County’s emergency services insurer need not chip in on $9M settlement

The 4th U.S. Circuit Court of Appeals ruled Tuesday that a North Carolina county’s emergency services insurer is not obligated to contribute $1 million toward Travelers Cos. Inc.’s payment of a $9 million settlement for the deaths of four people in a May 2019 apartment fire.

The three-judge panel in Travelers Indemnity Co. v. American Alternative Insurance Corp. reversed a federal judge in Greensboro, North Carolina’s March 2024 ruling that American’s primary policy to Surry County Emergency Services covered employees in the county’s 911 call center.

The appeals court ruled that the language in Surry County Emergency Services’ primary and excess policies limited coverage to only its employees and did not extend to two employees of the county’s 911 call center named defendants in two lawsuits brought by families of the victims. The judges said the policies’ use of the phrase “incidental operations” only included the work of the emergency services department.

The estates of the four people who died of smoke inhalation in the fire said in their lawsuit against Surry County and two 911 call center employees that one victim who called about the fire was told to keep her second-story apartment window closed, allowing the unit to fill with smoke. Travelers, which issued primary and excess policies to the county, settled the lawsuits using the full coverage limits, court records show.

Travelers sued American, seeking a contribution of at least 50% toward the settlement. The parties filed competing summary judgment motions, and the trial judge ruled that American’s $1 million primary policy provided coverage. Both insurers appealed.

Representatives for the parties did not respond to requests for comment.