USLI wasn't responsible for any of the settlement costs, so it says it should be reimbursed for its defense costs, too. (Credit: Lightfield Studios/Adobe Stock)

United States Liability Insurance Company (USLI) is taking Travelers to court over $900,000 in legal bills.

USLI has filed a lawsuit again Travelers and its affiliates in the Central District of California, saying it spent almost $1 million defending policyholders the two companies shared in an auto accident case.

In October 2019, Kasra Mizban and Nasser Mizban were in an auto accident Los Angeles involving another driver, Gabriel Sanchez. The Mizbans were covered by both a Travelers auto policy and a USLI umbrella policy.

Sanchez claimed Kasra Mizban rear-ended his vehicle and sued both Mizbans for negligence, seeking damages for injuries he said required medical treatment. The lawsuit, which began in January 2021, wasn’t settled until this August.

Sanchez agreed to accept the $250,000 policy limits of the Travelers auto policy, and USLI paid nothing in settlement costs. But USLI says it did pay $902,415.88 to counsel, experts, vendors and mediators used to defend the insureds.

USLI says Travelers, as the primary carrier, was supposed to pay those bills. It’s pointing to California Insurance Code, which says that when two or more personal policies cover the same motor vehicle, and one is primary and the other is excess, each insurers should pay its share of defense costs in proportion to the amount of damages paid.

Because USLI paid nothing in the settlement, USLI says Travelers is required to fund all of the defense costs in the case. It is asking the court to make Travelers reimburse USLI for all legal costs.

Travelers has yet to file a response in the case.

The court’s decision could have an impact on how primary and excess carriers handle defense costs in the future.

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