A construction defect will likely be considered an “occurrence” under a CGL policy. Travelers Ind. Co. v. Moore & Assoc., 216 S.w.3d 302 (Tenn. 2007).

E. Right to Repair – A plaintiff bringing an action against a contractor must serve written notice on the contractor before filing the lawsuit, thereby giving the contractor a right to repair the alleged defect. Tenn. Code § 66-36-103. Nonetheless, failure to serve such notice does not bar the filing of an action § 66-36-103, but the tribunal, on motion by a party to the action, must abate the action, without prejudice and the action can not proceed until the plaintiff has complied with the statutory notice requirements. § 66-36- 102.

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Tennessee courts permit a subrogation action by one co-insurer seeking contribution for defense costs from a non-performing co-insurer. See United Servs. Auto. Ass'n v. Hartford Accid. & Indem. Co., 414 S.W.2d 836 (Tenn. 1967).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any Tennessee cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – Under Tennessee law, insurer is generally subrogated to the rights its insured had against others when the insurer pays its insured's claim. Further, the excess insurer is subrogated to the insured’s rights where the excess insurer is required to pay a claim due to the primary insurer’s bad faith failure to settle the claim within the primary insurer’s policy limits. Electric Ins. Co. v. Nationwide Mut. Ins. Co., 384 F.Supp.2d 1190 (W.D. Tenn. 2005).

D. Targeted Tender – Research did not reveal Tennessee cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Under Tennessee law, primary liability insurer owed no duty to excess insurer to settle claim within primary policy's limits of coverage. Electric Ins. Co. v. Nationwide Mut. Ins. Co., 384 F.Supp.2d 1190 (W.D. Tenn. 2005).

B. Pro Rata Obligations and Who is Excess Issues – There are no federal or state cases in Tennessee specifically addressing the issue of how liability is allocated among insurers for ongoing property damage.

C. Other Insurance Clauses – Under Tennessee law, courts generally strike both other insurance clauses as conflicting when strict construction of the clauses results in the conclusion that no primary coverage exists. Methodist Healthcare v. American Intern. Specialty Line Ins. Co., 310 F.Supp.2d 976 (W.D. Tenn. 2004). Where possible, however, Tennessee courts will attempt to reconcile a pro rata clause and an excess clause in concurrent primary policies. See Shelter Mut. Ins. Co. v. State Farm Fire and Cas. Co., 930 S.W.2d 570 (Tenn. Ct. App. 1996) (Pro rata clause in homeowner’s policy and excess other insurance clause in church’s liability policy were not repugnant where pro rata clause provided that if there were other applicable insurance, homeowner’s insurer would pay its share and liability policy’s excess clause provided that insurance was excess over any other applicable insurance; homeowner’s policy, thus, would always provide coverage for any insured event, but liability policy would provide coverage only for excess not covered by any other existing policy.)

Texas

I. Duty to Defend Issues A. Coverage Trigger – Texas courts apply the actual injury trigger. The Texas Supreme Court rejected the “exposure rule” and the “manifestation rule,” instead adopting the “actual-injury” rule under a liability policy, under which property damage occurs during the policy period if “actual damage to the property occurred” during the policy period. See Pine Oak Builders, Inc. v. Great American Lloyds Ins. Co., 279 S.W.2d 650 (Tex. 2009); and Don’s Bldg. Supply, Inc. v. One Beacon Ins. Co., 267 S.W.3d 20 (Tex. 2008). In addition, the determination as to duty to defend is according to the eight-corners rule wherein only the pleadings and the policy language are considered. See Burlington N. & Santa Fe Ry. Co. v. Nat'l Union Fire Ins. Co., 2011 Tex. LEXIS 130, 5-7 (Tex. 2011). Also, an insurer may have duty to indemnify although that insurer did not have a duty to defend. See id.

B. Reservation of Rights (“ROR”) – Waiver and estoppel may not be used to create insurance coverage that did not originally exist. However, where an insurer assumes the

defense of the insured, knows that there is no liability and does reserve its rights, the insurer may be estopped from raising policy defenses and denying coverage. Paradigm Ins. Co. v. Tex. Richmond Corp., 942 S.W.2d 645, 653 (Tex. App. 1997). The total denial of liability on any grounds after the time permitted for giving notice does not constitute a waiver of the defense of late notice. Id. (citing U.S. Fidelity & Guaranty Co. v. Bimco Iron & Metal Co., 464 S.W.2d 353, 357 (Tex. 1971).

C. Mechanics of a ROR – “A reservation-of-rights letter ordinarily does not, by itself, create a conflict between the insured and the insurer[.]” Unauthorized Practice of Law Comm. v. Am. Home Assur. Co., 261 S.W.3d 24, 40 (Tex. 2008). “[W]hen the facts to be adjudicated in the liability lawsuit are the same facts upon which coverage depends, the conflict of interest will prevent the insurer from conducting the defense and the insured will be permitted to select its own defense counsel. N. County Mut. Ins. Co. v. Davalos, 140 S.W.3d 685, 689 (Tex. 2004). When insurer provides its insured with defense under reservation of rights, there is no longer privity between insurer and the insured. State Farm Lloyds Ins. Co. v. C.M.W., 53 S.W.3d 877, 886-887 (Tex. App. 2001).

D. Occurrence – A construction defect will likely be considered an “occurrence” under a CGL policy. Lamar Homes, Inc. v. Mid-Continent Cas. Co., 239 S.W.3d 302 (Tex. 2007). Property damage “occurs” during the policy period if “actual damage to the property occurred” during the policy period. See Pine Oak Builders, Inc. v. Great American Lloyds Ins. Co., 279 S.W.2d 650 (Tex. 2009).

E. Right to Repair – Claimant must provide notice of an alleged defect to the contractor prior to filing a lawsuit against that contractor thereby giving the contractor an opportunity to offer to settle the dispute by curing the defect or by various other means. TEX. PROP. CODE § 27.004.

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – The right of contribution among carriers depends on whether the carriers each share a common obligation. See Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co., 236 S.W.3d 765, 772 (Tex.2007) (“contribution ... require[s] that several insurers share a common obligation or burden ...”) The right of contribution among primary carriers exists where primary carrier failed to provide a defense despite having a duty to do so. American Indem. Lloyds v. Travelers Property & Cas. Ins. Co., 335 F.3d 429, 435-436 (5th Cir. 2003) (applying Texas law).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal Texas cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – Even where there is no contractual right to subrogation, an insurer will have an equitable or legal right to subrogation. Rushing v. International Aviation Underwriters, Inc., 604 S.W.2d 239, 243–44 (Tex. Civ. App.

Dallas 1980). Although there is no direct cause of action between carriers, an excess carrier is permitted to bring an equitable subrogation action against a primary carrier once the excess carrier has been expressly subrogated to the rights of the insured. Am. Centennial Ins. Co. v. Canal Ins. Co., 843 S.W.2d 480, 483 (Tex.1992); Royal Ins. Co. of Am. v. Caliber One Indem. Co., 465 F.3d 614, 625 (5th Cir. 2006) (applying Texas law).

D. Targeted Tender – An insured may select one insurer among multiple coinsurers covering the same risk, but once the choice is made, the non-targeted coninsurers will still be required to indemnify any loss. See Am. Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 855 (Tex. 1994).

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – There is no direct duty between an excess carrier and a primary carrier. American Centennial Ins. Co. v. Canal Ins. Co., 843 S.W.2d 480, 483 (Tex. 1992). The excess carrier can, however, sue the primary carrier for breaching its duty to settle (owed to the insured) through equitable subrogation of the insured’s right to bring the action. Id. An excess insurer is not obligated to provide “drop down” coverage when a primary insured becomes insolvent. Emscor Mfg., Inc. v. Alliance Ins. Group, 879 S.W.2d 894 ( Tex. App. Houston 14th Dist. 1994).

B. Pro Rata Obligations and Who is Excess Issues – Texas applies the joint and several or “all sums” method of allocation. American Physicians Ins. Exchange v. Garcia, 876 S.W.2d 842, 855 (Tex. 1994). See also, Texas Prop. & Cas. Ins. Guar. Assoc. v. Aggregates, Inc., 982 S.W.2d 600, 605 (Tex. App. 1999).

C. Other Insurance Clauses – Competing other insurance clauses are irreconcilable and, as a result, insurers must pro rate the loss. Hardware Dealers Mut. Fire Ins. Co. v. Farmers Ins. Exchange, 444 S.W.2d 583 (Tex. 1969). The legal effect of an “other insurance” or “pro rata” clause is to provide that each insurer shall not be liable for any greater proportion of any loss which may occur than the amount named in the policy bears to the entire amount of the insurance coverage available. State Farm Fire & Cas. Co. v. Griffin, 888 S.W.2d 150 (Tex. App. 1 Dist. 1994).

Utah

I. Duty to Defend Issues A. Coverage Trigger – Under Utah law, injury-in-fact or actual injury trigger applied to coverage for property damage from release or discharge of hazardous waste, and, thus, “occurrence” within meaning of comprehensive general liability (CGL) policies took place each time hazardous waste such as drain oil was discharged and inflicted property damage. Quaker State Minit-Lube. Inc. v. Fireman's Fund Ins. Co., 868 F. Supp. 1278 (D. Utah 1994) (applying Utah law).

B. Reservation of Rights (“ROR”) – Whether an insurer may recoup defense costs under a reservation of rights has never been addressed by the Utah Supreme Court or the Utah Court of Appeals. Westport Ins. Corp. v. Ong, 2008 WL 892941, *3 (D. Utah March 28, 2008) (certified question to Utah Supreme Court). It might be possible to argue, however, that reservation of rights letters may be recognized under Utah law. See Essex Ins. Co. v. Wake Up Too, Inc., 2009 WL 357987, *1 (D. Utah 2009) (slip copy).

C. Mechanics of a ROR – Utah cases make clear the most prudent approach for insurers when coverage is in doubt is to send a reservation of rights letter and continue defense: “[w]here factual questions render coverage uncertain . . . the insurer must defend until those uncertainties can be resolved against coverage.” United States Fidelity & Guar. Co. v. Sandt, 854 P.2d 519, 521 (Utah 1993) (internal quotation marks omitted)

D. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Concurrent primary insurers are allowed to recover from one another based on equitable subrogation. Sharon Steel Corp. v. Aetna Cas. & Sur. Co., 931 P.2d 127, 137-38 (Utah 1997) (paying insurer will have contribution as to a ratable proportion of the amount paid by it).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any Utah cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – Utah recognizes the insurer’s right to subrogation to the insured’s rights as against a third party. Bakowski v. Mountain States Steel, Inc., 52 P.3d 1179 (Utah 2002). Where the insured settles with the torfeasor, and the tortfeasor and/or its insurer was on notice of the other insurer’s subrogation right, then the settlement and release will not affect the insurer’s right of subrogation. Sharon Steel Corp. v. Aetna Cas. & Sur. Co., 931 P.2d 127, 138-139 (Utah 1997).

D. Targeted Tender – Research did not reveal Utah cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Under Utah law, duty of excess liability insurer to defend insured did not arise until limits of primary policy were exhausted. Utah Power & Light Co. v. Federal Ins. Co., 983 F.2d 1549, 1557 (10th Cir. 1993).

B. Pro Rata Obligations and Who is Excess Issues – Damages are allocated proportionally among insurers using the time on the risk method based on the number of

years the insurer was on the risk. Sharon Steel Corp. v. Aetna Cas. & Sur. Co., 931 P.2d 127, 140 (Utah 1997).

Vermont

I. Duty to Defend Issues A. Coverage Trigger – Vermont applies the continuous trigger. In Towns v. Northern Sec. Ins. Co., 964 A.2d 1150 (Vt. 2008), the court applied a continuous-trigger theory to a claim of liability coverage under a homeowners policy for groundwater contamination.

B. Reservation of Rights (“ROR”) – An insurer must reserve its rights or it waives any non-coverage defenses. Hardwick Recycling & Salvage, Inc. v. Acadia Ins. Co., 869 A.2d 82, 92 (Vt. 2004) (citing Cummings v. Conn. Gen. Life Ins. Co., 148 A. 484, 486 (Vt. 1930).

C. Mechanics of a ROR – The insurer may reserve its rights for all defenses or specify defenses which it may assert to deny coverage. Hardwick Recycling, 869 A.2d at 92 (citing Cummings, 148 A. at 486. However, if an insurer specifies defenses, it waives all other available grounds for denying coverage unless it expressly reserves the right to later raise other grounds, unless there were facts that it did not have knowledge of at the time of reservation. Id. Regardless of how detailed the reservation of rights letter is worded, the insurer has the burden of making sure the verdict in underlying cases involving both covered and uncovered claims is detailed enough to permit allocation of damages between covered and uncovered. See Pharmacists Mut. Ins. Co. v. Myer, Cooper and MMG Ins. Co., 993 A.2d 413, 419-420 (Vt. 2010) (in the absence of special interrogatories it was impossible to reliably allocate damages, so, to protect its interests and meet its burden, insurer should have notified court and parties of potential apportionment issue and need for special interrogatories allocating damages).

D. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Concurrent insurers are allowed to recover from one another based on a theory of equitable subrogation. Jefferson Ins. Co. v. Travelers Ins. Co., 614 A.2d 385, 387 (Vt. 1992). An insurer’s right to contribution will be waived if the insurer, without specifically reserving the right to contribution, enters into a settlement of a claim against its insured with the claimant and another insurance company that is arguably liable on the claim. Id.

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any Vermont cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – An insurer is subrogated to the rights of its insured. Utica Nat. Ins. Co. v. Cyr, 945 A.2d 361 (Vt. 2008). A subrogated insurer’s rights against a third-party tortfeasor are derivative of the insured’s rights, thus the subrogation claim is also subject to any defenses the tortfeasor or its insurer could assert against the insured. Id. However, when an insured gives a release to the tortfeasor, the subrogated insurer has a means to seek reimbursement from the insured for its loss based on breach of contract, not on a claim for subrogation, and may be able to pursue a subrogation claim against the tortfeasor under certain circumstances. Id.

D. Targeted Tender – Research did not reveal Vermont cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Where the policy specifically states that there is no duty to defend when the policy provides excess coverage, the Vermont Supreme Court will honor such language only if the insured’s overall coverage is not compromised. Fireman’s Fund Ins. Co. v. CNA Ins. Co., 862 A.2d 251, 264 (Vt. 2004).

B. Pro Rata Obligations and Who is Excess Issues – Vermont follows the “time on the risk” method of allocation with respect to environmental pollution claims. Towns v. Northern Security Ins. Co., 964 A.2d 1150, 1167 (Ver. 2008).

C. Other Insurance Clauses – In explaining why pro rata apportionment is used where “other insurance” clauses conflict, the Vermont Supreme Court has stated that pro rata apportioning of liability where “other insurance” provisions are mutually repugnant rests on the important policy goal of helping insureds to settle claims. Humphrey v. Vermont Mut. Auto. Ins. Co., 979 A.2d 452 (Vt. 2009).

Virginia

I. Duty to Defend Issues A. Coverage Trigger – Virginia applies the injury-in-fact/continuous trigger hybrid. “Based on the underlying complaint, the PCE contamination occurred over a ten year period. On these facts, then, all of the insurance policies in effect for each year during this ten year period are potentially implicated by the underlying suit, and therefore the language of each policy must be examined for its relevance to plaintiffs’ claim that defendants breached their duty to defend that suit. This is so in light of the sensible general rule, which Virginia would likely follow, that ‘coverage is triggered at the time of an injury-in-fact and continuously thereafter to allow coverage under all policies in effect

from the time of injury-in-fact during progressive damage.’” Morrow Corp. v. Harleysville Mutual Ins. Co., 101 F. Supp. 2d 422 (E.D. Va. 2000) (soil and groundwater contamination) (quoting Spartan Petroleum v. Federated Mut. Ins. Co., 162 F.3d 805 (4th Cir. 1998)).

B. Reservation of Rights (“ROR”) – If an insurer discovers a breach of its policy, it must provide notice to the claimant or its counsel of the breach. VA. CODE ANN. § 38.2- 2226.

C. Mechanics of a ROR – The insurer must also give notice of the reservation of rights to the claimant or claimant’s counsel within 30 days before the date of the trial. VA. CODE ANN. § 38.2-2226. The court may allow notice to be given less than 30 days upon a showing of good faith. Id. Failure to comply will result in the insurer’s waiver of the defense. Id. In addition, Virginia law does not mandate an insurer pay for independent counsel of the insured’s choice. See Hartford Cas. Ins. Co. v. JR Mktg., LLC, 511 F. Supp. 2d 644, 645 (E.D. Va. 2007).

D. Occurrence – A construction defect will not be considered an “occurrence” under a CGL policy. Hotel Roanoke Conf. Center Comm’n v. Cincinnati Ins. Co., 303 F. Supp. 2d 784 (W.D. Va. 2004).

E. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Contribution among primary insurers is permitted in certain circumstances. See Continental Ins. Co. v. State Farm Fire and Cas. Co., 380 S.E.2d 661 (Va. 1989). However, the Virginia Supreme Court reversed a decision allowing contribution where a homeowner’s insurer paid the loss on a fire damages claim and then sought, through subrogation, contribution from the builder’s insurer; the court reasoned the insureds under the homeowner’s insurer’s policy could not received contribution under the builder’s policy because they were not listed as “additional insureds” under the builder’s policy. Ohio Cas. Ins. Co. v. State Farm Fire and Cas. Co., 546 S.E.2d 421 (Va. 2001).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any Virginia cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier for contribution.

C. Subrogation Issues with Insured – An insurance company will have a right to subrogation where the insured's loss allegedly was caused by a third party’s negligent or tortious conduct. Gill v. Rollins Protective Services Co., 788 F.2d 1042, 4th Cir. 1986).

D. Targeted Tender – Research did not reveal Virginia cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Court will focus on the language of the excess policy to determine the point at which the excess insurer has an obligation to “drop down” and provide coverage in place of a primary insurer. Atkinson Dredging Co. v. St. Paul Fire & Marine Ins. Co., 836 F. Supp. 341, 347 (E.D. Va. 1993).

B. Pro Rata Obligations and Who is Excess Issues – There are no federal or state cases in Virginia specifically addressing the issue of how liability is allocated among insurers for ongoing property damage.

C. Other Insurance Clauses – Where two primary policies both contain excess “other insurance” clauses, the excess clauses are generally treated as mutually repugnant and the loss is pro rated between the insurers. Aetna Cas. & Sur. Co. v. National Union Fire Ins. Co., 353 S.E.2d 894 (Va. 1987). Where an excess clause and a pro rata clause appear in concurrently effective policies, the pro rata clause is disregarded and full effect is given to the excess clause, making the pro rata policy the primary insurance. United Services Auto. Ass’n v. Travelers Indem. Co., 396 S.E. 2d 658 (Va. 1990). In predicting Virginia law, a federal district stated where two policies afford coverage on a particular loss, and one contains a pro rata clause as to other insurance and the other policy contains an excess clause, the policy containing the excess clause does not provide any coverage until the other policy is exhausted. Early Settlers Ins. Co. v. Selected Risks Ins. Co., 346 F.Supp. 1272, 1277 (D.C. Va. 1972).

Washington

I. Duty to Defend Issues A. Coverage Trigger – With respect to the standard “occurrence” based CGL policy, Washington has adopted the single exposure “continuous trigger” theory of coverage, American Nat. Fire Ins. Co. v. B&L Trucking and Construction Co., 951 P.2d 250 (Wash. 1998). Each insurer who has issued a policy from the trigger date forward is jointly and severally liable for the entire loss, unless its policy covers a period of time after the loss became known to the insured. See also, Gruol Const. Co. v. Ins. Co. of N. Am., 524 P.2d 427 (Wash. 1974) (holding that when an insured sustains damages of a continuing nature, all policies are triggered in which the occurrence took place).

B. Reservation of Rights (“ROR”) – If the insurer is unsure of its obligation to defend, it may defend under a reservation of rights while seeking a declaratory judgment that it has no duty to defend. An insurer who fails to proceed under a reservation of rights may be precluded from asserting policy defenses under theories of waiver and estoppel. Truck Ins. Exch. v. VanPort Homes, 58 P.3d 276 (Wash. 2002).

C. Mechanics of a ROR – An insured is not entitled by law to choose independent counsel to represent it where there is a potential conflict with the insurer in a reservation of rights situation. See Johnson v. Cont'l Cas. Co., 788 P.2d 598, 601 (Wash. Ct. App.

1990) (“In Washington, there is simply no presumption . . . that a reservation of rights situation creates an automatic conflict of interest. Therefore, the insurer has no obligation before-the-fact to pay for its insured's independently hired counsel.”). Instead, the insured is entitled to a defense provided by a lawyer selected by the insurer, and the appointed lawyer owes an enhanced obligation of fairness to the insured. (As recently analyzed in Weinstein & Riley, P.S. v. Westport Ins. Corp., 2011 U.S. Dist. LEXIS 26369 (W.D. Wash. Mar. 14, 2011)).

D. Right to Repair – “In every construction defect action brought against a construction professional, the claimant shall, no later than forty five days before filing an action, serve written notice of claim on the construction professional.” Wash. Rev. Code § 64.50.020(1). § 64.50.020 further provides that the contractor must respond to the notice by either: (1) inspecting the defect and offering to repair it; (2) settling the claim without repairing the defect; or (3) disputing the claim.

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – The key inquiry in deciding whether one insurer is liable for equitable contribution to another is whether the nonparticipating co- insurer had a legal obligation to provide a defense or indemnity coverage for the claim or action prior to the date of settlement. Mut. Of Enumclaw Ins. Co. v. USF Ins. Co., 191 P.3d 866, 872-873 (Wash. 2008).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Although research did not reveal any Washington cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier, research did locate one case discussing the ability of a primary carrier to pursue a carrier holding a policy naming the primary carrier’s insured as an “additional insured.” In that case, a condominium project developer was not entitled to coverage as an additional insured pursuant to additional insured endorsement for the developer in the insurance policy issued by subcontractors’ insurer. Thus, developer’s insurer was not entitled to contribution from subcontractors’ insurer of funds it paid to settle a lawsuit that a condominium homeowners’ association brought against developer alleging construction defects. The additional insured endorsement for developer limited the developer’s coverage to property damage arising out of the subcontractors’ work in progress on project only, and the complaint in the underlying suit did not specifically allege liability arising from work of the subcontractors while the project was still in progress. Additionally, the letter refusing the developer’s tender of defense stated that the work of subcontractors was completed and accepted by developer. See Hartford Ins. Co. v. Ohio Cas. Ins. Co., 189 P.3d 195, 202-3 (Wash. App. Div. 1 2008).

C. Subrogation Issues with Insured – Regardless of whether the insurer includes a subrogation clause in the policy, the insurer is still entitled to legal or equitable subrogation. Fisher v. Aldi Tire, Inc. 902 P.2d 166, 168 (Wash. App. Div. 1 1995)

D. Targeted Tender – Washington recognizes and insured’s right to make a selective tender, but Washington courts have carved out an exception in cases where the insured makes a belated decision on which insurer it wishes to tender defense: the “late tender” rule provides that an insured’s breach of an insurance contract through failure to notify the insurer of a claim does not relieve the insurer of the obligation to perform under the insurance contract unless the insurer can prove that the late notice caused it actual and substantial prejudice. See Mut. of Enumclaw Ins. Co. v. USF Ins. Co., 191 P.3d 866, 873- 874 (Wash. 2008)

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – The duty to settle that a primary insurer owes to an excess insurer derives from the primary insurer’s duty to the insured, such that an aggrieved excess insurer may sue on an equitable subrogation theory. First State Ins. Co. v. Kemper Nat'l Ins. Co., 971 P.2d 953, 957 (Wash. Ct. App. 1999). Allowing excess insurers a right of action against primary insurers for bad faith (whether direct or via equitable subrogation) encourages reasonable settlements, prevents primary insurers from obstructing settlement, prevents the unfair distribution of losses among primary and excess insurers, and reduces the cost of excess insurance. See Truck Ins. Exch. v. Century Indem. Co., 887 P.2d 455, 458 (Wash. Ct. App. 1995).

B. Pro Rata Obligations and Who is Excess Issues – When multiple policies are triggered, insurers are held jointly and severally liable for the loss. Northwest Steel Rolling Mills Liquidating Trust v. Fireman’s Fund Ins. Co., 1991 WL 639662 at *7 (W.D. Wash., Feb. 27, 1991); American Nat'l Fire v. B&L Trucking, 951 P.2d 250, 255 (Wash. 1998).

C. Other Insurance Clauses – Where an excess clause and a pro rata clause appear in concurrently effective policies, the pro rata clause is disregarded and full effect is given to the excess clause, making the pro rata policy the primary insurance. Progressive Cas. Ins. Co. v. Cameron, 724 P.2d 1096 (Wash. App. Div. 1 1986).

West Virginia

I. Duty to Defend Issues A. Coverage Trigger – It is the date when the offense occurs that triggers the coverage rather than the date of the injury. State Bancorp, Inc. v. U.S. Fidelity and Guar. Ins. Co., 483 S.E.2d 228, 237 (W. Va. 1996).

B. Reservation of Rights (“ROR”) – Waiver and estoppel may not extend coverage beyond the terms of the insurance contract. Potesta v. U.S. Fid. & Guar. Co., 504 S.E.2d 135, 147 (W. Va. 1998). However, where an insurer defends a claim without a reservation of rights, the insurer may be estopped from later denying coverage. Id. at 148.

C. Mechanics of a ROR – When an insurer defends under a reservation of rights, West Virginia courts will not permit the insured to argue the insurer impliedly waived coverage issues, regardless of how far it goes in litigating the defense of the insured. See Farm Family Mut. Ins. Co. v. Bobo, 199 W. Va. 598, 603 (W. Va. 1997). If the insurer subsequently loses the declaratory judgment action it filed to determine whether coverage was due, the insured may be entitled to its attorneys fees in the declaratory judgment action. See Aetna Casualty & Surety Co. v. Pitrolo, 342 S.E.2d 156 (W. Va. 1986).

D. Right to Repair – A contractor has a right to repair alleged defects before a claimant can commence a lawsuit against the contractor; and prior to entering into a contract for residential improvements, the contractor must give notice to the owner of the contractor’s right to cure construction defects. W. Va. Code § 21-11A-5.

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – The West Virginia Supreme Court of Appeals has held that the doctrine of equitable contribution arises when there is a common obligation and one insurer has to pay more than its fair share of that obligation.. Mackey v. Irisari, 191 W.Va. 355, 445 S.E.2d 742, 747 (1994) (construing West Virginia law).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any West Virginia cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – The West Virginia Supreme Court has held that subrogation clauses in insurance contracts are valid and enforceable. See Nationwide Mutual Ins. Co. v. Dairyland Ins. Co., 445 S.E.2d 184, 186 (W.Va.1994). Insurers will also likely be entitled to equitable subrogation in the event there is no such contractual provision. See Martine v. Hertz Corp., 103 F.3d 118 (4th Cir. (W.Va.).

D. Targeted Tender – Research did not reveal West Virginia cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – A primary insurance carrier has a duty to act in good faith with respect to an excess or additional insurance carrier when defending a claim. State ex rel. Allstate Ins. Co. v. Karl, 437 S.E.2d 749, 755 (W. Va. 1993). It would be unlikely to find a common obligation in the context of primary insurers and excess insurers so as to support a contribution claim by one against the other. Mackey v. Irisari, 191 W.Va. 355, 445 S.E.2d 742, 747 (1994) (construing West Virginia law).

B. Pro Rata Obligations and Who is Excess Issues – Where both a business auto policy and a commercial general liability policy deemed their coverage excess over “any

other” available insurance, both insurers had a duty to share in the defense and indemnification of the insured together on a pro rata basis. American Safety Indem. Co. v. Stollings Trucking Co., Inc., 450 F.Supp.2d 639, 648 (S.D. W.Va. 2006).

C. Other Insurance Clauses – Competing excess insurance clauses “should be disregarded inasmuch as they are mutually repugnant and as against each other cannot be recognized.” Allstate Insurance Company v. Atlantic National Insurance Company, 202 F.Supp. 85, 88 (S.D. W.Va.1962) (construing West Virginia law).

Wisconsin

I. Duty to Defend Issues A. Coverage Trigger – Wisconsin courts apply the continuous trigger. See American Family Mut. Ins. Co. v. American Girl, Inc., 673 N.W.2d 65 (Wis. 2004) (applying continuous trigger theory to three commercial general liability (CGL) insurance policies issued to the general contractor where damage to warehouse from soil settlement was caused by faulty site preparation advice given accidentally by the subcontractor).

B. Reservation of Rights (“ROR”) – Wisconsin permits reservation of rights in three different ways: “1. the insurer and the insured can enter into a nonwaiver agreement in which the insurer would agree to defend, and the insured would acknowledge the right of the insurer to contest coverage; 2. the insurer can require a bifurcated trial or a declaratory judgment so that the coverage issue can be resolved before the liability and damage issues; 3. the insurer can file a reservation of rights which allows the insured to pursue his or her own defense not subject to the insurer's control, but the insurer agrees to pay for the legal fees incurred.” HK Systems, Inc. v. Admiral Ins. Co., 2005 WL 1563340, *6 (E.D.Wis. 2005).

C. Mechanics of a ROR – When an insurer contests coverage but invokes its option to provide a defense to the insured under a reservation of rights, the insurer remains entitled to a determination of its defense obligation separate from a determination on the merits. Estate of Sustache v. Am. Family Mut. Ins. Co., 751 N.W.2d 845 (Wis. 2008). A federal court in Wisconsin has predicted, “the Supreme Court of Wisconsin would not find that any reservation of rights automatically creates a conflict of interest between insured and insurer, which divests the insurer of control of the defense” and that only “a real conflict of interest based on opposing defenses of insured and insurer requires the insurer to give up control.” HK Sys., Inc. v. Admiral Ins. Co., 2005 U.S. Dist. LEXIS 39939 (E.D. Wis. June 24, 2005).

D. Occurrence – A construction defect will likely be considered an “occurrence” under a CGL policy. American Family Mut. Ins. Co. v. AmericanGirl, Inc., 673 N.W.2d 65 (Wis. 2004).

E. Right to Repair – Wis. Stat. § 895.07 states that before commencing an action against a contractor regarding a construction defect, a claimant must deliver written notice to the contractor, thereby giving the contractor an opportunity to cure the alleged defect prior to the lawsuit. Contractors are required to supply consumers with notice of the defect claim procedures before, and at the time of, contracting. Wis. Stat. § 101.148.

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – Wisconsin permits a contribution claim between insurers, but Wis. Stat. § 893.92 establishes a one-year limitation period on claims for contribution arising from payment. When payment is made, the contribution claim should be commenced within one year from that date. Milwaukee Mut. Ins. Co. v. Priewe, 348 N.W.2d 585, 587 (Wis. Ct. App. 1984). Additionally, Wisconsin courts permit equitable contribution claims. “Contribution is an equitable remedy that is available between insurance companies that are equally liable for the discharge of common obligations. That is, contribution may be available when there is “double coverage” for the loss. Double coverage exists only when both policies cover the same property, and the same interest in the property, against the same risk for the same insured.” Society Ins. v. Capitol Indem. Corp., 659 N.W.2d 875, 879 (Wis. App. 2003) (citing Reliance Ins. Co. v. Liberty Mut. Fire Ins. Co., 13 F.3d 982, 983 (6th Cir.1994)).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – A right of a primary carrier to pursue an additional insured’s own carrier may exist in Wisconsin, so long as there is “identity of insureds.” See Society Ins. v. Capitol Indem. Corp., 659 N.W.2d 875, 879-880 (Wis. App. 2003) (finding contribution is not available between a primary carrier and the carrier of an additional insured because, under the facts of the case, there was no “identity of insureds”).

C. Subrogation Issues with Insured – Excess carriers will likely be equitably subrogated to their insured’s malpractice claim against the insured’s attorney. Gen. Accident Ins. Co. of Am. v. Schoendorf & Sorgi, 549 N.W.2d 429 (Wis. 1996) (permitting subrogation). Under Wisconsin law, however, insurer may not claim right of subrogation against proceeds of insured's settlement with third-party tortfeasor in personal injury case unless insured has been made whole. Davis v. Nepco Employees Mut. Ben. Ass’n, 51 F.3d 752 (7th Cir. 1992).

D. Targeted Tender – Under Wisconsin law, tender occurs when an insured puts an insurer on notice of a claim against the insured, and the insurer has the option of requesting clarification from the insured. If the insured makes clear it has tendered to the insurer, the insurer must accept, but, if the insured fails to do so despite the insurer’s request for clarification, the insurer is not required to pursue the matter further. Thus, there is no existing duty to defend, even if previously triggered by actual notice of the claim. See Towne Realty, Inc. v. Zurich Ins. Co., 548 N.W.2d 64, 67 & n.2 (Wis. Ct. App. 1996)).

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – If the claim against the insured exceeds the monetary limits set by the primary insurer, the excess insurer will likely have an obligation to defend, even if the preliminary insurer undertakes the defense as well. American Motorist Ins. Co. v. Trane Co., 544 F. Supp. 669, 692 (W.D. Wis. 1982), aff’d, 718 F.2d 842 (7th Cir. 1983). Where the excess insurer’s policy includes the right to “associate” in the defense of lawsuits pending against the insured, however, the excess insurer does not have any duty to defend the insured until primary coverage is exhausted. Azco Hennes Sanco, Ltd. v. Wisconsin Ins. Sec. Fund, 502 N.W.2d 887, 889-90 (Wis. Ct. App. 1993). The primary insurer likely will not be treated as owing a duty to settle to the excess insurer. Loy v. Bunderson, 320 N.W.2d 175, 190-191 (Wis. 1982).

B. Pro Rata Obligations and Who is Excess Issues – Wisconsin courts have not currently addressed this question. See Plastics Engineering Co. v. Liberty Mut. Ins. Co., 514 F.3d 651 (7th Cir. 2008).

Wyoming

I. Duty to Defend Issues A. Coverage Trigger – To date, Wyoming has not addressed this issue in case law or statute.

B. Reservation of Rights (“ROR”) – An insurance company may send a notice of reservation of rights to the insured. Doctors’ Co. v. Ins. Corp. of Am., 864 P.2d 1018, 1030 (Wyo. 1993).

C. Mechanics of a ROR – The reservation of rights letter must make specific reference to the policy defense which the insurer may assert in the future. Doctors’, 864 P.2d at 1030. The failure to provide this specificity in the reservation of rights notice or the failure to provide any reservation of rights notice waives the insurance company’s right to claim non-coverage at a later time. See id. However, coverage cannot be extended by action or lack of action by the insurer under the doctrines of estoppel and waiver. St. Paul Fire & Marine Ins. Co. v. Albany County Sch. Dist., 763 P.2d 1255,1261 (Wyo. 1988). However, “[u]nder Wyoming law, courts disfavor insurer’s attempts to defend insureds while retaining the right to deny coverage and recoup defense costs at a later date.” Emplrs Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d 1153, 1175 (10th Cir. 2010).

D. Right to Repair – No statute

II. Contribution Issues A. Primary Carrier Ability to Pursue Each – For a proportionate recovery clause to operate in the insurer’s favor, or for the enforcement of contributions between insurers, there must be identity of risk. Northland Ins. Co. v. Miles, 446 P.2d 160, 161 (Wyo. 1968).

B. Primary Carrier Ability to Pursue Additional Insured Carrier – Research did not reveal any Wyoming cases discussing a primary carrier’s ability to pursue an additional insured’s own carrier.

C. Subrogation Issues with Insured – Insurer’s have a right to “conventional subrogation” under Wyoming law; this is essentially the same as equitable subrogation. Northern Utilities Division of K N Energy, Inc. v. Town of Evansville, 822 P.2d 829, 836 (Wyo.1991).

D. Targeted Tender – Research did not reveal Wyoming cases discussing insurers’ rights in situations involving “targeted tender” or “selective tender” among concurrent primary insurers.

III. Horizontal versus Vertical Issues A. Obligations between Primary and Excess Carrier – Excess insurer may be obligated to contribute to the loss if the loss is greater than the primary insurer’s policy limits. St. Paul Mercury Ins. Co. v. Pennsylvania Cas. Co., 640 F.Supp. 180, 187-188 (D. Wyo. 1986).

B. Pro Rata Obligations and Who is Excess Issues – There are no federal or state cases in Wyoming that specifically address the issue of how liability is allocated among insurers for ongoing property damage.

C. Other Insurance Clauses – The courts of Wyoming will closely exam the terms of the “other insurance” clauses in two or more policies, along with any other coverage provisions the court deems relevant. If those two clauses are found to be mutually repugnant, the liability of the insurers will be prorated in proportion to the liability limits provided by the respective policies. St. Paul Mercury Ins. Co. v. Pennsylvania Cas. Co., 642 F.Supp. 180 (D. Wyo. 1986).