California Court of Appeal

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American Safety Indemnity Co. v. Admiral Insurance Co., D061587

The trial court properly concluded that the defendant insurer in this equitable subrogation action had a duty to defend its insureds when large soil subsidence claims were made against them, where: 1) the commercial general liability policy at issue has a provision labeled "Self-insured Retention (SIR)" that clearly makes the insured liable for the first $250,000 in damages payable to any third party claimant, and the insured's payment of defense costs count toward meeting the insured's SIR obligations; 2) by its terms, the clause does not expressly make payment of the SIR a condition of the insurer's broader obligation to provide a defense when an arguably covered claim is tendered; 3) an insured could reasonably interpret it as providing a defense to arguably covered claims as soon as such claims are tendered and before any SIR has been paid; and 4) because the defendant insurer had a duty to defend its insureds, principles of equitable subrogation required that it reimburse the defense costs another insurer, the plaintiff herein, paid on behalf of the defendant's insureds in the course of the underlying subsidence litigation.

Appellate Information

  • Decided 09/27/2013
  • Published 09/27/2013




  • California Court of Appeal


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