United States: Deere & Company v. Allstate Insurance Company

In Deere & Co. v. Allstate Ins. Co., 32 Cal.App.5th 499 (February 25, 2019), the California First District Court of Appeal reversed the trial court's entry of judgment in favor of excess insurers and held that such insurers were obligated to cover asbestos bodily injury claims without requiring the insured to pay additional self-insured retentions for new claims covered by such excess policies. In addition, the Court of Appeal held that the excess insurers were obligated to indemnify Deere & Company ("Deere") for defense costs and expenses incurred in connection with claims which did not result in a settlement or judgment against Deere. The parties' dispute arose out of coverage for asbestos claims implicating umbrella and following form excess policies for the period of 1958 to 1986. Umbrella policies for this period included self-insured retentions ("SIRs") ranging from $50,000.00 to $2.5 million per claim. Ultimately, the umbrella policies were exhausted in connection with the defense and payment of such asbestos bodily injury claims. At that point, Deere began tendering new claims to its excess insurers. In response, the excess insurers took the position that as respects the new claims, Deere was obligated to pay additional self-insured retentions before coverage was triggered under the excess policies.

In reversing the trial court's entry of judgment in favor of the insurers' holding that Deere was obligated to pay additional SIRs for the new claims, the Court of Appeal held that the SIRs were included within the limits of liability of the underlying umbrella policies. Because the excess policies did not follow form to limits of liability, the Court of Appeal held that Deere was not obligated to pay additional SIRs for new asbestos bodily injury claims covered by the excess policies.

In addition, the Court of Appeal held that the excess insurers were obligated to reimburse Deere for defense costs and expenses, irrespective of whether such expenses were incurred in connection with the settlement of bodily injury claims or judgments rendered in connection with such claims.

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