California is one of the jurisdictions in the United States which recognizes a Claim for Equitable Contribution between insurers. What is an Insurance Company in such a jurisdiction to plan on doing, when the Jury's Verdict in the Underlying Case finds Negligence against the common Policyholder or other Insured, but the timing of that Negligence, i.e., in which Policy Period it Occurred, is left unclear?
In a case of Equitable Contribution between two Comprehensive General Liability Carriers, one California District Court of Appeal recently gave this answer:
We conclude that the jury's verdict against the insured did not clearly indicate whether the jury found negligence during the first policy period, the second policy period, or both. We thus address the following issue of first impression: Which insurer bears the burden of proving the existence (or nonexistence) of coverage in a case like the present one, where one insurer has participated in the defense and/or indemnity of an insured and the other has not? We hold that in an action for equitable contribution brought by an insurer who has defended and indemnified an insured against a coinsurer who has
not defended or has
not indemnified the insured, the participating insurer has met its burden of proof when it makes a prima facie showing of coverage under the nonparticipating insurer's policy-the same showing necessary to trigger the recalcitrant insurer's duty to defend. The burden of proof then shifts to the nonparticipating insurer to prove the absence of actual coverage. Here, because the first insurer failed to meet its burden of proving the absence of coverage, we reverse and remand to allow the trial court to allocate equitably defense and indemnity costs.
Case law on the Doctrine of Insurer Contribution is analyzed in Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" ยง 7.14 (Shepard's/McGraw-Hill Second Edition; West Publishing Co. 2010 Supplement).
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