Not Yours to Interpret: Temple Insurance Company et al. v Novex Insurance Company of Canada

Key Takeaway:

While interpreting an “Other Insurance” clause, the court affirms that it will not accept a subjective interpretation of a policy where such a clause is clear and unequivocal.

The Case

This allocation dispute was successfully litigated by our specialty coverage group. The court was not willing to accept the other insurer’s subjective interpretation of our client’s policy.

Our clients, D&O insurers, sought contribution from a CGL insurer in relation to sums paid to settle a class action lawsuit on behalf of a mutual insured. The CGL insurer agreed that certain claims made in the class action lawsuit came within the coverage it provided, but there was a dispute as to allocation of defence costs and the settlement payment.

Central to resolving the dispute was the interpretation of an “Other Insurance” clause in our clients’ D&O policy. The clause provided that this insurance does not apply to “claims covered under another valid and collectable insurance policy. Any coverage provided by this policy shall be specifically excess of and shall not act in contribution with such other insurance policy”.  The CGL insurer argued that the provision was ambiguous, only intended to apply when another valid and collectible D&O policy was in place and only when claims thereunder were covered in their entirety.  The court disagreed, as there was no evidence for that interpretation.

Our client’s “other insurance” clause was held to be clear and unequivocal – to the extent that some of the claims in the class action lawsuit are covered under any other policy, the D&O policy would not provide coverage. The CGL insurer was ordered to reimburse our client for the full portion of the class action settlement pertaining to claims covered under its policy and defence costs commensurate to its share of liability.

Lerners LLP acted for the successful insurer