Sunday, March 19, 2006

Eighth Circuit Court of Appeals rules under Nebraska law insurer for owner of vehicle in accident is primary insurer; secondary insurer of driver's employer did not waive equitable subrogation for amounts spent defending employer and settling its claimNational. American Ins. v. Republic Western Insurance 03/10/06 U.S. Court of Appeals #053037P.pdf District of Nebraska. Grain truck driver an employee of Grain company ran a stop sign and severely injured a motorist in North Dakota. Grain Company did not own the truck, rather Colberg Transportation owned the truck. Eventually the parties settled with the injured driver for $600K. Republic Western insured the vehicle. National American insured the drivers employer and paid $25000 of the settlement. Vehicle insurer Republic refused to National Americans offer to defend drivers employer. District Court Judge Camp found vehicle insurer Republic the primary insurer and also found that National American was entitled to subrogation of its defense and settlement costs. Eighth Circuit affirms. Eight circuit upholds ruling that vehicle's insurance is primary and there was no joint venture Inded under Nebraska law, the vehicle owner’s insurance provides primary coverage. See Turpin v. Standard Reliance Ins. Co., 99 N.W.2d 26, 37 (Neb. 1959). Because Republic Western fails to prove the jointventure constituted an “Insured contract,” and under Nebraska la the primaryinsurance follows the vehicle, the distict court did not err in determining theRepublic Western policy provides primary coverage and the National American policy was excess Eighth Circuit finds there was no waiver of subrogation whether or not excess insurer National American formally "reserved its rights," nor whether or not excess insurer National American preseved its equitable subrogation rights in the settlement docuements An insurer does not waive its right to subrogation against another insurer based on the first insurer’sconduct with its own insured. See St. Paul Mercury Ins. Co. v. Lexington Ins. Co., 78 F.3d 202, 208 (5th Cir. 1996) (holding primary and excess insurers who defended the insured did not waive their right to rely on “other insurance” clauses in their policies by failing to reserve that right); Attorneys Liab. Prot. Soc’y v. Reliance Ins. Co., 117 F. Supp. 2d 1114, 1122 (D. Kan. 2000) (concluding that because a reservation of rights is an agreement “between the insurer and the insured, the insurer’s failure to obtain such an agreement does not bar a contribution claim against a co-insurer”) As the primary insurer, Republic Western had a duty to provide (employer) W & G’s defense and pay any sums for which (employer) W & G was liable to (Injury case Plaintiff). (Excess insurer) National American tendered (employer's) W & G’s defense to (primary insurer) Republic Western, but Republic Western declined to defend W & G. Accordingly, Republic Western is liable as primaryinsurer for the amounts National American incurred for W & G’s defense and insettlement of the Quellhorst personal injury action.

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