Excess Insurance Reimbursement of Primary Insurer
In Signal Companies, the Supreme Court held that, as between a primary insurer and an excess insurer, the former is solely responsible for defense costs even though the claim against the insured may be for a sum in excess of the primary coverage (27 Cal. 3d at p. 368, 165 Cal. Rptr. 799, 612 P.2d 889; however, the duty to defend may shift to the excess insurer once the primary limits are exhausted (id. at pp. 365-369; Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 1999) PP 7:679 to 7:686.1, pp. 7B-49 to 7B-51).
While the court in Signal Companies, Inc. v. Harbor Ins Co. (1980) acknowledged the importance of equitable principles, it also pointed out:
"The excess insurer's policy explicitly states that its liability would not attach until the primary coverage has been exhausted. . . . It further provides that the duty to contribute to costs would arise only if the insured obtained the excess insurer's written consent to incur costs which the insured neither sought nor obtained. . . .. . . the primary insurer's fundamental contention would require the excess insurer to contribute to the defense costs incurred by the primary carrier even though excess liability might never attach and despite the explicit provisions of the excess insurer's policy. . . .
To impose an obligation on the excess insurer to reimburse the primary insurer in contravention of the provisions of its policy could only be justified . . . by some compelling equitable consideration.
We find no such consideration here." (Signal Companies, supra, 27 Cal. 3d at p. 367-369, italics added.)