A fresh fight between two major insurers has landed in Hawaii federal court, with Great American Alliance Insurance Company suing Great Divide Insurance Company over who should pick up the tab in a dispute involving a condo association’s insurance coverage.
Filed on August 14, 2025, in the US District Court for the District of Hawaii, the case is all about who’s on the hook when a policyholder faces a lawsuit and multiple insurance policies are in play. Great American, which provides umbrella and excess coverage, claims that Great Divide, the company responsible for the primary commercial general liability (CGL) policy, has walked away from its duty to defend and indemnify the Association of Apartment Owners of International Colony Club. The underlying lawsuit was brought by a condo owner, Peter Winn, who says the association blocked his renovation plans and stopped him from renting out his unit, causing him financial harm.
Great American’s complaint lays out the sequence: Winn sues the association in Hawaii state court, alleging negligence, retaliation, breach of fiduciary duty, and other claims after his renovation plans were denied and a Stop Order was issued. The association turned to its insurers for help. According to Great American, Great Divide denied coverage, saying there was no “property damage” from an “occurrence” and pointing to a policy exclusion for directors’ and officers’ liability.
Here’s where it gets sticky. The CGL policy from Great Divide says it will pay for damages the insured is legally obligated to pay because of “bodily injury” or “property damage,” and it has a duty to defend the insured in lawsuits seeking those damages. “Property damage” in this policy includes the “loss of use of tangible property that is not physically injured.” Great American argues that the association’s inability to renovate and rent out the unit fits that definition.
There’s also an “Other Insurance” clause in play. Great American says the Great Divide policy is supposed to be primary, while a separate directors and officers (D&O) policy from Travelers is excess. The D&O policy, with a $1 million limit, is what’s known as an “eroding” policy - defense costs eat away at the coverage. Great American claims that because Great Divide refused to defend, the D&O policy’s limits are being used up, leaving less money for any potential settlement and putting Great American’s umbrella coverage at risk sooner than it should be.
The exclusion Great Divide relies on says the policy doesn’t cover damages from any “error, omission, malpractice or mistake of a professional nature” by the association in its business activities. Great American pushes back, saying the actions at issue - like the alleged retaliation - don’t count as “professional” business activities under the policy.
Great American is asking the court to declare that Great Divide has to defend and indemnify the association before the umbrella policy kicks in. They also want the court to order Great Divide to participate in settlement talks and do its part under the policy.
At this point, it’s important to remember that these are just allegations from Great American’s complaint. No judge has weighed in, and Great Divide hasn’t had its say in court yet. But for insurance professionals, the case is a clear example of the headaches that can come with layered coverage and the importance of understanding who’s responsible for what when a claim arises.
The outcome could shape how insurers handle defense obligations and policy exclusions in complex, multi-policy scenarios. For now, it’s a waiting game to see how the court will sort out the responsibilities between these two industry players.
