Justia Insurance Law Opinion Summaries

On June 7, 2006, Insured Kelly left his car for service at a repair shop owned and operated by his parents. The shop loaned Kelly a car while his was being serviced. The next day, Kelly was involved in a collision with Martin Morasse. Subsequently Morasse and his wife brought suit against Kelly, alleging among other things, negligence. At the time of the accident, Kelly had a personal automobile insurance policy with Progressive Northern Insurance Company with liability limits of $100,000 per person. The shop had a garage insurance policy issued by Argonaut Insurance Company with limits of $25,000 and $750,000, depending on the circumstances. Argonaut investigated the accident and concluded Kellyâs use of the loaned car was personal, and he was not a scheduled driver on their policy. It concluded it would only provide a defense to Kelly under the $25,000 limit set forth in its âAdditional Garage Limitationsâ endorsement. Argonaut identified Progressive as the primary insurer and contended that Progressive was obligated to defend and indemnify Kelly in the Morasse lawsuit. Progressive sued Argonaut asserting that Argonaut must defend and indemnify Kelly under its $750,000 policy limit. Both insurers moved for summary judgment. The trial court concluded Argonaut was obligated to provide liability coverage under its policy up to $750,000. The court also ruled that Progressive must pay its pro rata share of defense costs. Argonaut appealed. The Supreme Court noted that â[a]s we have never addressed the precise issue of allocation of defense costs between a primary insurer and excess insurer, and the trial court relied upon authority from other jurisdictions to support its ruling, we cannot say that the law in this area is settled.â Accordingly, the Court declined to find error in the trial courtâs decision, and affirmed its summary judgment on behalf of Progressive.