N.Y. High Court Refuses to Impose Rule Capping Reinsurers’ Liability

ALBANY, N.Y. — The highest court in New York has held that its ruling in Excess Insurance Co. v. Factory Mutual does not impose a hard and fast rule that a per occurrence liability cap in a reinsurance contract limits the total amount available under the contract, including defense costs.

In a Dec. 14 opinion, the New York Court of Appeal explained that courts should not disregard the contract’s language and simply assume that any clause bearing the generic marker of a "limitation on liability" or "reinsurance accepted" clause was intended to be cost-inclusive.

Between 1971 and 1980, Century Indemnity …