Managing the Co-Insurer Relationship: Preserving Contribution Claims

What happens, however, if the responding insurer already has information regarding the identity or possible identity of the co-insurers, but the insured fails or refuses to place them on notice of the claim? An insured already receiving a full defense may have little incentive to chase down other insurers. The issue is important because late notice or no notice of the claim to the other insurers has the potential to vitiate the responding insurer's contribution claim against other responsible, but non-responding insurers. Based on the limited case law addressing this issue, notice by one insurer to another insurer is equivalent to notice from the insured. See Crum & Forster Org. v. Morgan, 596 N.Y.S. 2nd 472 (N.Y. App. Div. 1993); State of New York v. Blank, 27 F.3d 783 (2nd Cir. 1994); Truck Insurance Exchange v. Unigard Ins. Co., 94 Cal. Rptr. 2nd 516 (Cal. Ct. App. 2000); but see Casualty Indemnity Exchange Ins. Co. v. Liberty National Ins. Co., 902 F.Supp. 1235 (D. Mont. 1995) (holding that only notice from insured triggers insurer's duty to defend or provide contribution). Thus, the apparent solution to the situation where the insured fails to notify all co-insurers of a claim is for the responding insurer to promptly place all co-insurers on notice of the claim and advise them that it plans to seek contribution. The insured should be copied on those notice letters.