Ch. 11 Ruling Curbs Policyholders' Use Of Excess Coverage

Law360, Los Angeles (June 9, 2016, 11:05 PM EDT) -- A New York bankruptcy court's recent ruling that two excess insurers don't have to cover asbestos claims against Rapid-American Corp. until the limits of underlying policies have actually been paid further defangs a 1928 precedent that policyholders have used to tap excess coverage to pay losses not covered by lower-level carriers, experts say.

U.S. Bankruptcy Judge Stuart M. Bernstein ruled Tuesday that exhaustion language in three policies issued to Rapid by St. Paul Fire and Marine Insurance Co. and National Union Fire Insurance Co. of Pittsburgh, Pa., unambiguously require the underlying primary and excess limits in Rapid's multitiered insurance coverage "towers"...

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