When Two Insurers Point At Each Other

Some losses fall within more than one policy, and the resulting delay often looks to a claimant like both insurers denying responsibility. Policies contain specific language to resolve exactly this situation.

Other insurance clauses

Nearly every liability and property policy contains a condition addressing what happens when other insurance covers the same loss.

The clauses take recognizable forms: some make the policy primary, some make it excess over any other collectible insurance, and some provide for sharing.

Conflicts arise when two policies each declare themselves excess, which is a well-known problem courts have addressed repeatedly.

How primacy is usually determined

In auto claims, coverage often follows the vehicle first and the driver second, so the vehicle owner's policy typically responds before a driver's own policy.

In liability claims, a policy specific to the activity is generally primary over a broader policy that happens to include it.

Umbrella and excess policies sit above underlying limits by design and respond only once those limits are exhausted.

Resolution happens between the insurers

Insurers use intercompany arbitration for many of these disputes, a process run by industry arbitration forums rather than through the courts.

The claimant is not a party to that proceeding, and its outcome allocates cost between insurers rather than deciding what the claimant receives.

Where the amounts or the legal questions are large, insurers may litigate coverage instead, which takes considerably longer.

What a claimant can do while it runs

Asking each insurer in writing to state its coverage position and the basis for it converts an ambiguous delay into a documented one.

One insurer may agree to handle the claim while reserving the right to seek contribution later, which resolves the claimant's problem without settling the insurers' dispute.

Making a claim under one's own first-party coverage, where it exists, is often the faster route, with the insurer pursuing recovery afterward.

Where the delay becomes a regulatory issue

Most states impose time frames for acknowledging claims, completing investigations and communicating decisions, and those requirements apply regardless of an inter-insurer dispute.

A complaint to the state insurance department creates a record and requires a written response from the insurer within a set period.

Because prompt handling rules and coverage priority principles vary by state and change over time, an attorney licensed in the state is the right adviser where substantial amounts turn on the outcome.