A federal appeals court has rejected an insurer's novel argument for a "super excess" coverage tier in a commercial auto liability dispute.
The Seventh Circuit ruled on February 11 that Great West Casualty Company and Nationwide Agribusiness Insurance Company both owe excess coverage and must split costs proportionally based on their policy limits of $1 million and $2 million respectively. The decision resolves a dispute over which insurer should pay first for a 2021 collision that killed an SUV driver near Sycamore, Illinois.
On June 2, 2021, a tractor-trailer driven by Robert D. Fisher collided with Patrick J. Brennan's vehicle, killing Brennan. The tractor was leased by Deerpass Farms Trucking from Deerpass Farms Services, while the tanker trailer was owned by Conserv FS, Inc. Great West covered the tractor under a policy with Deerpass Trucking, while Nationwide insured the trailer through Conserv. Both policies covered all parties involved in the accident.
When Brennan's estate filed a wrongful death lawsuit, the insurers agreed both policies applied but disagreed sharply on payment order, landing the question in federal court.
The dispute hinged on "Other Insurance" clauses that establish whether coverage is primary, meaning it pays first, or excess, meaning it kicks in only after primary coverage runs out. Nationwide's clause said its coverage was excess when the trailer was connected to a motor vehicle Conserv didn't own. Great West's clause said coverage would be excess when the policyholder borrowed a vehicle from another motor carrier and a written agreement required the lessor to hold the lessee harmless. The lease between Deerpass Farms Services and Deerpass Trucking contained exactly that kind of indemnification provision.
The district court ruled both policies provided excess coverage. Nationwide appealed, arguing Great West's policy should be primary instead.
Nationwide first argued the lease shouldn't count because the policy referred to vehicles that were hired or borrowed, not leased. The appeals court rejected this, noting that Great West's policy specifically mentioned lessors and lessees. Nationwide also claimed allowing the lease to control coverage would let an insurer conspire with its policyholder to shift costs, but the court dismissed this as unsupported speculation.
Nationwide also focused on a provision in Great West's policy saying coverage would be primary for any liability assumed under an insured contract. Nationwide pointed to the interchange agreement between Deerpass Trucking and Conserv, which required Deerpass Trucking to indemnify Conserv. However, that provision carved out liability caused by Conserv's own negligence.
The court said that carveout made all the difference. Under Illinois law, an indemnity agreement qualifies as an insured contract only if one party clearly and explicitly agrees to cover the other party's own negligence. Because the interchange agreement excluded Conserv's negligence, Deerpass Trucking was only agreeing to cover its own actions, not Conserv's.
With both policies deemed excess, Great West argued on cross-appeal that its policy wasn't just excess, but excess over Nationwide's policy, creating a super excess tier that would make Nationwide pay first. The argument rested on wording differences: Great West's excess clause said coverage was excess over any other collectible insurance, while Nationwide's provision established coverage as excess without that additional phrase.
The court wasn't impressed. Great West's counsel essentially argued that while all excess clauses provide excess coverage, some provide more excess coverage than others. The court found this argument reminiscent of George Orwell's Animal Farm and its famous line about some animals being more equal than others.
The court raised practical concerns. If simply adding a few extra words created a new coverage tier, insurers would rush to update their policies. Would carriers start claiming double-super excess or triple-super excess coverage? The court compared the situation to children on a playground escalating their dares. While powerful rhetorically, such escalations carry no real legal weight.
The court also noted that recognizing a super excess tier would create internal contradictions in Great West's own policy, as other provisions contemplated only two coverage bases, primary or excess. The court added that some redundancy in insurance contracts is normal and expected.
The Seventh Circuit said Great West failed to show that any court had ever recognized a super excess tier of coverage. The result: Great West will pay roughly one-third of defense and liability costs based on its $1 million limit, while Nationwide covers about two-thirds based on its $2 million policy.
The case confirms that when multiple commercial policies cover the same loss, payment priority depends on careful policy analysis and established legal principles, not creative reinterpretations of standard insurance language.
