The Court of Appeals handed down two significant insurance decisions last month. One interpreted a “follow-the-form” clause in an excess insurance policy. The other involved an “other insurance” clause. We discuss these decisions, as well as a decision concerning whether options to renew leases violate the rule against perpetuities.
‘Follow-the-Form’ Clause
As is common when an insured procures both primary and excess insurance coverage, the excess insurance policy at issue in Union Carbide Corp. v. Affiliated FM Insurance Co. contained what is known as a “follow-the-form” clause that incorporates by reference the terms and conditions of the primary policy. Certain insurers on a three-year excess policy asserted that the phrase “subject to the declarations set forth below” limited the policy to providing $30 million in coverage over the course of the policy, despite the fact that the primary policy provided $30 million in coverage for each of the three years. The Court disagreed.
