CONFLICTING "OTHER INSURANCE" CLAUSES DISREGARDED

Homeowners

Other Insurance

Gary Gibler and his wife, Velene, were injured when their car collided with two horses standing on a state highway. The horses were owned by Robert Kurtz and were being boarded on property owned by the parents of Robert Kurtz. The Giblers filed suit against the parents and later amended the complaint to include Robert.

Mr. and Mrs. Kurtz had a policy issued by Farm Bureau which named their son as an additional insured. Kurtz also had an HO policy issued by Nationwide. Both policies covered personal liability, and both contained "other insurance" clauses. The policy issued by Farm Bureau provided: "If an insured has other insurance for a loss covered by this policy, we pay under this policy only a share of the loss. The share is computed by adding up the limits of this policy and all other valid and collectible insurance and finding the percentage of the total limits this policy represents."

Nationwide's policy provided that "this insurance is excess over other valid and collectible insurance. This does not apply to insurance written as excess over the limits of liability that apply in this policy." Farm Bureau's policy limit for liability was $500,000, and Nationwide's limit was $300,000.

Nationwide denied coverage. Farm Bureau filed for a declaratory judgment that Nationwide's policy covered the Giblers' claim, and that Nationwide's liability was on a pro rata basis with Farm Bureau. The case was referred to mediation, but Nationwide did not authorize its counsel to contribute to any settlement. Farm Bureau and the Giblers agreed upon a settlement of $437,000 which Farm Bureau paid in full. Farm Bureau then attempted to recover part of that amount from Nationwide, but the trial court ruled in favor of Nationwide, holding that the "other insurance" clauses were not in conflict. That court pointed out that Farm Bureau had not exhausted the limits of its policy, and the HO policy did not cover. Farm Bureau appealed.

The higher court noted that Indiana has ruled that when a policy clause conflicts with the "other insurance" clause of another company, regardless of the nature of the clause, they are, in fact, repugnant and each should be rejected.

Nationwide contended that the two clauses did not conflict; that Farm Bureau's policy was primary; and Nationwide's coverage only became effective after Farm Bureau's limits were exhausted.

The court, on appeal, concluded that there was no basis for concluding that either policy was primary; therefore, the two clauses were in conflict and should be disregarded.

The judgment entered in the lower court in favor of Nationwide was reversed, and the action was remanded for further proceedings. One justice filed a dissenting opinion.

United Farm Bureau Mutual Insurance Company and Robert H. Kurtz, Appellants v. Nationwide Mutual Fire Insurance Company, Gary Gibler and Velene Gibler-No. 02A04-9607-CV-267-Court of Appeals of Indiana-April 22, 1997-678 North Eastern Reporter 2d 1165.