Insurance – Garage Policy – Garage Operations & Covered Auto – Separate Coverage – Duty to Defend

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Diamond State Insurance Co. v. Estate of McNeal (Lawyers Weekly No. 002-046-13, 9 pp.) (J. Michelle Childs, J.) 1:11-cv-02528; D.S.C.

Holding: The garage insurance policy at issue clearly states that, if the $300,000 “garage operations” coverage applies, then the $300,000 “covered auto” coverage does not apply, and vice versa; therefore, the coverages may not be stacked. Furthermore, the policy’s $75,000 underinsured motorist endorsement plainly limits duplicate payments for losses covered by other liability coverage; accordingly, the policy does not provide UIM coverage in this case.

The plaintiff-insurer’s motion for summary judgment is granted as to stacking. The policy provides available coverage limits of $300,000. However, the summary judgment motion is denied as to the insurer’s duty to defend.

The tender of an insurer’s policy limits does not relieve it of the obligation to defend its insured. Additionally, the policy states that the duty to defend continues until the payment of a settlement or judgment. There has been no payment of a settlement or a judgment; consequently, the insurer remains under a contractual duty to defend its insured.