In Ohio Casualty Ins. Co. v. Oak Builders, Inc., 2007 WL 1584224 (Ill.App. 1 Dist.), a construction company appealed the decision of the lower court , which had ruled in favor of the construction company's liability insurer and granted summary judgment that the policy provided excess coverage only.
The appeal of the ruling concerned a dispute over the interpretation of “other insurance” clauses contained in the two insurance polices issued to the construction company by two different insurers. One policy was issued to the construction company pursuant to a commercial general liability policy and the other was issued to the construction company pursuant to an “additional insured endorsement.”
The construction company contended that both policies provided “primary” coverage and that the “excess” other insurance clauses in the two policies were mutually repugnant. Therefore, according to the construction company, the two insurers should share the cost of defending and indemnifying the action brought by the injured employee.
The Appellate Court of Illinois agreed. According to the court, both policies provided primary insurance and both contained the same sort of excess “other insurance” clauses, therefore both insurers intended to offer excess insurance if and when other primary insurance was available. The court concluded that the “excess” insurance clauses were mutually repugnant and cancelled each other out since the only way to give effect to one insurer's intention would be arbitrarily to read one policy's excess clauses first and undermine the intention of the insurer whose policy's “excess” insurance clause was second. The court also concluded that, where two policies contain the same sort of 'other insurance' clause, the clauses will be deemed incompatible.
The Appellate Court reversed the judgment of the circuit court and remanded the cause for a calculation of the respective liabilities under the two insurers' policies in accordance with the opinion and the language of the contracts.