The relationship between primary and excess liability insurers has been characterized as “unusual,” as in Physicians Insurance v. Callahan, 648 A.2d 608, 615-16 (Pa. Cmwlth. 1994), citing Puritan Insurance v. Canadian Universal Insurance, 775 F.2d 76 (3rd Cir. 1985).

When the insured is faced with a claim whose value hovers on the border between the primary and excess limits the relationship can become contentious. The primary insurer, which typically has the duty to defend, may be tempted to try a case that could be settled in the hope of saving some or all of its policy limit. Conversely, the excess insurer’s interests are served by having the primary insurer settle the case within the primary limits. Where the primary fails to settle within its limits or conducts the defense in a fashion that results in an excess verdict, an excess insurer will sometimes seek to pursue the primary insurer for the amount in excess of the primary limit.

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