This article also appeared in The National Law Review.
Because it is common for a company’s insurance program to include several distinct coverage parts, many types of liabilities – including most catastrophic liabilities – may fall under multiple coverages within the same policy. Yet there can be a dramatic difference in the amount of available limits under these various coverage parts. While almost all jurisdictions hold that absent specific policy language to the contrary, the policyholder has the right to choose which coverage part applies, it remains possible that the lesser coverage may trump the greater thanks to insurance companies’ manipulation of a policy provision known as the “other coverages exclusion,” which stipulates that coverage under any one part of a policy excludes coverage under other parts. A recent decision in DPC Industries, Inc. v. American International Specialty Lines Insurance Co. sets a potentially harmful precedent for policyholders with such an “other coverages” exclusion in their policies.