Safeco Insurance Company of Illinois v. American Family Mutual Insurance Company
2:12-cv-01158
| W.D. Wash. | Feb 13, 2013Background
- Safeco and American filed cross motions for summary judgment; court decides on the papers without oral argument.
- On August 30, 2010, Linda Shawcross (B&B employee) drove her personal vehicle in the course of her employment and was in an accident.
- Shawcross had Safeco personal auto insurance; B&B had American commercial liability insurance.
- Safeco sought pro rata coverage from American; American declined based on its policy interpretation.
- Under Washington law, policy terms are read as a whole and endorsements are read with the policy; endorsements control if they alter the original contract.
- American’s endorsement modified its general liability coverage to include non-owned autos and stated that certain exclusions do not apply to non-owned auto liability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Effect of American endorsement on coverage | Endorsement modifies coverage to non-owned autos; exclusions not applicable. | Endorsement is not a broad modification and does not create a separate layer of coverage. | Endorsement controls; no ambiguity; non-owned auto liability included. |
| Interplay of 'other insurance' / excess clauses | Excess clauses are mutually repugnant and yield pro rata liability. | Clauses are not mutually repugnant or must be interpreted as one excess over another. | Excess clauses are mutually repugnant, yielding pro rata liability. |
| Coverage level of American and Safeco policies | Both policies provide coverage at the same level for the accident. | American’s policy is primary or differs in level compared to Safeco. | Both policies provide coverage at the same level; pro rata allocation applies. |
Key Cases Cited
- Overton v. Consol. Ins. Co., 145 Wash. 2d 417 (2002) (policy interpretation and meaning of terms)
- Quadrant Corp. v. Am. States Ins. Co., 154 Wash. 2d 165 (2005) (read policy as a whole; endorsements control when consistent)
- Transcon. Ins. Co. v. Wash. Pub. Util. Dists’ Util. Sys., 111 Wash. 2d 452 (1988) (endorsement provisions must be read with the policy)
- Pac. Indem. Co. v. Federated Am. Ins. Co., 76 Wash. 2d 249 (1969) (mutually repugnant excess clauses require pro rata liability)
- Safeco Ins. Co. of Ill. v. Country Mut. Ins. Co., 165 Wash. App. 1 (2011) (mutual repugnance of excess clauses; pro rata sharing)