Co-Insurer Seeking to Recover Payment from Other Co-Insurer
In Employers Casualty Co. v. Transport Ins. Co., Prior Products, Inc., which was insured by Employers Casualty Company and Transport Insurance Company, was sued. 444 S.W.2d 606, 607 (Tex. 1969).
Transport denied that Prior Products was an insured and refused to defend the suit. See id.
Employers assumed the defense, negotiated a settlement, and subsequently sued Transport for contribution. See id.
Because Employers failed to meet the requirements necessary to be entitled to contribution, the trial court's summary judgment was affirmed. See id. at 609.
However, the Texas Supreme Court noted that Employers was not without a remedy. See id. at 610.
"Its remedy for recovery from Transport of a pro rata part of the payment to the Siegels, as clearly indicated by the many cases listed above from other jurisdictions, lies in a suit asserting its right to payment through contractual or conventional subrogation to the right of the insured." Id. at 610.
The opinion further indicates that whether the payment is voluntary is immaterial for purposes of the subrogation claim. See id.
Employers establishes that subrogation is the proper theory for one co-insurer to assert when seeking to recover from the other co-insurer the payment the first co-insurer made in excess of its pro rata share.
Employers also indicates that the voluntary payment clause would not be a consideration in evaluating the subrogation rights because whether the payment was voluntary is immaterial.