Indeed, in Farm Family Mut. Ins. Co. v. Allstate Ins. Co., the court held that the language of the policies rendered one primary policy with an excess clause excess to another primary policy with a lower-tier excess clause. 179 A.D.2d 965, 579 N.Y.S.2d 207 (3d Dep't 1992). That the policy found to be excess to the other was not a “true excess” policy did not alter the analysis of the policies' plain terms.
The effect of the Lumbermens exception is that “an insurance policy which purports to be excess coverage but contemplates contribution with other excess policies or does not by the language used negate that possibility must contribute ratably with a similar policy, but must be exhausted before a policy which expressly negates contribution with other carriers or otherwise manifests that it is intended to be excess over other excess policies.” State Farm Fire & Cas. Co. v. LiMauro 65 N.Y.2d at 375–76, 492 N.Y.S.2d at 539, 482 N.E.2d 13 ; see also, e.g., Farm Family Mut. Ins. Co. v. Allstate Ins. Co., 179 A.D.2d 965, 966, 579 N.Y.S.2d 207, 208–09 (3d Dep't) (“The Court of Appeals has made it clear, however, that to qualify as being considered a higher layer of coverage than the standard excess coverage, such a status must be shown by the presence of plain language in the policy to that effect establishing whether ratable contribution was bargained for in the policy.”), appeal denied, 80 N.Y.2d 756, 588 N.Y.S.2d 824, 602 N.E.2d 232 (1992).
Under New York law, if the Mount Vernon coverage is excess, and hence the two policies are excess to one another, the two "other insurance" clauses cancel each other out and the companies must apportion the costs of defending and indemnifying Selby on a pro rata basis. By contrast, if Mount Vernon's coverage is primary with respect to Great Northern's, then Mount Vernon must pay up to the limits of its policy before Great Northern's coverage kicks in. See, e.g., Farm Family Mut. Ins. Co. v. Allstate Ins. Co., 579 N.Y.S.2d 207, 207-208 (App. Div., 3d Dep't 1992); In re Allstate Ins. Co., 577 N.Y.S.2d 936, 938 (App. Div., 3d Dep't 1991), rev'd on other grounds, 597 N.Y.S.2d (N.Y. 1993). The Mount Vernon policy reads as follows:
When an insured has more than one potentially applicable policy for a claim, courts determine the insurers' obligations to the insured by applying a body of law developed to resolve "other insurance" disputes (State Farm Fire Casualty Co. v. LiMauro, 65 N.Y.2d 369). Under New York law, if the Mount Vernon coverage is excess, and hence the two policies are excess to one another, the two "other insurance" clauses cancel each other out and the companies must apportion the costs of defending and indemnifying Selby on a pro rata basis. In contrast, if Mount Vernon's coverage is primary with respect to Great Northern's, then Mount Vernon must pay up to the limits of its policy before Great Northern's coverage becomes effective (Farm Family Mut. Ins. Co. v. Allstate Ins. Co., 179 A.D.2d 965, 965-966; Allstate Ins. Co. v. Farmers Ins. Group, 108 A.D.2d 284, 285, mod on other grounds, 67 N.Y.2d 924). The District Court determined that the policies had "similar coverage" because each provided liability coverage to Selby for personal injuries arising out of work performed under the Monier contract.
Decided September 15, 1992 Appeal from (3d Dept: 179 A.D.2d 965) MOTIONS FOR LEAVE TO APPEAL GRANTED OR DENIED