Jenner & Block

Insurance Law Update, “A Look at Contrasting Rules for Excess Insurance Policies,” Law360

In the December Insurance Law Update, Jenner & Block Partner Brian S. Scarbrough and Associate Deepthika R. Appuhamy highlight the Delaware Superior Court’s ruling in Pfizer Inc. v. U.S. Specialty Insurance Co. In that case, the court reaffirmed the Stargatt rule, a legal principle that holds that the settlement of claims in excess of the primary policy limit triggers the excess policy — even if the actual amount paid by the primary insurer is less than the primary policy limit and potentially even in the face of explicitly contrary policy language. “The Pfizer case cements the continued application and strength of the Stargatt rule, which is favorable for policyholders,” the authors observe. But they caution that “in light of these competing rules nationwide, policyholders should continue to pay close attention to the language of the exhaustion clauses in their excess policies along with state-specific laws governing coverage issues.”