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Duty to Defend: Johnson Controls' Attempt to Turn Excess Insurance into Primary Insurance

By Chet A. Kronenberg, Sarah E. Luppen and Colin H. Rolfs
May 30, 2012

In 1989, Milwaukee-based manufacturer Johnson Controls, Inc. initiated an insurance coverage action against 36 insurance companies seeking defense and coverage for potential environmental liability at various sites located around the country. This suit, which is still ongoing today, has generated a number of significant (and controversial) coverage opinions.

Most recently, in 2010, the Supreme Court of Wisconsin held that an indemnity-only umbrella excess liability policy contained a duty to defend by virtue of “follow form” policy language in the excess liability policy. The Wisconsin Supreme Court further held that the excess carrier's duty to defend was not conditioned upon exhaustion of the primary policy or any of the underlying layers of coverage. These rulings are contrary to the law in other states, and arguably convert low-premium, excess liability policies into primary policies when that clearly was not the parties' intention when the policies incepted.

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