A vehicle insured by Shelter Mutual Insurance Company was permissively being driven by an individual who was insured by American Farmers and Ranchers Mutual Insurance Company . The driver was involved in a collision that occurred when he turned left in front of another vehicle which resulted in injuries to the passengers of the second vehicle. The passengers of the other vehicle made claims for property damage and personal injury against the driver for his negligence and submitted claims to both insurance companies.

American Farmers’ policy contained an "other insurance" clause that stated: "provided, however, the insurance with respect to a . . . non-owned automobile shall be excess insurance over any other valid collectible insurance. . . ."

Shelter’s policy also contained an "other insurance" clause which stated: "if there is other insurance which covers the insured’s liability with respect to a claim also covered by this policy, coverages a and b (i.e., bodily injury and property damage liability) of this policy will apply only as excess to other insurance."

The two insurance companies jointly settled the claims and prorated the amount of the settlement based on the liability limits in the respective insurance policies. The Shelter insurance policy contained an "other insurance" exclusion which limited insurance coverage only to claims only in excess of other insurance which covered an insured’s liability. American Farmers reserved the right to recover from Shelter in the event Shelter’s "other insurance" clause was deemed invalid.

See more after the jump…

Continue Reading Insurance – Automobiles