Court Opinion

ID: 9720335
Source: CourtListenerOpinion
Date Created: 2023-08-26 08:26:42.866067+00
Date Added: 2024-06-11T18:24:16.190345
License: Public Domain

BAKER, Judge,
dissenting.
Because I disagree with the majority’s determination that our supreme court’s decision in Indiana Ins. Co. v. American Underwriters, Inc., 261 Ind. 401, 304 N.E.2d 783 (1973) compels reversal of the trial court’s decision, I respectfully dissent.
In Indiana Ins. Co., our supreme court considered the conflict between two insurance policies, both of which contained limitations on their application when the insured has “other insurance.” Specifically, one policy contained an escape clause, which provided that it would not apply if the insured was covered by another policy, while the other policy contained an excess coverage clause, which provided that it was excess insurance over any other valid and collectible insurance. The court determined that these policy provisions were conflicting and, therefore, should be disregarded in favor of a pro rata division of liability. Id. 304 N.E.2d at 787. As the majority notes, the court then concluded that whenever two applicable policies contain “other insurance” clauses, they are automatically in conflict and should be rejected. The majority decision follows this ruling and holds that the Farm Bureau and Nationwide policy provisions here are in conflict and disregards them in favor of a pro rata apportionment of liability. I disagree.
The Indiana Ins. Co. rule is based upon the assumption that “other insurance” clauses automatically conflict. I do not believe that this blanket assumption is correct. Instead, consistent with our standard rules of contract interpretation, the “other insurance” policy provisions should be compared and, if possible, harmonized. See First Federal Sav. Bank v. Key Markets, Inc., 559 N.E.2d 600, 603 (Ind.1990) (court must accept interpretation of contract which harmonizes provisions as opposed to one which causes provisions to be conflicting). Only if the policies are actually in conflict and cannot be harmonized should the Indiana Ins. Co. rule apply.
In the instant case, the insurance clauses are not in conflict. Farm Bureau’s policy provides that “if an insured has other insurance for a loss covered by this policy we pay under this policy only a share of the loss.” R. at 34. The policy then provides that its proportional share is computed by comparing the total insurance available through all of the policies to the coverage limit of its policy. On the other hand, Nationwide’s policy provides that its coverage is “excess over other valid and collectible insurance.” R. at 63. I believe that the trial court properly harmonized these policies by reading Farm Bureau’s pro rata provisions to be applicable only when another insurance policy simultaneously provides coverage. Here, Nationwide’s *1169policy does not provide coverage until Farm Bureau’s policy limits are reached. Because Farm Bureau did not have to pay its policy limits, the pro rata provisions in its policy do not apply and it is responsible for paying the claims.
My conclusion that the rule announced in Indiana Ins. Co. should only apply when policies are actually in conflict is consistent with the policy considerations which led to that rule. In particular, the court in Indiana Ins. Co. was concerned with insureds who had paid policy premiums, yet, due to conflicting policy provisions, were in danger of losing coverage. Additionally, the court sought to avoid policy provisions which allowed an insured double recovery. However, such situations are only likely to arise when two policy provisions conflict. When they do not conflict, the trial court can harmonize them to provide an insured with appropriate coverage. Thus, my conclusion is mandated by the well-settled principle that when the reason for a rule ceases to be applicable, the rule should no longer be applied. Shriner v. Union Federal Saving & Loan Assn., 235 Ind. 380, 385, 133 N.E.2d 861, 863 (1956), (Arterburn, J., writing separately). For these reasons, I would affirm the decision of the trial court.