Kinsale Insurance Company is taking Colony Insurance Company to federal court, claiming Colony left it holding the bag on a costly construction defect lawsuit in Los Angeles.
Filed on September 2, 2025, in the Central District of California, the complaint tells a story familiar to many in the insurance business: two carriers, one insured, and a dispute over who pays when things go sideways on a big project. At the center is Prime Aire, Inc., a subcontractor pulled into a lawsuit over alleged construction defects at a single-family home at 1536 Blue Jay Way in Los Angeles.
Here’s what Kinsale is saying. Both Kinsale and Colony provided general liability coverage for Prime Aire, but for different years. When Prime Aire was sued in 2020 for alleged negligence in its subcontracting work that supposedly caused property damage, both insurers initially defended Prime Aire in the underlying action. But last fall, Colony decided to step away. In a letter dated September 24, 2024, Colony told Prime Aire it would withdraw from the defense as of September 28, 2024, arguing that Prime Aire’s work was allegedly completed before Colony’s policies took effect and citing a continuous damage exclusion in its policies.
Kinsale’s complaint says that’s not how it should work. According to Kinsale, the underlying lawsuit against Prime Aire does not allege when the claimed damages began, so there remains a potential for coverage under Colony’s policies. Since Colony’s withdrawal, Kinsale says it has continued to defend Prime Aire and has incurred and will continue to incur sums in excess of its equitable share in connection with the defense.
Now, Kinsale wants a judge to declare that Colony still has a duty to defend Prime Aire and must contribute toward the attorneys’ fees and costs Kinsale has incurred and will continue to incur. The company is also seeking equitable contribution for the defense costs it claims to have paid in excess of its share since Colony stepped away.
Why does this matter to the insurance industry? For one, it’s a real-world example of the challenges that can come with overlapping policies and unclear timelines in construction defect claims. When multiple insurers provide coverage for the same insured, determining who pays - and when - can quickly become complicated. The case also highlights how policy exclusions, such as those for continuous or ongoing damage, can become central points of contention when the facts are not clearly established in the underlying complaint.
For insurance professionals, especially those in claims and underwriting, this case is a reminder of the importance of clear policy language and communication between carriers. It also shows how a routine defense can turn into a dispute between insurers, with significant costs at stake.
As of now, there’s no decision - just Kinsale’s claims as set out in the complaint. The court will eventually decide whether Colony must resume its defense and share costs with Kinsale. Until then, this case is one to watch for anyone involved in liability coverage, construction risks, or the sometimes tricky relationships between co-insurers.
