Forest Oil Corp. 8. Xxxxx River Coal
Forest Oil Corp v. Strata Energy, 929 F.2d 1039 (5th Cir. 1991), (additional insured was entitled to full liability limit of $1 million when underlying contract required named insured to provide “limits of not less than $100,000" and additional insured endorsement contained no language limiting the amount of coverage provided to that required in the underlying contract). UNEXPECTED EXCESS/UMBRELLA COVERAGE Can an additional insured reasonably argue that it is entitled not only to coverage under the policyholder’s primary commercial liability policy as specified in their underlying contract, but also under the named insured’s umbrella policy if no provision for such coverage was made in their agreement? The answer to that question would seem to be, it depends. There is no Pennsylvania law on this issue and the results in cases decided in other jurisdictions appear to be mixed and highly dependent upon the language of the underlying contract, the primary policy and the umbrella policy involved. It should at least be recognized, however, that an umbrella policy may also be implicated under such circumstances, particularly where that policy confers insured status upon anyone who qualifies as an insured under the terms of the primary, underlying policy and contains no language confining the limits available to the additional insured to those required by its contract. Such a result would be consistent with the New York decision in Old Republic Ins. Co. v. Concast, Inc., 588 F.Supp. 616 (S.D.NY 1984) in which the named insured product manufacturer agreed to provide coverage to the product designer by adding it as an additional insured on its primary commercial liability policy, but the contract between the two apparently made no mention of the necessity of providing umbrella coverage and was silent as to the amount of coverage required. In the absence of any language regarding this issue in the parties’ contract, the primary liability policy, or the umbrella policy, the court held that the additional insured was entitled to coverage up to the limits of both policies, holding that the additional insured qualified as an insured under the terms of both policies and rejecting the insurer’s contention that the umbrella policy was inapplicable because its insured’s underlying contract made no mention of requiring excess coverage. The same result was reached in the case of Xxxxxxxxx v. Aetna Ins. Co., 564 F.2d 292 (9th Cir. 1997), in which the named insured agreed to provide additional...
