Q

We have heard that a rule known as the “Lamb-Weston” rule exists and that it affects coverage under the other insurance clause. We believe that the rule primarily affects the relationship between general contractors and subcontractors when it comes to a general contractor's additional insured status on a sub's policy.

We would appreciate any information you may have about this rule and how it applies.

Louisiana Subscriber

A

The Lamb-Weston rule comes from an Oregon case, Lamb-Weston v. Oregon Auto Insurance Company, 341 P.2d 110 (1959), a case decided by the Oregon Supreme Court. The issue in the case dealt with “other insurance” clauses found in two separate policies. Lamb-Weston leased a truck from a person named Shafer. Lamb was insured with its own policy and Shafer was insured with his own policy. The Lamb policy stated that if liability was covered by other valid and collectible insurance, the policy was excess. The Shafer policy said if the insured had other insurance, the policy coverage was pro-rata. The Oregon Supreme Court had to decide which other insurance clause was in effect.

The court decided that the clauses were in conflict with one another. It said “any attempt to give effect to the other insurance provision of one policy while rejecting it in another is like pursuing a will o' the wisp. We follow the rule in Oregon Auto Insurance v. USF&G, 195 F.2d 958: the other insurance provisions of two policies are indistinguishable in meaning and intent. One cannot rationally choose between them and both must be disregarded.” The court ordered a pro rata settlement in the Lamb-Weston case.

Basically, the Lamb-Weston rule is that some courts see “other insurance” clauses as in conflict with each other, and that when they are seen as such, they are mutually repugnant and have to be rejected in toto. It cannot be said that the Lamb-Weston rule is the law of the land because much depends on the wording of the “other insurance” clauses and the state court that is hearing the dispute. If the “other insurance” clauses are, in fact, in conflict, they will be disregarded to the extent that the insured does not suffer; but whether the clauses are in conflict depends on the wording of the clauses and the judicial interpretation of the wording.