Illinois “Other Insurance” Clauses: Leasing Counts as “Hired or Borrowed,” “Insured Contract” Requires Assumption of Another’s Negligence, and No “Super-Excess” Tier

1. Introduction

This Seventh Circuit decision resolves a priority-of-coverage dispute between two commercial auto insurers after a fatal tractor-trailer collision in Illinois. The underlying tort action—filed by the estate of Patrick J. Brennan—named multiple entities connected to the tractor-trailer operation, including the driver (Robert D. Fisher), the motor carrier/lessee (Deerpass Farms Trucking, LLC-II), the tractor lessor affiliate (Deerpass Farms Services, LLC), and the trailer owner (Conserv FS, Inc.).

Both insurers agreed their policies provided coverage to the relevant actors, but they disagreed on which policy must pay first. The core issues were contractual and hierarchical:

• Whether Great West’s policy was “primary” or “excess” under its “Other Insurance” clauses, given the tractor was leased.
• Whether a trailer interchange indemnity clause created an “insured contract” that would force Great West to be primary “regardless” of other provisions.
• Whether “excess over any other collectible insurance” creates a third tier (“super excess”) that would push Great West behind Nationwide even though both were excess.

2. Summary of the Opinion

The court concluded:

• The Great West “Other Insurance” provision that applies to autos “hired or borrowed” from another motor carrier includes a lease, because the provision’s subparts expressly use “lessor” and “lessee.”
• The trailer interchange agreement was not an “insured contract” under Illinois law because it did not require Deerpass Trucking to indemnify Conserv for Conserv’s own negligence; it carved that out.
• The phrase “excess over any other collectible insurance” did not create a “super excess” category under Illinois law; the court treated it as drafting redundancy and declined to invent a new tier of priority.

3. Analysis

3.1. Precedents Cited

A. Standards of review and forum-law methodology

• Tech. Sec. Integration, Inc. v. EPI Techs., Inc.: Cited for de novo review of summary judgment and the requirement to view facts and inferences in favor of the nonmovant. It framed the appellate posture rather than supplying substantive insurance doctrine.
• Hess v. Biomet, Inc.: Applied for the basic Erie principle that a federal court sitting in diversity applies the forum state’s contract law. This anchored the court’s insistence that the question was what Illinois courts would do—especially important when rejecting the proposed “super excess” tier.

B. Illinois insurance-contract interpretation toolkit

• Sproull v. State Farm Fire & Cas. Co. and Acuity v. M/I Homes of Chicago, LLC: Used to emphasize that insurance policies are construed like contracts and that the “primary objective” is to give effect to the parties’ intent as expressed in policy language.
• Crescent Plaza Hotel Owner, L.P. v. Zurich Am. Ins. Co.: Cited alongside Illinois principles for reading the contract naturally and reasonably; also later invoked (with Great W. Cas. Co. v. Robbins) for the idea that some redundancy in insurance drafting is normal—critical to rejecting “super excess.”
• Land of Lincoln Goodwill Indus., Inc. v. PNC Fin. Servs. Grp., Inc.: Featured repeatedly for the “contract as a whole” approach and the preference to avoid interpretations that render provisions superfluous—then later balanced against the recognition that this preference is not absolute.
• State Farm Mut. Auto. Ins. Co. v. Elmore: Supported the court’s caution that ambiguity requires more than imaginative alternative meanings; undefined terms or “creative possibilities” do not suffice.
• Clanton v. Oakbrook Healthcare Ctr.: Reinforced the anti-superfluity canon (harmonize provisions; avoid rendering language meaningless), which Great West invoked to argue its “excess over” wording must do extra work.
• Stone v. Signode Indus. Grp. LLC: Provided the counterweight: the anti-superfluity rule is not absolute and redundancy is common. This case was pivotal in the court’s explanation for why “excess over any other collectible insurance” need not create a new legal category.
• Outboard Marine Corp. v. Liberty Mut. Ins. Co.: Used to cabin the anti-superfluity canon further—courts avoid a reading that would make the policy inconsistent or inherently contradictory. This supported the view that recognizing “super excess” would destabilize Great West’s policy structure.
• Sterling Nat'l Bank v. Block: Cited for the practical drafting insight that drafters often “err on the side of redundancy,” bolstering the rejection of a “super excess” tier.

C. Waiver / undeveloped equitable theories

• Puffer v. Allstate Ins. Co.: Invoked to dismiss Nationwide’s equity-based “conspiracy” concern as unsupported by law and record; the court treated it as the kind of undeveloped argument that can be deemed waived.

D. “Insured contract” and indemnity under Illinois law

• Hankins v. Pekin Insurance Co.: The key interpretive precedent on “insured contract” language requiring assumption of another’s tort liability. Hankins held that an indemnity provision is not an “insured contract” absent clear, explicit, and unequivocal intent to indemnify the indemnitee for the indemnitee’s own negligence. The Seventh Circuit applied that logic directly to the interchange agreement’s negligence carveout.
• Buenz v. Frontline Transp. Co.: Cited to underscore Illinois Supreme Court guidance: when an indemnity contract expressly limits itself to the indemnitor’s negligence, courts will not strain to read indemnification for the indemnitee’s negligence into it. This fortified the court’s conclusion that “insured contract” status did not arise merely because the underlying tort suit alleged only the carrier/driver’s conduct.

E. Competing “excess” clauses and the failed “super excess” theory

• Truck Insurance Exchange v. Liberty Mutual Insurance Co.: Great West’s principal authority for giving effect to “excess over any other valid and collectible insurance.” The Seventh Circuit distinguished it: in Truck Insurance Exchange, the dispositive feature was a lease between policyholders that already allocated priority, and the insurer’s policy incorporated that lease arrangement. Here, there was no comparable agreement that independently established inter-insurer priority.
• New Amsterdam Cas. Co. v. Certain Underwriters at Lloyds, London and U.S. Fire Ins. Co. v. Wilson Driveaway, Inc.: Mentioned as cases where courts gave effect to similar phrases, but the opinion emphasized they did not address the specific comparison at issue—plain “excess” versus “excess over any other collectible insurance”—limiting their persuasive force.

F. State-law primacy in insurance disputes

• Stampley v. Altom Transp., Inc.: Cited for the proposition that insurance and contract rules are matters of state law, reinforcing the court’s restraint in refusing to “create” a new tier without Illinois authority.

3.2. Legal Reasoning

A. Great West is “excess,” not “primary”: “hired or borrowed” includes leased equipment

The decisive Great West clause (paragraph 5.b) applies “while any covered ‘auto’ is hired or borrowed” by the insured from another “motor carrier,” and then toggles priority based on whether the lessor must hold the lessee harmless. Nationwide tried to avoid paragraph 5.b entirely by arguing that “leased” is different from “hired or borrowed,” but the court rejected this as an unnatural reading because the subparagraphs expressly refer to “lessor” and “lessee.” Interpreting “hired or borrowed” to exclude leases would make the lessor/lessee substructure largely inoperative—an outcome at odds with the “contract as a whole” approach.

Once paragraph 5.b applied, Nationwide effectively conceded the consequence: under 5.b(2), Great West is “Excess over any other collectible insurance” where the lessor must hold the lessee harmless—consistent with the Deerpass lease terms.

B. The interchange indemnity was not an “insured contract”: carveouts for the indemnitee’s negligence matter

Nationwide’s main attempt to make Great West primary relied on paragraph 5.g, which overrides other “Other Insurance” clauses and makes coverage primary for “liability assumed under an ‘insured contract.’” The policy defined “insured contract” as one where the insured “assume[s] the tort liability of another.”

The court focused on the interchange agreement’s express limitation: Deerpass Trucking indemnified Conserv except to the proportionate extent losses are caused by Conserv’s negligent acts or omissions. Under Hankins v. Pekin Insurance Co. and Buenz v. Frontline Transp. Co., that carveout is fatal to “insured contract” status because the agreement does not clearly and unequivocally require indemnification for Conserv’s own negligence.

Critically, the court held the allegations in the underlying complaint did not change the contract’s classification: whether Conserv ultimately was or was not negligent is beside the point; what matters is whether the contract requires assumption of Conserv’s tort liability, including Conserv’s own negligence, in the clear way Illinois demands for such a shift.

C. No “super excess”: “excess over any other collectible insurance” does not create a third tier

Great West’s cross-appeal sought to introduce a “super excess” tier based on the phrase “excess over any other collectible insurance.” The court declined for three reasons:

• Lack of Illinois authority: Great West could not point to a decision recognizing a distinct “super excess” tier in this context, and Truck Insurance Exchange v. Liberty Mutual Insurance Co. did not do that work because it turned on a lease allocating priority.
• Interpretive coherence: Recognizing “super excess” would complicate the policy’s own architecture, which elsewhere speaks in the binary of “primary” versus “excess” (the opinion highlighted paragraph 5.h’s two-bucket structure).
• Redundancy is permissible: Drawing on Stone v. Signode Indus. Grp. LLC, Sterling Nat'l Bank v. Block, and the redundancy discussion in Crescent Plaza Hotel Owner, L.P. v. Zurich Am. Ins. Co. (quoting Great W. Cas. Co. v. Robbins), the court treated the extra words as common drafting belt-and-suspenders language, not a directive to build a new hierarchy.

3.3. Impact

A. Priority disputes in trucking (tractor-trailer, leased power units, interchanges)

The opinion strengthens three practical propositions likely to shape future Illinois-governed coverage disputes in the motor-carrier space:

• Leasing will not defeat “hired or borrowed” triggers where the clause’s structure is built around “lessor/lessee” terminology. Parties should expect courts to treat leases as within the ordinary commercial meaning of “hired or borrowed” in these forms.
• “Insured contract” priority overrides remain narrow under Illinois law: indemnity clauses with express carveouts for the indemnitee’s negligence will not be treated as assumption of the indemnitee’s tort liability, even if the underlying lawsuit alleges only the indemnitor’s conduct.
• Attempts to manufacture “super excess” tiers face strong headwinds absent clear state authority. Insurers seeking finer gradations of priority may need explicit, internally consistent policy language—yet even then, state-law acceptance is not assured.

B. Litigation strategy and drafting consequences

• For insurers: The decision discourages reliance on marginal wording differences (“excess” vs. “excess over any other collectible insurance”) as a standalone route to priority. Expect more emphasis on incorporated agreements (leases, interchange terms) that clearly allocate risk.
• For motor carriers and equipment owners: If the business objective is to shift accident risk upstream or downstream, Illinois law demands clarity—particularly if the intent is to indemnify a party for its own negligence (a high bar).
• For courts: The opinion models a restrained Erie approach: decline to innovate new priority tiers without state-court signals.

4. Complex Concepts Simplified

• Primary vs. excess insurance: If two policies cover the same loss, the “primary” policy pays first (up to its limit). The “excess” policy pays only after primary coverage is exhausted.
• “Other Insurance” clause: A policy provision that tells you how that policy behaves when other coverage exists (primary, excess, or pro rata sharing).
• Pro rata sharing: When two policies share the same level of responsibility (e.g., both excess), they may split costs proportionally—often by policy limits (here, $1M vs. $2M).
• “Insured contract”: Typically refers to an agreement where the insured assumes another party’s tort liability to a third party. Under Illinois law (as applied here), a contract that excludes the other party’s own negligence generally does not qualify as assuming that party’s tort liability.
• Indemnity “carveout” for the indemnitee’s negligence: Contract language stating the indemnitor will not indemnify the other party for losses caused by the other party’s own negligence. This carveout was decisive in rejecting “insured contract” status.
• Ambiguity in insurance policies: A term is ambiguous only if it reasonably supports more than one interpretation; courts will not find ambiguity just because a party can propose a clever alternative.

5. Conclusion

Great West Casualty Co. v. Nationwide Agribusiness Insurance Co. delivers a pragmatic, Illinois-centered roadmap for trucking “Other Insurance” disputes: (1) a lease fits naturally within “hired or borrowed” where the clause is built around lessor/lessee concepts; (2) “insured contract” status—capable of forcing primary coverage “regardless” of other clauses—requires a genuine assumption of another’s tort liability, not merely indemnity for one’s own conduct; and (3) Illinois law, as best predicted by the Seventh Circuit, does not recognize a free-floating “super excess” tier based solely on the phrase “excess over any other collectible insurance.”

Net effect: where both policies are excess and no contractual priority device (like a lease allocating insurance responsibility) controls, insurers should anticipate equal-level sharing rather than linguistic escalation.