Doctrine of Targeted Tender and “Other Insurance” Excess Provision
In River Village v. Central Ins., the general contractor, River Village, hired the subcontractor, First Choice, to perform work at the project site. The insurer, Harleysville, issued a policy to River Village as the primary insured. The insurer, Central Ins., issued a commercial general liability policy to First Choice as the policyholder and River Village as an additional insured. The contract between River Village, the general contractor, and First Choice (the subcontractor) did not specify whether the policy issued by Central Ins. was primary or excess insurance.
An employee of First Choice was injured while working on the project site. He sued River Village, who tendered its defense to First Choice, who then tendered the suit to Central Ins. Central Ins. denied tender of the defense.
River Village argued that it was obvious that Central Ins. was required to provide defense and indemnification to River Village in the underlying litigation. River Village cited the targeted tender doctrine, which allows an insured who is covered by multiple and concurrent insurance policies to select which insurer he wants to defend and indemnify him regarding a specific claim.
The issue was whether the doctrine of targeted tender used by an insured to obtain his selected primary coverage, or the application of other insurance excess provisions used by insurers to invoke only excess coverage, should prevail.
The court held that the situation in River Village v. Central Ins. did not involve concurrent primary insurers but rather concurrent, primary, and excess insurance. The Central Ins. policy clearly and unambiguously required that River Village first exhaust the primary insurance it held with Harleysville before it could trigger the excess coverage it held with Central Ins. Because the underlying litigation was completely satisfied within the limits of the Harleysville policy, there remained no claim in excess. Accordingly, the court held that the Central Ins. policy was not triggered, and the targeted tender suit for reimbursement from Central Ins. failed.
River Village I, LLC v. Central Ins. Co., 919 N.E.2d 426 (Ill.App. 1 Dist., 2009).
