Right of contribution
The right of contribution is the right of a party who has satisfied a common obligation to reimbursement for the proportionate shares of other obligated parties. Because contribution is an excellent way for an insurance company to recover some of the damages it pays on a particular loss, consideration should be given to separate policies an insured or other entity may maintain on the same risk, property and/or interest. Ohio law gives rise to two rights of contribution for an insurer:
- From a joint tortfeasor, pursuant to Ohio Revised Code Section 2307.25; and
- From a coinsurer or concurrent insurer who provides coverage for the same loss.
The right to contribution from a coinsurer or concurrent insurer is recognized in both statute and equity. Ohio Revised Code Section 3929.26 states that: “[w]hen there are two or more insurance policies upon the same property, each policy shall contribute to the payment of the whole or of the partial loss in proportion to the amount of insurance mentioned in each policy. In no case shall the insurer be required to pay more than the amount mentioned in its policy.”
The linchpin for establishing concurrent liability
In insurance law, the term “contribution” has a fixed legal meaning, and arises from coinsurers only, permitting one who has paid an entire loss to obtain contribution from other insurers who are also liable for the loss. Nationwide Mut. Ins. Co. v. Motorists Ins. Co., 2009 Ohio Misc. LEXIS 13253 * (Ohio C.P. July 28, 2009). The linchpin for establishing concurrent liability among coinsurers is showing that the respective coverages apply to the same property, insure against the same risk, and protect the same interest of the same insured. See, generally, 16 Couch on Insurance (2 Ed.Rev.1983), Section 62:167; see, also, Buckeye Union Ins. Co. v. State Auto Mut. Ins. Co. (1977), 49 Ohio St. 2d 213, 361 N.E.2d 1052, syllabus. If two policies insure the same risk, concurrent coverage will exist even where each policy purports to provide only excess coverage. Arkwright Mut. Ins. Co. v. Lexington Ins. Co., 2000 Ohio App. LEXIS 4468, 2000 WL 1434164 (Ohio Ct. App., Hamilton County Sept. 29, 2000).
Because contribution is an excellent way for an insurer to recoup some of the damages that it pays on a particular loss, consideration should be given to separate policies that an insured or other entity may maintain on the same risk, property and/or interest, so that contribution may be pursued from coinsurers or concurrent insurers. To discuss contribution as it applies to one of your files, contact one of our subrogation attorneys.