The federal district court found that the insurer paying the full settlement amount of the underlying case was entitled to equitable contribution from another insurer. Allstate Indem. Co. v. Fed. Ins. Co., 2026 U.S. Dist. LEXIS 33700 (S.D. Texas, Feb. 19, 2026).

The case involved a dispute arising out of the settlement of a vehicle collision lawsuit between Makanzy Cornell and Kendal Jordan. Cornell sought damages for substantial bodily injury. Jordan had primary coverage under an Allstate auto policy with a bodily injury liability limit of $250,000. Jordan also had a personal umbrella policy with a limit of $1 million issued by Allstate. Federal issued an excess policy providing liability coverage for the claims against Jordan in the underlying lawsuit with limits of $10 million.

Both policies had excess clauses, which restricted the liability of an insurer to excess coverage after another insurer had paid up to its policy limits. The Federal policy required payment for damages “in excess of all underlying insurance covering those damages.” The Allstate umbrella policy stated that Allstate “will pay only that amount of damages which exceeds the sum of” the limits on the auto policy and “the limits of any and all other liability insurance available to an insured person which apply to this occurrence.”

Cornell’s counsel sent Jordan a $1.25 million settlement demand. Cornell’s expert estimated that Cornel’s “damages far exceed the coverages in this matter of $250,000 provided by Allstate . . . and $1,000,000 Excess Liability provided by Allstate’s umbrella policy.

Counsel for Allstate sent Federal a letter suggesting acceptance of the settlement offer and demanding that Federal “agree to pay $910,000 of the $1.25 million as its pro rate share of the $1 million in excess of the Allstate policy limit.” The letter further noted that Jordan’s counsel felt the $1.25 million settlement would be reasonable given the life care plan and other damages documentation and testimony that would be admitted into evidence and could result in a judgment far in excess of $1.25 million. The letter reiterated that Jordan’s defense counsel “strongly recommend[ed] that the carriers pay the $1.25 million for a full release of his client.”

Federal did not respond. With the deadline approaching, Allstate paid the settlement. It then filed suit against Federal seeking a $910,000 payment for Federal’s pro rata share of the settlement. Allstate then moved for summary judgment.

Federal did not dispute that both the Allstate umbrella policy and the Federal policy provided excess coverage for the claims against Jordan. Nevertheless, Federal opposed Allstate’s motion.

The court noted that when conflicting “other insurance” clauses were involved, contribution was available to an insurer that paid more than its proportionate share. Federal argued that Allstate’s payment was voluntary. The court disagreed. Under Texas law, an insurer’s payment toward settlement of a lawsuit was not voluntary if the insurer made the payment in good faith and under a reasonable belief that the payment was necessary for the insured’s protection. Allstate based its decision to settle on the recommendation of Jordan’s defense counsel and his belief that a potential judgment could be far in excess of $1.25 million. Federal offered no evidence on which a reasonable jury could find the settlement was voluntary.

Allstate was entitled to summary judgment on its contribution claim. Allstate and Federal had a common obligation to insure Jordan against the claims, and Allstate made a fair and reasonable settlement payment to Cornell in service of the legal obligations to Jordan. Because Allstate paid more than its share of the legal obligation to settle Jordan’s clams, it had a right to pro rata contribution from Federal.