Download PDF - Goodmans

Thus, CIGA is “deemed to be the insurer to the extent of its obligation on
covered claims, subject to the purposes and limitations of other provisions of
the Act,” such as the nonduplication of recovery, which was enacted to avoid
windfall recoveries, and other sections which address the problem of
conserving resources to protect the financial stability of CIGA.
Delaware
Marra v. Wilson, 2003 WL 367831 (Del. Super. Ct. 2003). The court considered
how a “statutorily‐mandated credit is to be applied when a tortfeasor’s source
of insurance has been declared insolvent before liability has been determined.”
Id. at *1. The plaintiffs recovered $100,000 from their own insurer and claimed
the credit should be applied to the total amount of damages they were entitled
to. The Delaware Insurance Guaranty Association (“DIGA”) argued the credit
should be applied to its statutory maximum exposure of $300,000. Defendants,
at the time of the accident, were insured by Reliance who was later declared
insolvent and DIGA assumed its responsibilities. Plaintiffs filed a claim with their
uninsured motorist carrier and received $100,000. The court held that Delaware
law supported that the $100,000 must be deducted from DIGA’s $300,000 limit.
Florida Barnett Bank of Jacksonville, N.A. v. State ex. rel. Department of Insurance, 507
So. 2d 142 (Fla. Dist. Ct. App. 1987). A person's mutual debts with an insolvent
insurer which arise prior to a liquidation order may be offset, and only any
balance remaining after offset must be paid to the insurer's receiver. As a
result, under an indemnification agreement between a bank and an insolvent
insurer, the insurer's debt to the bank for checks presented before, but
dishonored after, insolvency may be offset against funds held in the insurer's
account. This preference given to persons having a mutuality of debt with the
insolvent insurer is consistent with Florida statute which allows the prioritizing
of creditor's claims.
Sunset Commercial Bank, v. Florida Department of Insurance, 509 So. 2d 366
(Fla. Dist. Ct. App. 1987). Although not entitled to a self‐executing offset, a bank
was entitled after presentment of its claim to the receivership court to offset
the account funds of an insolvent insurer against that insolvent insurer's
obligation on a promissory note provided in consideration of the issuance of a
letter of credit. A lower court's order which directed the bank to transfer the
balance of the insolvent insurer's accounts to the Florida Department of
Insurance was reversed because such setoff should be allowed as a specie of
preference before general distribution to claimants with claims against the
assets of the insolvent insurer.
Urich & Schenkman, P.A. v. Horton Insurance Co., 491 So. 2d 1195 (Fla. Dist. Ct.
App. 1986). The trial court held that an attorney's retaining lien is not a secured
claim and not subject to foreclosure by setoff under the liquidation provisions of
the Florida Statutes. The court reversed the lower court's holding that an
attorney's lien could not be offset against funds of an insolvent insurer which
were in the attorney's possession, but, certified the issue to the Supreme Court
of Florida.
Georgia
Pink v. Georgia Stages, 35 F. Supp. 437 (D. Ga. 1940). The holder of automobile
casualty policies issued in Georgia by a New York insurer was not entitled to
offset unpaid premiums against a claim for losses covered by one of the policies.
Illinois Clark v. Cannon Steel Erection Co., 359 Ill.App.3d 739, 835 N.E.2d 394 (2005).
Policyholder may not set‐off unliquidated claims for defense and indemnity
expenses against liquidator’s claims for unpaid premiums and assessments
because, in addition to meeting the requirements of 215 Ill. Comp. Stat. 206, only
mature and liquidated debts may be set off under the common law of the state.