The Pennsylvania Superior Court recently affirmed a lower court’s summary judgment ruling in favor of an insurer, holding that the limit of liability in a directors and officers liability policy was limited to $10 million in the aggregate, as opposed to per claim, even though certain policy documents did not include the word “aggregate” when referring to the limit of liability. Zurich American Ins. Co. v. O’Hanlon et al., No. 1193-2008, (Pa. Super. Ct. Mar. 16, 2009).
The insurer issued a D&O liability insurance policy to a financial services company. The insured’s prior coverage with a different insurer contained a $10 million aggregate limit of liability. When the insured purchased coverage from the instant insurer, certain documents issued by the insurer did not contain the word “aggregate” when referring to the limit of liability. During the policy period, the insured and its directors and officers submitted notice of a number of claims. The insured took the position that coverage under the policy was not limited to an aggregate of $10 million, but instead the limit of liability for each claim was $10 million. The insurer filed a declaratory judgment action seeking a court determination that any available coverage was limited to an aggregate of $10 million for all claims. The lower court found in favor of the insurer and the insured appealed.
On appeal, the Superior Court affirmed the lower court’s granting of summary judgment in favor of the insurer. The Superior Court’s decision found that, based on the record, the insured failed to meet its “burden to demonstrate a genuine issue of material fact as to whether the true agreement that [the insured] entered into with [the insurer] contained a No-Aggregate Limit of Liability.” In finding in favor of the insurer, the court noted the lack of evidence demonstrating the insured’s intent and expectation to procure a D&O policy with a per claim limit of liability as opposed to an aggregate limit. As no genuine issue of material fact existed as to the insured’s intent to purchase a $10 million aggregate limit of liability policy, or the insurer’s intent to offer it, the Superior Court upheld the finding of summary judgment in favor of the insurer.