Opinion ID: 884407
Heading Depth: 1
Heading Rank: 8

Heading: Did the District Court err in granting Continental's Motion for Summary Judgment on the issue of the specific limits of liability applicable to the Herrons' claims?

Text: The District Court concluded that the Herrons' claims are subject to the remaining policy limits of $20,742.94 for the 1993-1994 policy year. The Herrons argue to the contrary, contending that regardless of when their claim was made, they are entitled to the liability limits in effect at the time of the wrongful act and those limits have not been diminished by payments on other claims. The Herrons maintain that because the stated limits in effect during the 1993-1994 policy year and the stated limits in effect at the time of the wrongful act are identical and since the policy fails to define which set of limits will apply in that event, under the accepted rules of policy construction, the limits which provide the greatest degree of coverage  the undiminished limits in effect at the time of the wrongful act  must apply. They base their contention on the provision at section III(A)(1) of the policy, which provides: Our obligation to pay is further limited to: a. the amount of the limit of liability in effect at the time of the actual or alleged wrongful act, or b. the amount stated as the limit of liability for this policy term, whichever is less. The Herrons maintain that, because the two limits are equal, this language in the policy creates an ambiguity and any ambiguity must be construed in their favor. Contrary to the Herrons' assertions, we perceive no ambiguity in the policy language. The Herrons fail to note the policy language immediately preceding the policy provision cited by them, which states: The limit of liability shown on the Declarations is the maximum we will pay for any one or more claim [sic] made during this policy term. This limit applies as excess over any deductible amount. It is clear from this language in the policy that the maximum limit of liability for all claims made in any policy period is the purchased coverage, which in this case was $100,000. Continental then further limits its liability, in the provision cited by the Herrons, for acts which occurred before the policy period to the amount of insurance in effect at the time of the act. This prevents an insured who has a potential liability from increasing the limits before the claim is actually made. Since Continental has limited its coverage for all claims made during the policy year to $100,000 and since it has already paid out nearly $80,000 on prior claims during the 1993-1994 year, the Herrons are limited to the remaining policy limits of $20,742.94 for the 1993-1994 policy year. We agree with the District Court that it is troubling that the amount of insurance coverage is limited here just because the claim happened to be made at an inopportune time, but, this is a problem that occurs with claims-made policies. However, as the District Court stated, [e]ven insurance companies have the right to rely on the clear language of their policies. Accordingly, we hold that the District Court did not err in granting Continental's Motion for Summary Judgment on the issue of the specific limits of liability applicable to the Herrons' claims. Affirmed. TURNAGE, C.J., and HUNT and GRAY, JJ., concur.