Excess Carriers are Equitably Subrogated to Insured’s Cause of Action Against Primary Carriers for Breach of Stowers Duty: American Centennial Insurance Co. v. Canal Insurance Co., 810 S.W.2d 246 (Tex. App.—Houston [1st Dist.] 1991, writ granted)

Date

1992

Journal Title

Journal ISSN

Volume Title

Publisher

Texas Tech Law Review

Abstract

In American Centennial Insurance Co. v. Canal Insurance Co., the First District Court of Appeals held that an excess carrier is equitably subrogated to the rights of its insured against the primary carrier. The court relied upon decisions from jurisdictions, which had previously allowed such a cause of action. It also relied upon the well settled right of insurance carriers to be subrogated to their policyholders' rights against the one who caused the loss. Although there may be a question as to whether this was a proper fact pattern in which to adopt a right of equitable subrogation, the American Centennial decision should help to realign the previously unequal balance of power, which allowed primary carriers to gamble with excess carriers' money.

Description

Keywords

Excess carrier’s cause of action for breach of good faith, Cause of action, Insurance, Equitable subrogation, Direct duty, Triangular reciprocity, Duty of the insurer, Texas, American Centennial Insurance Co. v. Canal Insurance Co.

Citation

23 Tex. Tech L. Rev. 643