Opinion ID: 1376545
Heading Depth: 1
Heading Rank: 2

Heading: The policy provides:

Text: The company [Royal Indemnity] will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of: Coverage A. Bodily injury or Coverage B. Property damage to which this insurance applies ... but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company's liability has been exhausted by payment of judgments or settlements. An endorsement to the policy also provides that: The limit of liability stated in the schedule of this endorsement as applicable to `each occurrence' is the total limit of the company's liability for all damages because of bodily injury ... as a result of any one occurrence.... Under these provisions, Royal Indemnity must indemnify the insured for liability assessed against the insured up to the amount of the policy limits for any one occurrence. Royal Indemnity argues that a prejudgment interest award is part of the damages the insured is legally obligated to pay because of bodily injury and is thus not recoverable in a situation where, as here, the policy limits have been exhausted. [5] The stipulated facts of this case indicate that the policy limits were exhausted by the principal amount awarded in the settlement. The policy-the contract between the parties-clearly provides that Royal Indemnity is obligated only for the amount of the policy limits. As such, it cannot be required to pay more than the contractual limit unless there has been a breach of contract, which has not been alleged here. See Henson v. Southern Farm Bureau Cas. Ins. Co. & Texas Farm Bureau Mut. Ins. Co., 17 S.W.3d 652, 653 (Tex.2000). Because the principal sum of the settlement agreement represented Royal Indemnity's entire contractual obligation, the explicit policy language precludes Embrey from recovering prejudgment interest in this case. Embrey argues, however, that the policy's Supplementary Payments Provision provides a basis to recover prejudgment interest. That provision states that Royal Indemnity will pay, in addition to the applicable limits of liability under the policy: (a) all expenses incurred by the company, all costs taxed against the insured in any suit defended by the company and all interest on the entire amount of any judgment therein which accrues after entry of the judgment and before the company has paid or tendered or deposited in court that part of the judgment which does not exceed the limit of the company's liability thereon. This language does not address prejudgment interest, but instead includes an explicit obligation to pay post-judgment interest. Consequently, the language used in the Supplementary Payments provision unambiguously obligates Royal Indemnity to pay post but not prejudgment interest. Nevertheless, Embrey argues that, although the Supplementary Payments provision does not mention prejudgment interest, the language of that provision should be interpreted to include prejudgment interest based on a State Board of Insurance Order issued for certain types of insurance policies. The State Board of Insurance issued an Order construing identical language used in general liability policies as providing coverage for prejudgment interest. In General Casualty Bulletin No. 644, the Board approved an amendatory endorsement explicitly stating that all general liability insurance policies effective on or after October 1, 1984 provide coverage for prejudgment interest. The accompanying Explanatory Memorandum stated that the amendatory endorsement [c]learly indicates that [prejudgment interest] coverage is provided, makes prejudgment interest payment not subject to the policy limits, and states that the rates should not be adjusted to reflect the endorsement. The memorandum further listed the lines of insurance to which the endorsement applies: Boiler and Machinery, Commercial Crime, Farm, General Liability, and Professional Liability. The parties do not dispute that this particular Board Order does not, on its face, apply to automobile liability insurers. But, Embrey argues that surely, once the auto insurers learned that the Board's ruling had gone against an insurer writing general liability coverage, no auto insurer would be foolish enough to ask for a similar ruling as to auto policies. Embrey's argument is based on the assumption that there can be no material difference between general liability polices and automobile insurance policies, and that the language required in the former must be required in the latter even without Board action to indicate that such language is required. We disagree and decline to expand the language used by the Board. Because the Board Order applies only to the types of insurance listedand Automobile Liability is not part of the list the Board Order does not apply to the automobile policy at issue here.