By Robert L. Sallander, Jr.
This Briefing Paper focuses on the general rules of allocating the costs of defense and indemnity among several insurance companies. It assumes that the carriers are jointly and severally obligated to defend and indemnify the same insured. It does not deal with disputes over the primary/excess relationship of carriers.
December 14, 1999
In California, the problem of allocating the costs of defending and indemnifying a single insured in a single lawsuit among many carriers that share in the obligation is not subject to any bright-line rule. The respective obligations of those carriers "flow from equitable principles designed to accomplish ultimate justice in the bearing of a specific burden." Signal Companies, Inc. v. Harbor Ins. Co., 27 Cal.3d 359, 369 (1980). Thus, theoretically, courts applying California law are not bound to any particular method or formula, but are free to adopt any approach that produces a just result. Stonewall Insurance Co. v. City of Palos Verdes Estates, 46 Cal.App.4th 1810, 1861 (1996).