Horace Mann Insurance v. General Star National Insurance

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

HORACE MANN INSURANCE COMPANY, 

Plaintiff-Appellee,

v.

 No. 06-2156

GENERAL STAR NATIONAL INSURANCE

COMPANY,

Defendant-Appellant.



Appeal from the United States District Court

for the Northern District of West Virginia, at Clarksburg.

Irene M. Keeley, Chief District Judge.

(1:04-cv-00163-IMK)

Argued: September 26, 2007

Decided: January 23, 2008

Before NIEMEYER and TRAXLER, Circuit Judges,

and Samuel G. WILSON, United States District Judge for the

Western District of Virginia, sitting by designation.

Reversed and remanded by published opinion. Judge Traxler wrote

the majority opinion, in which Judge Wilson joined. Judge Niemeyer

wrote a dissenting opinion.

COUNSEL

ARGUED: Jeffrey Alan Holmstrand, MCDERMOTT & BONEN-

BERGER, P.L.L.C., Wheeling, West Virginia, for Appellant. Daniel

C. Cooper, Bridgeport, West Virginia, for Appellee. ON BRIEF:

2 MANN INSURANCE v. GENERAL STAR NATIONAL

Jamison H. Cropp, STEPTOE & JOHNSON, Clarksburg, West Vir-

ginia, for Appellee.

OPINION

TRAXLER, Circuit Judge:

This appeal involves a dispute between two insurance companies,

with each company claiming that the insurance provided by its policy

was "excess" to the other insurance and that its coverage therefore

was not triggered until the limits of the other company’s policy were

exhausted. The district court granted summary judgment in favor of

Horace Mann Insurance Company, concluding that its policy was

excess to the policy issued by General Star National Insurance Com-

pany. General Star appeals. We reverse the decision of the district

court and remand for entry of judgment declaring the General Star

policy excess to the Horace Mann policy.

I.

A West Virginia high school student was sexually abused by a

teacher, and the student filed suit against numerous defendants,

including the school board and the school principal. The parties set-

tled the claims for an amount in excess of $1,000,000.

West Virginia law requires the State Board of Risk and Insurance

Management to provide a minimum of $1,000,000 of liability insur-

ance coverage for all county school boards and their employees. See

W. Va. Code § 29-12-5a. The board must also provide a minimum of

$5,000,000 in excess liability insurance coverage. See id.

In this case, the statutorily required first layer of liability insurance

was provided by National Union Fire Insurance Company, and the

$5,000,000 in excess liability coverage was provided by General Star.

National Union contributed its policy limits to the settlement of the

student’s claims, and General Star, as excess insurer, contributed the

balance of the settlement amount.

MANN INSURANCE v. GENERAL STAR NATIONAL 3

General Star thereafter sought reimbursement from Horace Mann

Insurance Company, which had issued to the school principal a policy

providing some coverage for the student’s claim. Believing that its

policy provided no coverage until the limits of the General Star policy

were exhausted, Horace Mann commenced this declaratory judgment

action seeking a declaration of the parties’ obligations with regard to

the settlement.

The district court granted summary judgment in favor of Horace

Mann. The district court compared the language of the "other insur-

ance" clauses contained in the General Star and Horace Mann policies

and concluded that the Horace Mann policy was excess to all other

insurance policies, while the General Star policy contemplated situa-

tions where other policies would be excess to its coverage. The dis-

trict court therefore concluded that the language of the policies

required the limits of the General Star policy to be exhausted before

any contribution was required under the Horace Mann policy

II.

On appeal, General Star argues that its policy is a true excess pol-

icy, unlike the Horace Mann policy, which provides primary coverage

that sometimes becomes excess by virtue of an "other insurance"

clause. General Star argues that it is a well-established principle of

insurance law that true excess policies are always excess to policies

that provide primary coverage, and that the district court therefore

erred by granting summary judgment in favor of Horace Mann.

As we will explain, we agree with General Star that its status as a

true excess insurer requires us to reverse the decision of the district

court. Before delving into the details of General Star’s argument,

however, we believe it will be helpful to first discuss the nature and

operation of primary and excess liability insurance policies. Because

we are sitting in diversity, our role is to apply the governing state law,

or, if necessary, predict how the state’s highest court would rule on

an unsettled issue. See Private Mortgage Inv. Servs., Inc. v. Hotel &

Club Assocs., Inc., 296 F.3d 308, 312 (4th Cir. 2002). Accordingly,

where there is West Virginia law addressing a particular question, we

will follow it. But if the West Virginia courts have not addressed an

issue, we will look to generally accepted principles of insurance law,

4 MANN INSURANCE v. GENERAL STAR NATIONAL

because we believe that West Virginia’s Supreme Court of Appeals

would adopt those principles as its own.

A.

Primary liability insurance "provides the first layer of insurance

coverage. Primary coverage attaches immediately upon the happening

of an ‘occurrence,’ or as soon as a claim is made. The primary insurer

is first responsible for defending and indemnifying the insured in the

event of a covered or potentially covered occurrence or claim." Gauze

v. Reed, 633 S.E.2d 326, 332 (W. Va. 2006) (internal quotation marks

omitted). "Because most losses are within primary policy limits and

therefore create greater exposure for primary insurers, and because

primary insurers are generally obligated to defend their insureds, pri-

mary insurers charge larger premiums for coverage than do excess

and umbrella carriers." Id. (internal quotation marks omitted)

Excess liability policies, by contrast, do not provide first-dollar

coverage for insured losses, but instead provide an additional layer of

coverage for losses that exceed the limits of a primary liability policy.

Coverage under an excess policy thus is triggered when the liability

limits of the underlying primary insurance policy have been

exhausted. See id. ("In keeping with the reasonable expectations of

the parties, including the insured, which paid separate premiums for

its primary and excess policies, excess coverage generally is not trig-

gered until the underlying primary limits are exhausted by way of

judgments or settlements." (internal quotation marks and citation

omitted)); 15 Lee R. Russ & Thomas F. Segalla, Couch on Insurance

§ 220:32 (3d ed. 2005) ("The purpose of . . . excess . . . coverage is

to protect the insured in the event of a catastrophic loss in which lia-

bility exceeds the available primary coverage. Accordingly, it is only

after the underlying primary policy has been exhausted does the

excess . . . coverage kick in." (footnote omitted)). "Excess insurance

is priced on the assumption that primary coverage exists: indeed, an

excess policy usually requires by its terms that the insured maintain

in force scheduled limits of primary insurance."1 Gauze, 633 S.E.2d

at 332 (internal quotation marks omitted).

1

Excess insurance may also be designed to operate above another

excess policy. In such a case, coverage under a second- layer excess pol-

icy would be triggered only after the limits of the first-layer excess pol-

icy have been exhausted.

MANN INSURANCE v. GENERAL STAR NATIONAL 5

The General Star policy at issue in this case is a typical excess pol-

icy. The policy describes itself an excess liability policy, see J.A. 25

("Certificate of Excess Insurance"), and the declarations on the first

page of the policy include a listing of the required underlying insur-

ance and define the coverage as limited to occurrences where liability

is "in excess of the limits" of the underlying insurance, J.A. 25. The

policy’s insuring agreement likewise clearly defines the coverage as

excess in nature. See J.A. 31 ("The Company shall indemnify the

insured for ultimate net loss in excess of the underlying insurance

stated in Item 2 of the Declarations, but not in excess of the Compa-

ny’s limits of liability stated in Item 3 of the Declarations.").

The Horace Mann policy is an "educators employment liability"

policy issued to the school principal by virtue of his membership in

the National Education Association. J.A. 16. It provides for

$1,000,000 of coverage per member per occurrence for claims other

than civil rights claims; $300,000 of coverage for civil rights claims;

reimbursement of up to $35,000 for attorney’s fees incurred in suc-

cessfully defending a criminal action; and $1,000 bail bond premium

reimbursement. Whether the policy is a primary or excess policy is

a matter of some dispute that we will address in detail later in the

opinion. For the moment it suffices to say that the policy appears to

provide first-dollar, primary liability insurance coverage for the speci-

fied risks.

B.

Under certain circumstances, a primary liability insurance policy

may in fact provide only excess liability coverage. Because multiple

insurance policies may cover a given loss, liability insurance policies

generally contain "other insurance" clauses that attempt to define the

insurer’s responsibility for payment when other insurance coverage is

available. These clauses typically take the form of a pro-rata clause,

an escape clause, or an excess clause. A pro-rata clause "limit[s] the

insurer’s liability to its pro rata share of the loss in the proportion that

its policy limits bear[ ] to the aggregate of available liability cover-

age." State Farm Mut. Auto. Ins. Co. v. U.S. Fidelity & Guar. Co, 490

F.2d 407, 410 (4th Cir. 1974). An escape clause provides that the

insurer will have no liability to the insured when other insurance cov-

erage is available, while an excess clause provides that the insurer

6 MANN INSURANCE v. GENERAL STAR NATIONAL

will be liable only after the exhaustion of the limits of any other appli-

cable insurance. See id.; see also 15 Russ & Segalla, Couch on Insur-

ance § 219:5.

A primary liability insurance policy that contains an excess other-

insurance clause thus effectively operates as an excess policy if other

insurance is available. That is, even though the policy would provide

primary, first-dollar coverage for an insured loss if no other insurance

policy covered the loss, it will provide excess coverage when other

insurance is available. Primary liability policies with excess other-

insurance clauses are sometimes referred to as "coincidental excess"

policies. See Fireman’s Fund Ins. Co. v. CNA Ins. Co., 862 A.2d 251,

266 (Vt. 2004) ("‘[C]oincidental’ excess insurance is primary insur-

ance that is rendered excess by operation of a policy provision, like

an ‘other insurance’ clause, in a specific set of circumstances.").

Other-insurance clauses are generally valid and enforceable, see 15

Russ & Segalla, Couch on Insurance § 219:3, and the clauses are easy

enough to interpret and apply when only one policy with an other-

insurance clause is involved. Interpretation and application of the

clauses, however, may be quite difficult in cases where multiple lia-

bility policies potentially provide coverage for a given loss and each

of the policies contains an other-insurance clause. For example, if two

potentially applicable policies both contain an escape clause, applica-

tion of the clauses as written could leave the insured without any lia-

bility coverage—each insurer could point to the existence of the other

policy and claim that its escape clause relieved it of any obligation

under the policy. And in cases where both policies contain excess

other-insurance clauses, each insurer will contend that its other-

insurance clause makes it excess to the other and that the other policy

must therefore provide primary coverage. In such cases there typically

is no language in either policy that gives a court a contractually-based

way to decide which policy should be excess to the other. Cf. Employ-

ers Reinsurance Corp. v. Phoenix Ins. Co., 230 Cal. Rptr. 792, 798

(Cal. Ct. App. 1986) ("If we were to give effect to all three excess

clauses in this instance, they would cancel each other out and afford

the insured no coverage whatsoever. We would travel full circle with

no place to say ‘the buck stops here.’"). Given the prevalence of

other-insurance clauses, it is not surprising that "the books are replete

MANN INSURANCE v. GENERAL STAR NATIONAL 7

with cases involving conflicts between various combinations of such

clauses." State Farm, 490 F.2d at 410.

Generally speaking, in cases where the other-insurance clauses can

be reconciled, the clauses will be enforced in accordance with their

terms. See, e.g., Citgo Petroleum Corp. v. Yeargin, Inc., 690 So. 2d

154, 167 (La. Ct. App. 1997); Northland Ins. Co. v. Continental West-

ern Ins. Co., 550 N.W.2d 298, 303 (Minn. Ct. App. 1996). In cases

where there are actual conflicts in the language of the clauses, or

where a literal application of the clauses could leave the insured with-

out coverage, various methods for resolving the issue have gained

acceptance. Some courts find conflicting other-insurance clauses to be

"mutually repugnant" and thus unenforceable and require the insurers

to bear pro-rata shares of the total liability. See, e.g., State Farm, 490

F.2d at 410; Hoffmaster v. Harleysville Ins. Co., 657 A.2d 1274, 1277

(Pa. Super. Ct. 1995). Other courts, however, resolve the conflicts by

considering the "total policy insuring intent." Under this approach,

where conflicting other-insurance clauses "cannot be resolved by the

logic of their terms, the insurer whose coverage was effected for the

primary purpose of insuring the particular risk should be primarily lia-

ble for payment, with the insurer whose coverage was most incidental

to risk being liable last." 15 Russ & Segalla, Couch on Insurance

§ 219:49; see, e.g., Integrity Mut. Ins. Co. v. State Auto. & Cas.

Underwriters Ins. Co., 239 N.W.2d 445, 446-47 (Minn. 1976).

The Horace Mann and the General Star policies both include other-

insurance clauses. The General Star clause states that

[i]f other valid and collectible insurance with any other

insurer is available to the insured covering a loss also cov-

ered by this Policy, other than insurance that is in excess of

the insurance afforded by this Policy, the insurance afforded

by this Policy shall be in excess of and shall not contribute

with such other insurance. Nothing herein shall be construed

to make this Policy subject to the terms, conditions, and lim-

itations of other insurance, reinsurance or indemnity.

J.A. 35.

The relevant portions of the Horace Mann clause state that:

8 MANN INSURANCE v. GENERAL STAR NATIONAL

[The policy] was written and priced to reflect the intent of

all parties that this policy is in excess of any and all other

insurance policies, . . . whether primary, excess, umbrella,

or contingent . . . . [I]t is the intent of the parties that the

coverage afforded in this policy does not apply if the insured

has other valid and collectible insurance of any kind whatso-

ever whether primary or excess, . . . except any excess

beyond the amount which would have been payable under

such other policy or policies . . . had this policy not been in

effect. Other valid and collectible includes, but is not limited

to, policies . . . purchased by . . . an educational unit to

insure against liability arising from activities of the educa-

tional unit or its employees, regardless of whether or not the

policy . . . provides primary, excess, umbrella, or contingent

coverage. . . .

This policy is specifically excess over coverage provided by

school district or school board errors and omissions or gen-

eral liability policies purchased by the Insured’s employer

. . . and it is specifically excess over coverage provided by

any policy of insurance which purports to be excess to or

recites that it is excess to a policy issued to the Insured for

the benefit of members of the National Education Associa-

tion.

J.A. 22-23 (emphasis added).2

The district court viewed this case as a straightforward other-

insurance-clause case and concluded that the clauses could be recon-

ciled. The Horace Mann policy clearly indicates that it is to be excess

to all other applicable insurance policies, including excess policies.

The General Star policy, by contrast, states that it will be excess to

all other insurance "other than insurance that is in excess of the insur-

ance afforded by this Policy." J.A. 35 (emphasis added). The district

court concluded that because the General Star policy contemplated

that it might not always be excess and the Horace Mann policy made

2

Horace Mann’s other-insurance clause also provides for pro-rata con-

tribution in the event there is some other excess policy to which the Hor-

ace Mann policy would not be considered excess.

MANN INSURANCE v. GENERAL STAR NATIONAL 9

clear its intention to always be excess when other insurance is avail-

able, the Horace Mann policy was not required to contribute to the

settlement of the underlying tort claims until the limits of the General

Star policy were exhausted. And because payment of the underlying

settlement did not exhaust General Star’s policy limits, the district

court granted summary judgment in favor of Horace Mann.

C.

We turn now to General Star’s challenge to the district court’s

decision. General Star argues that its policy is a true (or pure) excess

policy that only provides excess coverage and never provides primary

coverage. Horace Mann’s policy, by contrast, provides primary liabil-

ity coverage that in some cases will convert to excess coverage by vir-

tue of the other-insurance clause. General Star contends that the rules

generally governing conflicts between other-insurance clauses do not

apply when one of the policies at issue is a true excess policy and the

other policy is a primary liability policy. Instead, General Star con-

tends that priority disputes between a true excess policy and a primary

policy with an excess other-insurance clause are always resolved in

favor of the true excess policy.

(1)

"True excess" or "pure excess" is a description used to distinguish

typical excess liability policies from coincidental excess policies—

policies that provide primary liability coverage but operate as excess

in a given case because of an other-insurance clause. See Gauze, 633

S.E.2d at 333 (concluding that policy was not a "pure excess" policy

because it "provide[d] the first layer of insurance coverage, unless

there was some ‘other’ coverage"); see also Sherlock v. Ocean Sal-

vage Corp., 785 So. 2d 932, 937 (La. App. 2001) ("In resolving con-

flicting ‘other insurance’ clauses it is important to distinguish

between policies that are true excess policies and those that are actu-

ally primary policies with ‘excess’ other insurance clauses." (internal

quotation marks omitted)).

There is no question that General Star’s policy is a true excess pol-

icy. As the terms of its insuring agreement make clear, coverage

under the General Star policy is dependent upon the exhaustion of the

10 MANN INSURANCE v. GENERAL STAR NATIONAL

limits of underlying primary liability insurance, and this kind of

dependence on an underlying liability policy is the hallmark of a true

excess policy.

It is just as clear to us that the Horace Mann policy is a primary

liability policy. The policy provides that it will pay "on behalf of the

insured any and all [covered losses] subject to the limit of liability."

J.A. 18. The policy does not require that the insured maintain other

insurance, and neither the declarations nor the insuring agreements

limit coverage to losses in excess of the limits of an underlying insur-

ance policy. See Gauze, 633 S.E.2d at 333 (concluding that insurance

policy was not a pure excess policy because the policy "did not pro-

vide specific coverage above a defined underlying limit of primary

insurance," did not require the insured "to maintain in force certain

scheduled limits of primary insurance," and there was no indication

the "premiums were priced on the assumption that primary coverage

existed"); Commerce & Industry Ins. Co. v. Chubb Custom Ins. Co.,

89 Cal. Rptr. 2d 415, 419-20 (Cal. Ct. App. 1999) (rejecting insurer’s

claim that policy was always intended to provide contingent or excess

coverage, noting that the policy "meets the definition of primary

coverage—the insurer’s liability arises immediately upon occurrence

of a covered loss—and fails to display the indicia of a true excess or

umbrella policy, such as . . . specific identification of the primary cov-

erage policy or other policy language" (citations omitted)). The policy

as written thus provides primary, first-dollar liability insurance.

Although the policy is written to provide primary liability cover-

age, Horace Mann, pointing to the language in its other-insurance

clause, insists that the policy was always intended to be an excess pol-

icy. The language in the other-insurance clause, however, states only

that the policy was intended to be excess to any other policy that may

exist; if there is no other insurance, the primary coverage offered by

the policy would be triggered. While this makes the policy a coinci-

dental excess policy, the question is whether the policy qualifies as

a true excess policy. Because the other-insurance clause does not

make coverage in all cases dependent on the exhaustion of the limits

of an underlying insurance policy, the other-insurance clause does not

transform the policy into a true excess policy. See, e.g., Firemen’s

Fund Ins. Co., 862 A.2d at 266 ("The fact that Fireman’s policy is

excess under a certain set of circumstances does not transform it from

MANN INSURANCE v. GENERAL STAR NATIONAL 11

a primary policy with an ‘other insurance’ clause into a ‘true’ excess

policy."); CNA Ins. Co. v. Selective Ins. Co., 807 A.2d 247, 254 (N.J.

Supr. App. 2002) (explaining that an excess other-insurance clause

contained in a primary insurance policy "does not transform that pri-

mary policy into an excess policy" (internal quotation marks omit-

ted)); Bosco v. Bauermeister, 571 N.W.2d 509, 514 (Mich. 1997)

("Plaintiff misunderstands the basic nature of the Frankenmuth policy.

It is a primary policy and has an excess clause that becomes operative

in certain limited circumstances. This clause does not change the

nature and function of the policy."); North River Ins. Co. v. American

Home Assur., 257 Cal. Rptr. 129, 131 (Cal. App. 1989) ("The pres-

ence of an ‘other insurance’ provision in a primary policy does not

transform that primary policy into an excess policy vis a vis a second-

ary carrier with excess coverage.").

We recognize that in most cases where there is coverage under the

Horace Mann policy, the policy will in fact operate as excess cover-

age. The Horace Mann policy apparently was developed specifically

for West Virginia NEA members, all of whom should be covered by

the statutorily mandated insurance coverage for county school board

employees. The policy’s other-insurance clause thus means that the

policy generally will provide only excess coverage to a West Virginia

teacher.3 That the policy will typically operate as an excess policy,

however, simply cannot change the fact that the policy is written to

3

As mentioned above, the Horace Mann policy provides for reimburse-

ment for a bail bond premium and reimbursement for attorney’s fees

incurred in a successful defense against criminal charges. It seems

unlikely that such coverage would be provided by the other insurance

that might be available to Horace Mann policy holders, such as the statu-

torily mandated insurance for school boards, or homeowner’s insurance.

Thus, it may well be that the Horace Mann policy would provide primary

coverage in these areas even when other insurance exists. See 15 Lee R.

Russ & Thomas F. Segalla, Couch on Insurance § 219:14 (3d ed. 2005)

("It is generally held that in order for an other insurance clause to operate

in the insurer’s favor, there must be both an identity of the insured inter-

est and an identity of risk. . . . The rule that the risks be identical in order

for an ‘other insurance’ clause to apply does not mean that the total pos-

sible coverage under each policy be the same, but merely that with

respect to the harm which has been sustained there be coverage under

both policies." (footnotes omitted)).

12 MANN INSURANCE v. GENERAL STAR NATIONAL

provide primary liability insurance. Horace Mann could have offered

NEA members a true excess policy that provided coverage after

exhaustion of the limits of West Virginia’s statutorily mandated insur-

ance. It instead chose to offer a policy that provides some amount of

primary liability coverage but converts to excess coverage when other

insurance exists. The excess other-insurance clause works to reduce

Horace Mann’s exposure in most cases, but it does not transform the

policy into a true excess policy. See Gauze, 633 S.E.2d at 333; CNA

Ins. Co., 807 A.2d at 254; Bosco, 571 N.W.2d at 514.

(2)

The identification of the General Star policy as a true excess policy

and the Horace Mann policy as a primary policy that becomes excess

by operation of its other-insurance clause is effectively dispositive of

the priority issue presented in this appeal. Although the West Virginia

Supreme Court has not spoken on this precise question, the general

rule is that as between a true excess policy and a primary liability pol-

icy with an other-insurance clause, the limits of the policy that pro-

vides primary insurance must always be exhausted before coverage

under the excess policy is triggered:

[N]umerous courts in other jurisdictions have addressed the

question and have aligned themselves with the position [the

excess insurer] takes: a true excess insurance policy is sec-

ondary in priority to a primary insurance policy, even with

respect to an incident for which the primary policy purports

to make itself excess to any other available insurance. . . .

Indeed, it appears that not only is this the majority rule, but

the practically universal rule in jurisdictions that have

addressed the issue. Otherwise stated, the prevailing rule is

that umbrella insurance coverage is "true excess over and

above any type of primary coverage, excess provisions aris-

ing in regular policies in any manner, or escape clauses."

Monroe Guar. Ins. Co. v. Langreck, 816 N.E.2d 485, 492-93 (Ind.

App. 2004) (emphasis added); accord National Surety Corp. v.

Ranger Ins. Co., 260 F.3d 881, 884 (8th Cir. 2001) (applying Iowa

law); Institute for Shipboard Educ. v. Cigna Worldwide Ins. Co., 22

F.3d 414, 425-26 (2d Cir. 1994) (applying Pennsylvania law);

MANN INSURANCE v. GENERAL STAR NATIONAL 13

National Farmers Union Prop. & Cas. Co. v. Farm & City Ins. Co.,

689 N.W.2d 619, 624 (S.D. 2004); LeMars Mut. Ins. Co. v. Farm &

City Ins. Co., 494 N.W.2d 216, 218-19 (Iowa 1992); Atkinson v.

Atkinson, 326 S.E.2d 206, 214 (Ga. 1985).

This rule applies without regard to the terms of the policies’ other-

insurance clauses, because other-insurance clauses are an issue only

"when two or more policies apply at the same level of coverage. An

‘other insurance’ dispute can only arise between carriers on the same

level[;] it cannot arise between excess and primary insurers." North

River Ins. Co., 257 Cal. Rptr. at 132 (citations and internal quotation

marks omitted); see Allstate Ins. Co. v. Frank B. Hall & Co. of Ca.,

770 P.2d 1342, 1347 (Co. Ct. App. 1989) (declining to require pro-

rata contribution where other-insurance clauses were mutually repug-

nant, because that "rule has generally not been applied when one of

the clauses is contained within what would otherwise be a primary

policy . . . and the other is contained within a policy that is designed

to be an excess or umbrella policy"); 15 Russ & Segalla, Couch on

Insurance § 218:5 ("An ‘other insurance’ dispute cannot arise

between primary insurers and true excess insurers."). Accordingly, in

a priority dispute between a true excess insurer and a primary or coin-

cidental excess insurer, the policies’ other-insurance clauses simply

are not relevant, and there is no reason to consider whether the other-

insurance clauses may be reconciled or must be set aside as mutually

repugnant. See General Star Nat’l Ins. Co. v. World Oil Co., 973 F.

Supp. 943, 949 (C.D. Cal. 1997) ("When a policy is excess to another

policy, there is no need to analyze the ‘other insurance’ clauses in

either of the policies. Because an excess or secondary policy, by its

own terms, does not apply to cover a loss until the underlying primary

insurance has been exhausted, an examination of other insurance

clauses to determine the relative rights and responsibilities of the par-

ties is unnecessary where the policies do not provide the same level

of protection." (citation and alteration omitted)); National Farmers

Union Prop. & Cas. Co., 689 N.W.2d at 624 (concluding that true

excess policy was last in priority of payment even though the primary

insurance policy had a broad other-insurance clause: "Competing

‘other insurance clauses’ . . ., which normally would invoke contract

construction rules, must yield to a finding of the insurance policies’

main functions."); accord National Sur. Corp., 260 F.3d at 884;

14 MANN INSURANCE v. GENERAL STAR NATIONAL

Cigna Worldwide Ins. Co., 22 F.3d at 426; Langreck, 816 N.E.2d at

493.

If this general rule—that true excess insurance is always excess

over a policy providing primary coverage—applies in West Virginia,

then the district court erred by looking to the language of the policies’

other-insurance clauses rather than to the nature of the insurance cov-

erage provided by the policies. As noted above, West Virginia courts

have not yet addressed this issue. General Star, however, contends

that this court has already predicted that West Virginia would follow

the general rule that true excess coverage is always excess to cover-

age provided in a primary insurance policy. See Allstate Ins. Co. v.

American Hardware Mut. Ins. Co., 865 F.2d 592 (4th Cir. 1989).

In Allstate, a car owned by the Chrysler Corporation and leased to

a dealer was involved in an accident. Liability coverage for the car

was provided by policies issued by Continental Insurance and Ameri-

can Hardware Insurance. A true excess policy4 issued to Chrysler by

Allstate also provided coverage for the car. There was no dispute that

the Continental policy provided primary coverage that must be

exhausted before coverage from the other policies would become

applicable; the question was the order of priority between the Allstate

and American Hardware policies. The American Hardware policy

was a "garage operations" policy that provided primary liability insur-

ance to the dealer for claims arising from its garage operations. The

policy, however, included a provision that made its coverage excess

for covered claims involving a car that was not owned by the dealer.

Because the Allstate policy also included an excess other-insurance

4

We referred to the excess policy as an "umbrella" policy, a term that

is often used to describe a pure excess policy. See Allstate Ins. Co. v.

American Hardware Mut. Ins. Co., 865 F.2d 592, 593 (4th Cir. 1989).

Umbrella policies, however, may provide coverage not available under

a typical pure excess policy. In addition to excess coverage for risks cov-

ered by an underlying insurance policy, some umbrella policies offer pri-

mary liability coverage for certain risks not covered by the underlying

policy. See, e.g., Coleman Co., Inc. v. California Union Ins. Co., 960

F.2d 1529, 1530 n.1 (10th Cir. 1992). The policy at issue in Allstate,

however, was a pure excess policy; it offered no primary coverage for

any risk. See Allstate, 865 F.2d at 593.

MANN INSURANCE v. GENERAL STAR NATIONAL 15

clause, the district court concluded that the excess other-insurance

clauses in the policies were mutually repugnant and that any loss

above the limits of the Continental policy should be pro-rated

between Allstate and American Hardware. See id. at 593.

On appeal, we noted that the overwhelming weight of authority

held that "primary policies with excess clauses must be exhausted

before the carrier of an umbrella policy will be required to pay." Id.

at 594. We concluded that West Virginia would follow the same rule,

and we therefore reversed the district court’s ruling:

[T]he Allstate policy is purely excess in nature. It is a classic

umbrella policy and can therefore never provide primary

coverage. Rather, it encompasses all the potential liabilities

which Chrysler might incur and provides an additional

source of funds for liabilities in excess of the underlying

policies’ coverage. The issuance of the umbrella policy in

the present case was conditioned upon the existence of 13

different underlying policies protecting Chrysler from liabil-

ity in almost any imaginable circumstance.

In contrast, the American Hardware policy is essentially

a policy of primary coverage. It is a "garage operations" pol-

icy and provides Greenbrier with primary coverage for all

liabilities arising from its operations. However, in the event

that liability should result from the use of a non-owned auto-

mobile, the American Hardware policy states that it will

provide only excess coverage. Consequently, in the instant

case American Hardware purports to be a secondary carrier

even though it has issued essentially a primary policy to

Greenbrier. . . . Since American Hardware is in most

instances a primary policy, its limits should be exhausted

before Allstate is required to contribute.

Id. at 594-95.

In our view, Allstate represents a straightforward application of the

true-excess-is-always-excess rule urged by General Star. The district

court in Allstate had approached the case by comparing the language

of the other-insurance clauses and determining that the clauses were

16 MANN INSURANCE v. GENERAL STAR NATIONAL

"mutually repugnant and must be disregarded." Id. at 593. We

reversed the district court not because we believed that the other-

insurance clauses in fact could be reconciled, but because we believed

that West Virginia would follow the majority rule that "purported

conflicts" between a true excess insurer and an insurer that provided

"essentially primary coverage" made excess by virtue of a contract

provision must be resolved in favor of the true excess insurer. Id. at

594. Our holding thus was premised on the nature of the policies at

issue, not on the language of the other-insurance clauses. See id. at

594-95. Because the West Virginia courts still have not directly

addressed this issue, we believe that Allstate’s prediction of West Vir-

ginia law must control the disposition of this appeal.5

Horace Mann, however, contends that Allstate is distinguishable

and does not control the resolution of this appeal. Horace Mann seems

to suggest that Allstate is inapplicable because it involved a primary

automobile liability policy that was rendered excess by virtue of a

non-owned vehicle clause. Allstate did involve automobile liability

insurance, as do many of the cases applying the general true-excess-

is-always-excess rule. The general rule, however, is not dependent on

5

Even without Allstate, we would predict that West Virginia would fol-

low the true-excess-is-always-excess rule. Horace Mann does not dispute

the substance or wisdom of the general rule, but argues only that the rule

does not apply to this case. And while the rule is frequently described as

being the majority rule, Horace Mann does not point to any case where

a court has rejected the rule. Cf. Monroe Guar. Ins. Co. v. Langreck, 816

N.E.2d 485, 492-93 (Ind. App. 2004) (characterizing the true-excess-is-

always-excess rule as a "practically universal rule in jurisdictions that

have addressed the issue"). Moreover, the rule is advocated by the

authors of the leading treatises on insurance law, see 15 Russ & Segalla,

Couch on Insurance § 218:5 ("An ‘other insurance’ dispute cannot arise

between primary insurers and true excess insurers."); 8A John A. Apple-

man & Jean Appleman, Insurance Law and Practice § 4909.85 (1981)

("Umbrella coverages, almost without dispute, are regarded as true

excess over and above any type of primary coverage . . . ."), treatises to

which the West Virginia Supreme Court has looked for guidance when

resolving insurance issues, see, e.g., West Virginia Fire & Cas. Co. v.

Mathews, 543 S.E.2d 664, 670 (W. Va. 2000) (citing Couch); Erie Ins.

Prop. & Cas. Co. v. Stage Show Pizza, JTS, Inc., 553 S.E.2d 257, 262

(W. Va. 2001) (citing Appleman and Couch).

MANN INSURANCE v. GENERAL STAR NATIONAL 17

the wording of the non-owned vehicle clause or on any other contract

provision that is peculiar to automobile policies. The rule is based on

a consideration of the nature of primary and excess liability insurance

policies generally, regardless of whether the policies provide cover-

age for automobile liability or liability arising from a different source.

Horace Mann also finds it significant that the excess insurance pol-

icy in Allstate was voluntarily purchased, whereas the excess cover-

age provided by General Star was part of a package of insurance that

West Virginia county school boards are statutorily obligated to carry.

We fail to see how the outcome of this appeal is affected by the man-

datory nature of the General Star insurance. The statute simply

requires that primary and excess liability insurance of specified

amounts must be carried; it does not speak to questions of priority

between concurrent policies. See W. Va. Code § 29-12-5a(c). Accord-

ingly, it is in no way inconsistent with West Virginia’s statutory

insurance scheme to require Horace Mann’s coverage limits to be

exhausted before General Star’s coverage is triggered. If anything,

because the legislature is presumed to have knowledge of the com-

mon law relating to the subject matter of a statute, see State ex rel.

Fox v. Brewster, 84 S.E.2d 231, 244 (W. Va. 1954), the legislative

silence on the question of priority suggests approval of the general

rule that we apply in this case.

Horace Mann’s other efforts at distinguishing Allstate revolve

around the language and effect of its and General Star’s other-

insurance clauses. Horace Mann first suggests that the other-insurance

clauses at issue in Allstate, when read together, indicated that the pri-

mary insurance should be exhausted first, while "the overall insuring

schemes of the policies at issue [in this case] demonstrate that the

Horace Mann policy is contractually excess to the General Star pol-

icy." Brief of Appellee at 17. As discussed above, however, the All-

state court applied the true-excess-is-always-excess rule, a rule that

applies without regard to language of the other-insurance clauses.

Horace Mann therefore cannot avoid Allstate by arguing that applica-

tion of the other-insurance clauses in this case would yield a different

result.6

6

We note that Horace Mann misconstrues the scope of General Star’s

other-insurance clause. In our view, the clause is properly understood as

18 MANN INSURANCE v. GENERAL STAR NATIONAL

Horace Mann also argues that the primary policy in Allstate was

always intended to provide primary coverage (except when a non-

owned vehicle was involved), while its policy, as evidenced by the

language in its other-insurance policy, "can never be primary7 to any

other policy," Brief of Appellee at 17, and "was always intended to

provide excess coverage," id. at 22. Though couched in terms of dis-

tinguishing Allstate, Horace Mann’s argument is more of a challenge

to the characterization of its policy as a primary liability policy or a

coincidental excess policy. In any event, the argument is without

merit.

Horace Mann is probably correct that there is a factual difference

between its level of exposure and the level of exposure in Allstate of

the garage policy insurer, whose policy limits we concluded must be

exhausted before the true excess insurer could be required to contrib-

ute. That is, the issuer of the garage operations policy in Allstate

likely would have expected that most claims under the policy would

trigger its primary coverage obligations rather than the excess cover-

a recognition that the insured might buy secondary excess insurance—

insurance that operates as excess to General Star’s excess policy. See

National Farmers Union, 689 N.W.2d at 623 (concluding that other-

insurance clause contained in true excess policy which stated that the

policy would not be excess to "insurance bought to apply in excess of the

retained limit of liability plus the limit of liability of this policy" referred

to a third layer of insurance coverage); Allstate Ins. Co. v. Frank B. Hall

& Co. of Ca., 770 P.2d 1342, 1347 (Colo. Ct. App. 1989) (concluding

that "the reference in the umbrella coverage’s excess clause to a policy

‘that is specifically stated to be in excess’ of that policy refers to a third

tier of insurance that treats the umbrella coverage as underlying insur-

ance and specifically refers to that coverage. This proviso does not refer

to primary liability insurance that merely has a standard excess clause.").

That General Star contemplated the possibility of another true excess

policy being excess to its coverage does not mean that it contemplated

that a policy providing primary coverage would be excess to its policy.

7

We also note that in no event is Horace Mann providing primary lia-

bility coverage in this case; primary coverage was provided under the

National Union Fire Insurance Company policy. The question in this

appeal is whether Horace Mann or General Star must bear responsibility

for the amount of the settlement in excess of the limits of the primary

insurance.

MANN INSURANCE v. GENERAL STAR NATIONAL 19

age available when a non-owned vehicle was involved. As we have

previously discussed, it is likely that most of the claims asserted under

Horace Mann’s policy by West Virginia NEA members will require

Horace Mann to function only as an excess insurer. We simply cannot

conclude, however, that this factual distinction has any legal signifi-

cance.

We have already set out the governing legal principles: Horace

Mann’s policy as written provides primary coverage and contains

none of the hallmarks of a true excess policy. While its other-

insurance clause makes the policy coverage excess if other insurance

also covers the loss, an excess other-insurance contained in a policy

that provides primary insurance does not transform that policy into a

true excess liability policy. And in a priority dispute between a true

excess insurer and a coincidental excess insurer, the true excess

insurer wins. The limits of the coincidental excess policy must be

exhausted before coverage is triggered under the true excess policy.

By arguing that it never expected to provide anything other than

excess coverage and that its expectation is relevant to the priority

issue we face, Horace Mann is effectively asking this court to carve

out an exception to these well-established principles. Horace Mann

would have this court conclude that there is another category of insur-

ance (in addition to true excess insurance and coincidental excess

insurance), a category that should perhaps be referred to as just-

barely-coincidental excess insurance, because there will hardly ever

be a situation where the insurance will operate as primary rather than

excess, and would have us treat this just-barely-coincidental excess

insurance as if it were true excess insurance. We decline this invita-

tion.

Horace Mann cites nothing in support of its view of the relevancy

of the theoretical frequency that offered primary coverage will actu-

ally be triggered, and we have found no case that contemplates the

possibility that the general rules would not apply to a policy like Hor-

ace Mann’s. Horace Mann could have obtained the result it seeks by

writing a true excess policy for West Virginia NEA members, but it

chose instead to write a policy that by its plain terms offers primary

liability coverage. Because the Horace Mann policy offers primary

liability coverage, we see no reason to except it from the rule that the

limits of policies providing primary liability insurance must be

20 MANN INSURANCE v. GENERAL STAR NATIONAL

exhausted before the coverage of a true excess policy is triggered. We

have already predicted that the West Virginia Supreme Court will fol-

low this nearly universally accepted rule. See Allstate, 865 F.2d at

595. But even if we were not bound by Allstate’s prediction of West

Virginia law, we do not believe that the West Virginia Supreme Court

would see fit to create a previously unknown exception to the general

rule in order to insulate Horace Mann from the effect of its decision

to write a primary liability insurance policy.

III.

To summarize, we conclude that the policy issued by General Star

is a pure excess policy, while the Horace Mann policy provides pri-

mary liability coverage that becomes excess coverage by virtue of its

other-insurance clause. Because the General Star policy is a pure

excess policy, we must follow the general rule (as applied in Allstate

Ins. Co. v. American Hardware Mut. Ins. Co., 865 F.2d 592 (4th Cir.

1989)) that the limits of a policy that provides primary insurance must

always be exhausted before coverage under the true excess policy is

triggered.8 Accordingly, we hereby reverse the order of the district

court and remand for entry of judgment declaring the General Star

policy excess to the Horace Mann policy.

REVERSED AND REMANDED

NIEMEYER, Circuit Judge, dissenting:

I

During the 2002-2003 school year, a high school teacher in West

Virginia’s Lincoln County School District sexually abused a student,

and the student’s parents sued the teacher, the school board, and sev-

eral school system employees, including the school’s principal.

National Union Fire Insurance Company ("National Union"), the

school board’s primary insurance carrier, paid the limits of its $1 mil-

8

Our disposition of this issue makes it unnecessary to consider the

other issues raised by General Star.

MANN INSURANCE v. GENERAL STAR NATIONAL 21

lion policy to settle the parents’ claim, and General Star National

Insurance Company ("General Star"), the school board’s excess car-

rier, contributed a portion of its $5 million excess coverage to the set-

tlement. This action addresses whether General Star has a right to

obtain reimbursement from Horace Mann Insurance Company

("Horace Mann"), which had underwritten an insurance policy cover-

ing members of the West Virginia Education Association personally,

including the school principal in this case.

The district court, considering the language of both the General

Star policy and the Horace Mann policy, concluded that the "other

insurance" provisions of the two policies were reconcilable and

accordingly applied them so that the Horace Mann policy was excess

over the General Star policy. The court noted that the language of the

Horace Mann policy specifically defined its coverage to be excess

over the General Star policy and that the General Star policy explic-

itly accommodated this order of coverage, providing that it was not

an excess policy over another policy that provided it was an excess

policy over the General Star policy.

I agree with the district court’s common sense reading of the plain

language of the two policies and its conclusions that they are not in

conflict. Therefore, I conclude that no extra-contractual insurance

principles developed to resolve conflicts among policies need to be

applied to determine the order of their coverage.

II

Rather than applying the language of the policies, the majority

attempts to assign the policies at issue to generalized classifications

and then to apply general rules of court-made law to resolve conflicts

among policy classifications. To this end, the majority devotes pages

to defining the classifications to which it might assign the policies and

how each classification might change with the inclusion of a different

type of "other-insurance" clause. The generalized classifications iden-

tified by the majority include: "a primary policy," "an excess policy,"

"policies with ‘other insurance clauses’ taking the form of a pro-rata

clause, an escape clause, or an excess clause," "a primary liability

insurance policy that contains an excess other-insurance clause," "a

coincidental excess policy," "a true excess or pure excess policy," and

22 MANN INSURANCE v. GENERAL STAR NATIONAL

an "umbrella policy." And then, after spending pages defining these

general classifications, the majority attempts to fit the policies in this

case within one classification or another. It concludes that the Horace

Mann policy is a "coincidental excess policy" and that the General

Star policy is a "true excess policy." It then assumes that these classi-

fications conflict and, without considering whether the policies do in

fact conflict, predicts that West Virginia would resolve the conflict in

favor of General Star, even as it acknowledges that no West Virginia

case has so held. As to whether it should consider the policy lan-

guage, the majority states:

Accordingly, in a priority dispute between a true excess

insurer and a primary or coincidental excess insurer, the pol-

icies’ other-insurance clauses simply are not relevant, and

there is no reason to consider whether the other-insurance

clauses may be reconciled or must be set aside as mutually

repugnant.

(Emphasis added). To predict what West Virginia might do, the

majority relies on our holding in Allstate Insurance Co. v. American

Hardware Mutual Insurance Co., 865 F.2d 592 (4th. Cir. 1989),

which held that when two policies conflict, the true excess insurance

is always excess over a policy providing primary coverage, regardless

of the language of the policies.

The jurisprudence of the majority’s decisionmaking is a remarkable

creation for this case, especially in view of its acknowledgment, when

describing the generally applicable principles of law, that "where the

other-insurance clauses can be reconciled, the clauses will be

enforced in accordance with their terms." Rather than attempting to

apply this principle and reconcile the clauses, however, the majority

concludes from its classification system that the policies cannot be

reconciled. Accordingly, it applies the inappropriate proposition that

when in conflict, an excess policy is always secondary to a primary

policy. Using this methodology, it reaches the conclusion that General

Star wins and so reverses the district court’s judgment.

Had the majority taken the relevant insurance policies as contracts

and applied them as written, it would undoubtedly have reached the

same conclusion that the district court reached.

MANN INSURANCE v. GENERAL STAR NATIONAL 23

III

The policies in this case were issued against the statutory backdrop

of the West Virginia Code, which requires specified insurance for

school systems and public school employees. In West Virginia, all

county boards of education are required by law to have at least $1

million of primary liability insurance coverage and $5 million of

excess coverage. See W. Va. Code § 29-12-5a. In particular, the stat-

ute requires that the West Virginia Board of Risk and Insurance Man-

agement purchase such insurance on behalf of all boards of education

and their employees, and it requires that the county school boards pay

the premiums for the excess policy. Id. § 29-12-5a(c). Moreover, each

insurance company providing insurance under this mandate must be

licensed to do business in West Virginia. Id. For the Lincoln County

Board of Education’s 2002-2003 school year, the statutorily required

insurance package consisted of a primary policy issued by National

Union, covering losses up to $1 million, and an excess policy issued

by General Star, covering losses greater than $1 million, up to an

additional $5 million. For persons in the education and insurance

fields in West Virginia, these requirements were well known and well

understood.

Recognizing this system of mandated insurance, the West Virginia

Education Association obtained a supplemental policy from Horace

Mann, which provided personal coverage for the members of the

Association, including the school principal in this case. The Horace

Mann policy explicitly stated that it was a low-cost policy providing

personal protection to members over and above the state-mandated

insurance for public school employees.

In this case, after National Union paid its policy limits to settle

with the parents of the abused student and General Star paid the

remainder of the settlement amount, General Star sought to obtain

reimbursement for the amounts it paid from Horace Mann. Horace

Mann denied that it had a duty to reimburse General Star because its

policy was excess over General Star’s policy, and it commenced this

action seeking a declaratory judgment that its coverage was excess

over General Star’s policy and that General Star’s policy limits had

to be exhausted before Horace Mann would become obligated to con-

tribute any amount. In response, General Star counterclaimed for a

24 MANN INSURANCE v. GENERAL STAR NATIONAL

declaratory judgment favoring its position, and it also sought a money

judgment compensating it for the portion of the underlying settlement

it paid to the parents.

On cross-motions for summary judgment, the district court granted

Horace Mann’s motion, declaring that the coverage provided by the

Horace Mann policy was unambiguously excess over the coverage

provided by the General Star policy and that the coverage limits of

the General Star policy had to be exhausted before Horace Mann

became obligated to contribute. Because General Star’s coverage lim-

its were not exhausted in this case, the court did not order any contri-

bution from Horace Mann.

I believe that the district court had it exactly right. The order of

coverage provided by these policies is dictated by the unambiguous

"other insurance" clauses contained within each policy, and in this

case those clauses do not conflict; indeed, they accommodate each

other. The "other insurance" clause of the Horace Mann policy

begins:

This is a manuscript contract and is personal to the individ-

ual Insured named herein. It was written and priced to

reflect the intent of all parties that this policy is in excess

of any and all other insurance policies, insurance programs,

self-insurance programs, and defense and indemnification

arrangements whether primary, excess, umbrella or contin-

gent and whether collectible or not, to which the Insured is

entitled or should have been entitled, by contract or opera-

tion of law, to coverage or to payment including, but not

limited to, payment of defense and/or indemnification.

(Emphasis added). The Horace Mann "other insurance" clause goes

on to provide specifically that it was excess over the policies pur-

chased by educational units in West Virginia to insure against liability

arising from activities of the educational unit or its employees,

regardless of whether that educational insurance provided primary or

excess coverage. As the policy language specifies:

Further, it is the intent of the parties that the coverage

afforded in this policy does not apply if the Insured has

MANN INSURANCE v. GENERAL STAR NATIONAL 25

other valid and collectible insurance of any kind whatsoever

whether primary or excess, or if the Insured is entitled to

defense or indemnification from any other source whatso-

ever, including by way of example only, such sources as

state statutory entitlements or provisions, except any excess

beyond the amount which would have been payable under

such other policy or policies or insurance program or

defense or indemnification arrangement had this policy not

been in effect. Other valid and collectible insurance

includes, but is not limited to, policies or insurance pro-

grams of self-insurance purchased or established by or on

behalf of an educational unit to insure against liability aris-

ing from activities of the educational unit or its employees,

regardless of whether or not the policy or program provides

primary, excess, umbrella, or contingent coverage.

***

This policy is specifically excess over coverage provided by

school district or school board . . . general liability policies

purchased by the Insured’s employer or former employer

and it is specifically excess over coverage provided by any

School Leaders Errors and Omissions Policy purchased by

the Insured’s employer or former employer and it is specifi-

cally excess over coverage provided by any policy of insur-

ance which purports to be excess to or recites that it is

excess to a policy issued to the Insured for the benefit of

members of the National Education Association.

(Emphasis added). It is apparent from this language and the statutory

mandate for insurance that the West Virginia Education Association

was purchasing a supplemental policy for its members to provide

backstop coverage beyond that provided by National Union and Gen-

eral Star to the school board and its employees under state statutory

requirements. This is the explicitly stated posture of the Horace Mann

policy — to provide coverage in excess of the coverage provided by

"an educational unit to insure against liability arising from activities

of the educational unit or its employees." Moreover, the policy explic-

itly refers to the state statutory provisions providing for the underly-

ing insurance. Because the General Star policy is incontrovertibly the

26 MANN INSURANCE v. GENERAL STAR NATIONAL

policy issued pursuant to West Virginia’s mandate to have $5 million

of excess coverage for school boards and school employees, the Hor-

ace Mann policy thus provides it is excess over that policy.

In addition to policy language, the structure of insurance coverage

for principals and teachers in West Virginia confirms Horace Mann’s

posture as the ultimately excess policy. All public school principals

and teachers in West Virginia are covered by the statutorily mandated

insurance for the first $6 million of liability as provided by National

Union for primary coverage and General Star for excess. By indicat-

ing that it is excess over insurance provided through "such sources as

state statutory entitlements or provisions" and "purchased or estab-

lished by or on behalf of an educational unit," the Horace Mann pol-

icy clearly was referencing that it was excess over the $6 million of

insurance required by West Virginia law and provided by National

Union and General Star.

The language of General Star’s policy does not conflict with Hor-

ace Mann’s order of coverage. To the contrary, it explicitly accommo-

dates Horace Mann’s policy as a policy excess over its own in its

"other insurance clause." The General Star "other insurance" clause

provides:

If other valid and collectible insurance with any other

insurer is available to the Insured covering a loss also cov-

ered by this Policy, other than insurance that is in excess of

the Insurance afforded by this Policy, the insurance afforded

by this Policy shall be in excess of and shall not contribute

with such other insurance.

(Emphasis added). In the "other than" clause, the General Star policy

explicitly recognizes that other insurance can in fact be excess over

it when the other insurance provides that it is excess over the General

Star policy. As I already noted, Horace Mann explicitly made its cov-

erage excess over the General Star policy and therefore General Star’s

"other insurance" clause accommodates the order specified in the

Horace Mann policy.

It is thus clear that the insurers involved understood the overall

insurance scheme, with General Star and National Union providing

MANN INSURANCE v. GENERAL STAR NATIONAL 27

the $6 million of coverage mandated by statute and with Horace

Mann providing supplemental coverage over the statutorily mandated

insurance. As the Horace Mann policy stated, it was offered to West

Virginia Education Association members and priced "to reflect the

intent of all parties" that it was intended only to be "in excess of any

and all other insurance policies," to provide members with protection

against a potential loss of assets in the face of an astronomically high

judgment exceeding the other statutorily mandated insurance.

Under West Virginia law, when we decide a case "concerning the

language employed in an insurance policy," we must "look to the pre-

cise words employed in the policy of coverage." Horace Mann Ins.

Co. v. Adkins, 599 S.E.2d 720, 724 (W. Va. 2004). Moreover, we

should give the language "its plain, ordinary meaning." Id. (internal

quotation marks and citation omitted). In this case the district court

read the policies and concluded that

[T]he language of both Horace Mann’s and General Star’s

other insurance provisions is unambiguous. Further, in

applying the plain and ordinary meaning of the words used

in those provisions, the Court concludes that, as written, the

coverage provided by Horace Mann’s policy is unambigu-

ously excess to the coverage provided by the policy issued

by General Star.

I agree.

In addition to refusing to consider the policy language, the majority

also misapplies our decision in Allstate Insurance Co. v. American

Hardware Mutual Insurance Co., 865 F.2d 592 (4th Cir. 1989). In

Allstate we held that the rules generally governing conflicts between

"other insurance" clauses do not apply when one of the policies at

issue is a true excess policy and any other policy is a primary liability

policy. Id. at 595. In the usual case, where two or more "other insur-

ance" clauses are in conflict, the clauses should be ignored and the

policies applied pro rata. See Md. Cas. Co. v. Cont’l Cas. Co., 189 F.

Supp. 764, 772-74 (N.D. W. Va. 1960). Our decision in Allstate

merely changed this rule in one specific set of circumstances where

there are conflicting "other insurance" clauses and where one policy

is a true excess policy and the other a primary policy. Instead of

28 MANN INSURANCE v. GENERAL STAR NATIONAL

requiring proration, we required, in the automobile context, that the

primary policy be exhausted before the excess policy is applied.

But the Allstate rule applies only to resolve conflicting "other insur-

ance" clauses. When there is no conflict among such clauses, it

remains the governing law in West Virginia that "[l]anguage in an

insurance policy should be given its plain, ordinary meaning." Horace

Mann, 599 S.E.2d at 724 (internal quotation marks omitted). Indeed,

"[w]here provisions in an insurance policy are plain and unambiguous

and where such provisions are not contrary to a statute, regulation, or

public policy, the provisions will be applied and not construed." Id.

Because the reading of the General Star and Horace Mann policies

at issue in this case reveals that they are not in conflict, we should

move no further than declaring that their intent and effect are clear

and, therefore, that application of the rules set forth in Allstate are

inappropriate. I would accordingly affirm.