Court Determines Priority of Coverage Where Employer is Vicariously Liable

March 12, 2013:  “Burke’s Law,” a monthly column featured on, recently reviewed a California appellate court’s decision clarifying the priority of coverage where multiple insurers are implicated for the acts of a negligent employee.  In GuideOne Mutual Insurance Company v. Utica National Insurance Group, 2013 Cal. App. LEXIS 148, the court determined that insurers for a negligent employee must provide coverage before the insurance of the vicariously liable employer applies.

California law provides that where multiple policies provide coverage for an automobile accident, the insurance policy in which the vehicle is described as an owned auto will be primary and the insurance afforded by other policies will be excess.  In this case a dispute arose between two excess insurers as to their respective contributions.  One insurer argued that the excess insurers are treated equally under the statute and must contribute based upon their pro rata share of the coverage.  The other insurer argued that because it insured the employer, who was only vicariously liable for the acts of its employee, that the insurance covering the employee who is primarily liable must be exhausted first.

The appellate court agreed that an insurer for a vicariously liable employer must contribute only after the employee’s insurance has been exhausted.  The decision is an important clarification of California law.  All excess insurers are not necessarily required to share proportionally in the coverage and, while the California statute provides a starting point by defining the primary and excess insurers, other legal principles may be referenced to determine priority of coverage as between excess insurers.

The article can be read at: