TOKIO MARINE AND FIRE INSURANCE COMPANY LTD v. INSURANCE COMPANY OF NORTH AMERICA INC (1999)

Order, Supreme Court, New York County (Ira Gammerman, J.), entered May 11, 1998, which granted defendant's motion for summary judgment dismissing the complaint, unanimously affirmed, with costs.

Defendant Insurance Company of North America, Inc. (INA) issued a commercial general liability policy to its insured, covering liability to the insured of $1 million with a $250,000 deductible, defined as “the amount of damages under this policy which the insured has a duty to pay.”   The policy also provided that INA had the right to pay damages within the deductible if the insured failed to pay a final judgment or settlement against the insured, and to pay any amounts within the deductible to settle any claim or suit.   The insured was required to “promptly reimburse” INA for any such advances.   These provisions demonstrate that the $250,000 was a true deductible, properly subtracted from the policy limits, and not a self-insured retention as contended by plaintiff excess insurer (see, Ostragen and Newman, Handbook on Insurance Coverage Disputes, § 1313[a] [9th ed.] ).  Accordingly, when the insured contributed $250,000 toward settlement of a wrongful death action for an amount in excess of the coverage afforded by INA, INA discharged its obligation under the subject policy by contributing an additional $750,000;  it was not required to contribute $1 million, as it would have been had the $250,000 contributed by the insured represented a self-insured retention.

MEMORANDUM DECISION.