Ohio Casualty Ins. Co. v. Unigard Ins. Co.
Annotate this CaseOhio Casualty insured Cloud Nine from 2001 to 2002. Unigard Insurance insured Cloud Nine from 2002 to 2005. Edizone, LC sued Cloud Nine in federal district court, alleging injuries that began during the last three months of Ohio Casualty's policy period and continued throughout Unigard's policy period. The federal district court ruled that the insurers must equally share the total defense costs they incurred in defending Cloud Nine against the Edizone suit. The Supreme Court accepted certification to answer whether the defense costs in Edizone should be allocated between Ohio Casualty and Unigard under the "equal shares" method set forth in the "other insurance clause" of Ohio Casualty's policy, or, in the alternative, because the policies were issued for successive period, whether those defense costs should be allocated using the time-on-risk method described in Sharon Steel Corp. v. Aetna Casualty and Surety Co. The Court concluded that the "other insurance" clauses did not apply to successive insurers. Accordingly, defense costs should be apportioned using a modified version of the Sharon Steel method that divides responsibility for defense costs between the two insurers in proportion to their time on the risk.
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