Court Opinion

ID: 9633700
Source: CourtListenerOpinion
Date Created: 2023-08-22 11:57:17.554035+00
Date Added: 2024-06-11T14:55:51.947198
License: Public Domain

RIGGS, J.,
dissenting.
I disagree with the majority’s conclusion that defendant is not required to pay for a loss that plaintiffs are unable to recover from their insolvent underlying insurer. Defendant agreed to pay losses in excess of the “amount recoverable” under the underlying insurance. “Recoverable” means “that which is able to be, or capable of being, recovered.” Pacific Atlantic S.S. Co. v. United States, 120 F Supp 753, 755 (D Or 1954); Webster’s Third New International Dictionary 1898 (unabridged 1971). Under the plain, ordinary meaning of that phrase, defendant is required to pay the excess over the amount capable of being recovered from the underlying insurer.
That interpretation creates no unacceptable inconsistencies with other provisions in the policy. The majority asserts:
“The ‘LOSS PAYABLE’ clause provides that defendant can have no liability until the aggregate limits of the underlying insurance have been ‘paid.’ ” 106 Or App at 333. (Emphasis supplied.)
That is incorrect. The “LOSS PAYABLE” clause does not use the term “aggregate limits.” Instead, the clause provides that defendant’s liability does not attach until the underlying insurer has paid the amount of the “underlying limits.” The policy itself defines “underlying limits” to be the “amount recoverable” from the underlying insurer. Therefore, plaintiffs’ interpretation of “amount recoverable” is not inconsistent with the “LOSS PAYABLE” clause.
*335Neither is the interpretation inconsistent with the “OTHER INSURANCE” clause, which refers to “other valid and collectible insurance.” The reference to “other collectible insurance” reinforces plaintiffs’ interpretation that the underlying insurance must also be collectible or recoverable.
Although the majority disregards authorities from other jurisdictions, I find them persuasive. Cases in which language similar to that in defendant’s policy has been considered have concluded that the umbrella insurer’s coverage “drops down” to cover the risk of an underlying insurer’s insolvency.1 As one court noted:
“A review of the state and federal jurisprudence in this country reveals that the controlling consideration on this ‘drop down’ issue is the agreement between the insurer and the insured, namely, the insurance policy itself. * * *
“In one category there are excess policies that distinctly facilitate dropping down. The policies in this group state, in effect, that the underlying limit of the excess coverage is dependent on the ‘collectibility’ or ‘recoverability’ of the primary limits. For instance, in McGuire v. Davis Truck Services, Inc., 518 So.2d 1171 (La.App. 5th Cir.), writ denied, 526 So.2d 791 (La. 1988) and Reserve Ins. Co. v. Pisciotta, 30 Cal.3d 800, 180 Cal.Rptr. 628, 640 P.2d 764 (1982), the respective policies provided for liability in excess of ‘the amount recoverable under the underlying insurance as set out in the schedule of the underlying insurance....’ It is clear that in this type of policy the excess carrier does drop down to provide coverage. Insolvency of the underlying carrier prevents the primary limits from being collectible, or recoverable. If not recoverable because of insolvency, the underlying insurance does not constitute any part of a retained limit. Where this phraseology is used (liability in excess of the amount recoverable), the pro-coverage result is consistent in the cases.” Kelly v. Weil, 563 So 2d 221, 222 (La 1990).
Cases holding that the umbrella insurer’s coverage does not “drop down” have considered policies with different language or additional terms that clearly limited the insurer’s liability *336to amounts in excess of the dollar limits of the underlying insurance.2
After reviewing the cases from other jurisdictions, I conclude that excess insurers who do not intend drop down coverage if an underlying insurer becomes insolvent can and do write their policies to exclude that liability. Defendant drafted the language of the policy and, if it meant to exclude drop down coverage, it could have done so. By using the term “amount recoverable,” it expressly agreed to pay losses that are not recoverable from an insolvent underlying insurer.
For these reasons, I dissent.

 See, e.g., Sifers v. General Marine Catering Co., 892 F2d 386, rev’d in part on other grounds 897 F2d 1288 (5th Cir 1990); Reserve Ins. Co. v. Pisciotta, 30 Cal 3d 800, 180 Cal Rptr 628, 640 P2d 764 (1982); Donald B. MacNeal, Inc. v. Interstate Fire & Casualty Co., 132 Ill App 3d 564, 477 NE2d 1322 (1985); McGuire v. Davis Truck Services, Inc., 518 So 2d 1171, writ denied 526 So 2d 791 (La App 1988); Lechner v. Scharrer, 145 Wis 2d 667, 429 NW2d 491, rev den 147 Wis 2d 890 (1988).

 See, e.g., Morbark Indus. Inc. v. Western Employers Ins. Co., 170 Mich App 603, 429 NW2d 213 (1988) (insurer liable for excess over “amount equal to the limits of liability indicated beside the underlying insurance”); Werner Industries, Inc. v. First State Ins. Co., 112 NJ 30, 548 A2d 188 (1988) (declarations described coverage in excess over “amount recoverable” but additional language in policy limited insurer’s liability to excess over the “limits of liability indicated beside the underlying insurance”); Wurth v. Ideal Mut. Ins. Co., 34 Ohio App 3d 325, 518 NE2d 607 (1987) (insurer liable for excess over the “underlying limit,” defined as “amounts of applicable limits of liability of the underlying insurance”); Federal Ins. Co. v. Pacific Sheet Metal, 54 Wash App 514, 774 P2d 538, rev den 113 Wash 2d 1008 (1989) (insurer liable in excess over “amount equal to the limits of liability indicated beside the underlying insurance listed in the schedule”).