Excess insurance policies are often written to follow form, but then an excess carrier may issue a policy that does not follow the bid upon form. Insurance agents and excess lines brokers can certainly do a much better job at the point of sale by reading the policies they sell and broker so the insurance coverage for which they are arranging is actually sold.
In a recent case,1 a railroad company received a non-conforming excess contract that had a one-year suit limitation clause. The railroad was not even required to file a proof of loss until the replacement of the property was complete—and that took almost five years. Unfortunately, the court upheld the one-year suit limitation period.
These cases often require the policyholder file a lawsuit for reformation of the non-conforming excess contract. Unfortunately, the court also noted the policyholder never filed a reformation action, so the issue was not before it.
The practical pointer in cases like this: Obtain all the excess contracts. Following a loss, check the time to file suit provisions and other clauses for non-conformance. In the event there are non-conforming provisions, ask that they be reformed or tolled. If these are not agreed to, a reformation claim and suit may have to be filed.
Quote of the Day
People are getting smarter nowadays; they are letting lawyers, instead of their conscience, be their guide.
1 Consolidated Rail Corp. v. Aspen specialty Ins. Co., No. 17-12281, 2019 WL 2417704 (D.N.J. June 10, 2019).