Rhode Island § 27-34-12 - Rhode Island Property and Casualty Insurance Guaranty Association

§ 27-34-12. Exhaustion of other coverage.

(a)(1) Any person having a claim against an insurer, shall be required first to exhaust all coverage provided by any other policy, including the right to a defense under the other policy, if the claim under the other policy arises from the same facts, injury, or loss that gave rise to the covered claim against the association. The requirement to exhaust shall apply without regard to whether the other insurance policy is a policy written by a member insurer. However, no person shall be required to exhaust any right under the policy of an insolvent insurer or any right under a life insurance policy.

(2) Any amount payable on a covered claim under this chapter shall be reduced by the full applicable limits stated in the other insurance policy, or by the amount of the recovery under the other insurance policy as provided herein. The association shall receive a full credit for the stated limits, unless the claimant demonstrates that the claimant used reasonable efforts to exhaust all coverage and limits applicable under the other insurance policy. If the claimant demonstrates that the claimant used reasonable efforts to exhaust all coverage and limits applicable under the other insurance policy, or if there are no applicable stated limits under the policy, the association shall receive a full credit for the total recovery.

(i) The credit shall be deducted from the lesser of:

(A) The association’s covered claim limit;

(B) The amount of the judgment or settlement of the claim; or

(C) The policy limits of the policy of the insolvent insurer.

(ii) In no case, however, shall the obligation of the association exceed the covered claim limit embodied in § 27-34-8.

(3) Except to the extent that the claimant has a contractual right to claim defense under an insurance policy issued by another insurer, nothing in this section shall relieve the association of the duty to defend under the policy issued by the insolvent insurer. This duty shall, however, be limited by any other limitation on the duty to defend embodied in this chapter.

(4) A claim under a policy providing liability coverage to a person who may be jointly and severally liable as a joint tortfeasor with the person covered under the policy of the insolvent insurer that gives rise to the covered claim shall be considered to be a claim arising from the same facts, injury, or loss that gave rise to the covered claim against the association.

(5) For purposes of this section, a claim under an insurance policy other than a life insurance policy shall include, but is not limited to:

(i) A claim against a health maintenance organization, a hospital plan corporation, a nonprofit hospital, medical, or dental service corporation, or disability insurance policy; and

(ii) Any amount payable by or on behalf of a self-insurer.

(6) The person insured by the insolvent insurer’s policy may not be pursued by a third-party claimant for any amount paid to the third party by which the association’s obligation is reduced by the application of this section.

(b) Any person having a claim which may be recovered from more than one insurance guaranty association or its equivalent shall seek recovery first from the association or its equivalent of the place of residence of the insured, except that if it is a first party claim for damage to property with a permanent location the person shall seek recovery first from the association of the location of the property. If it is a workers’ compensation claim, the person shall seek recovery first from the association of the residence of the claimant. Any recovery under this chapter shall be reduced by the amount of recovery from another insurance guaranty association or its equivalent.