Comerica, Inc. v. Zurich American Insurance Company
United States District Court for the Eastern District of Michigan
498 F. Supp. 2d 1019 (2007)
Comerica (plaintiff) held a $20 million primary policy with FIC and an excess policy with Zurich (defendant) that was triggered only once the primary policy was "reduced or exhausted by payments for losses." Comerica settled underlying lawsuits for $21 million, with FIC contributing $14 million and Comerica personally paying the remaining $7 million; Comerica then sought coverage from Zurich for amounts beyond that, but Zurich argued the $20 million primary limit had never actually been exhausted by FIC's own payments.
Whether, where an insured has settled a claim for less than its primary-policy limit, and coverage under the excess policy requires that the insured exhaust its primary-policy limit, the insured can meet the exhaustion requirement by paying the difference between the settlement amount and the primary-policy limit.