New York Court of Appeals
Excess Insurance Company Ltd., Respondents v. Factory Mutual Insurance Company, Formerly Known as Allendale…
December 2, 20043 N.Y.3d 577
Summary
The New York Court of Appeals affirmed the Appellate Division, holding that the reinsurers' obligation to pay loss‑adjustment expenses is limited by the $7 million indemnity cap in the reinsurance policy. The Court rejected the argument that the "follow the settlements" clause overrides that limit, and it declined to consider the certificate ambiguous. Justice Read dissented, arguing the clause is ambiguous and should be read as cost‑exclusive, and would have remanded the case.