Opinion ID: 1448289
Heading Depth: 1
Heading Rank: 12

Heading: NPIC's Status as Excess Insurer

Text: At the time National Union tendered its policy limits and NPIC offered to assume the defense (March 10, 1994), NPIC had already made its position clear by Hasty's February 16, 1994, letter. NPIC would not participate in any settlement, although it had the opportunity to settle within policy limits. The NPIC policy provided: If the Limit of Liability of the Scheduled Underlying Policy(ies) as stated in the Schedule of Underlying Insurance has been exhausted by payments made on behalf of an insured by the primary insurer, this policy will continue in force as Underlying Insurance. The NPIC policy provided further: We will assume charge of the settlement or defense of any claim or suit against the insured when: a. the Limits of Liability of the Scheduled Underlying Policies have been exhausted by payment of claims. The policy required that the insured NOT, unless [NPIC agrees], incur any expense or make any payment other than for first aid. If [insured does], those expenses will be at [insured's] own cost. NPIC's consent would be required for any settlement reaching its coverage level. NPIC contends that Glenn, 247 Kan. 296, which did not involve excess coverage, should be distinguished. Americold reached the settlement agreement (March 10, 1994) after NPIC refused to participate in settlement but offered to defend subject to a reservation of rights. NPIC then stood in the primary carrier's shoes. Although the time was limited between the tender of National Union's policy limits and the Americold settlement agreement with plaintiffs (1 day), NPIC had known of a policy limits settlement offer from most of the plaintiffs since November 1993. Court-ordered settlement discussions had been going on since February 18, 1994. Americold's counsel in his March 9, 1994, letter gave NPIC an opportunity to change its position. NPIC never suggested that it needed more time to reconsider the opportunity to settle within policy limits. NPIC cites Emscor Mfg., Inc. v. Alliance Ins. Group, 879 S.W.2d 894, 909 (Tex. App. 1994), which contains language favorable to NPIC's position. However, Emscor is distinguishable. The Emscor excess coverage was never triggered because the primary insurer was insolvent. The excess policy carried no obligation to defend. Here, NPIC's duty to defend began upon exhaustion of primary coverage. National Union assumed Americold's defense and later tendered its policy limits during settlement discussions. The primary insurer's insolvency or failure to act did not occur here. For criticism of Emscor, see Ashley, § 6:21, pp. 62-63, 66 (1996 Supp.).