U.S. District Court – Priority Of Coverage – Duty To Defend

In Allied World Assurance Company (U.S.), Inc. v. Great Divide Insurance Company, two insurers mutually insured a subcontractor, Precision Trenchless LLC ("Precision"). After Precision's allegedly defective work on a construction project caused property damage, the employer and general contractor brought a lawsuit against it. Precision requested that both Allied World and Great Divide defend it in the suit, and Allied World began defending it. The underlying suit subsequently settled. During the pendency of that suit, Allied World sought a judicial declaration that Great Divide had a co-primary duty to defend Precision, as well as reimbursement for Great Divide's portion of the defense. Allied World contended that Great Divide's defense obligation was co-primary, rather than excess, because the two policies did not insure the same risk. Great Divide contended that its coverage was excess to Allied World's coverage without consideration of identity of risk, and,