Insurers Are Liable To Insureds For Full Policy Limits, Not Merely Pro Rata Share Of All Limits

In a decision that benefits policyholders, the Oregon Court of Appeals said yesterday that Lamb-Weston allocation principles are merely used to decide responsibilities between insurers, and do not limit an insurer’s responsibility to its insured up to the full policy limits. The case is Cascade Corporation v. Employers Reinsurance CorpRead the decision here.

In cases in Oregon and elsewhere in which damages span multiple policy periods and involved multiple insurers, some insurers have taken the position that Lamb-Weston gives them the right to limit both their indemnity and defense obligations to a pro rata share of the total available limits.  This decision repudiates that thinking.

Hat tip to my BPM colleague and fellow coverage litigator Brian Talcott for calling my attention to the case.

2 Comments

Filed under Duty to Defend, Duty to Indemnify, Industry Developments

2 Responses to Insurers Are Liable To Insureds For Full Policy Limits, Not Merely Pro Rata Share Of All Limits

  1. Maybe it is just me – but that decision seemed fairly common sense. I really wouldn’t have wanted to be appellate counsel for the insurers…

  2. Unfortunately, here in Oregon, a lot of coverage law is undefined or ill-defined, including some questions that were settled long ago in other jurisdictions. So often a “good faith” position here can look somewhat out of place with reference to the law in other states.