COURT HOLDS LIABILITY LIMITS IN REINSURANCE CERTIFICATES LIMITED AMOUNTS FOR COVERED EXPENSES AS WELL AS COVERED LOSSES
In a litigation over the extent of liability covered by certain facultative excess general liability reinsurance certificates, a court recently granted a reinsurer’s motion for judgment on the pleadings, dismissing the case. The reinsured sought a declaration that the reinsurance certificates at issue did not contain limits on the reinsurer’s liability for the reinsured’s expenses, and that the reinsurer therefore breached its certificates by failing to pay the full amounts owed for covered expenses under the certificates. The reinsured argued that no limits on liability for expenses were expressly stated in the certificates, and that the certificates’ use of the phrase “in addition thereto” with respect to the reinsurer’s obligation to pay its proportion of expenses, insulated expenses from the certificates’ limits on covered losses. The court rejected the reinsured’s argument, holding there was “nothing in the language of the certificate[s] to suggest that the ‘reinsurance assumed’ amount did not encompass both the ‘reinsurance assumed’ for losses and the ‘reinsurance assumed’ for expenses,” and that this interpretation “is in accord with the majority of cases that have dealt with similar reinsurance certificates.” The court also rejected the reinsured’s alternative argument that the certificates were ambiguous. Continental Casualty Co. v. Midstates Reinsurance Co., Case No. 12 CH 42911 (Ill. Cir. Ct. Aug. 29, 2013).
This post written by Michael Wolgin.
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