By Jamie Denenberg, Michael Frimet and George Vogrin
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Published 21 October 2026
On August 31, 2026, the Southern District of New York (“Southern District”) permitted Systems 2000 Plumbing Service, Inc. (“Systems 2000”), an insured, to recover attorneys’ fees from its excess insurer, GuideOne National Insurance Company (“GuideOne”). GuideOne filed a declaratory judgment action against its insured, Systems 2000.
GuideOne, who issued a follow-form excess policy, sought a declaration that it had no obligations to indemnify or defend Systems 2000 or otherwise provide coverage to Systems 2000.[1] Travelers Indemnity Company of Connecticut (“Travelers”), the underlying primary insurer, initially declined its duty to defend and indemnify its insured based on a “Residential-Work Exclusion.” Travelers later reversed its decision and voluntarily reformed its policy to provide coverage for residential work. Following a bench trial, the Court found that GuideOne excess policy provided coverage for its insured’s losses.[2]
The Travelers policy had a $2 million limit of indemnity. The GuideOne excess policy had a $4 million limit of indemnity.[3] Early communications between Travelers and GuideOne demonstrated that the loss likely exceeded the primary limits, and therefore, would implicate the excess policy. Travelers’ loss estimate was supported by an expert retained to quantify an estimate of loss.
The Southern District found that the New York Court of Appeals (New York’s highest court) has not specifically ruled whether an excess insurer can be held liable for attorneys’ fees.[4] However, RLI Insurance Company v. Smiedala, 77 A.D.3d 1293, 1295 (4th Dep’t 2010), a New York intermediate appellate court, “reject[ed] the contention” that “an excess insurer whose coverage has not yet been triggered” is inoculated from an award of fees.[5] Based on RLI Insurance and Mighty Midgets[6], the Southern District found that a New York state court would grant attorneys' fees to an insured who prevailed in a declaratory judgment action when an excess insurer had a “looming, likely-to-be-triggered duty to defend.”[7]
This recent ruling provides authority for an insured to seek attorneys' fees from an excess insurer who declines its duty to defend its insured. However, the Southern District does clarify whether an excess insurer can only be liable for attorneys’ fees when its duty to defend is “looming,” as was the case in GuideOne, and as opined in Liberty Surplus Insurance Corporation v. Segal Company, 420 F.3d 65, 69 (2d Cir. 2005) (per curiam).[8]
[1] The GuideOne excess policy was a “follow form” policy, and contained language obligating GuideOne to defend “such claims or suits when the applicable Limits of Insurance of the ‘Schedule of Underlying Insurance’ has been exhausted…”
[2] As it is not the basis of this article, we do not discuss the Court’s Opinion and Order following the bench trial. December 22, 2025 Opinion and Order. GuideOne Nat'l Ins. Co. v. Sys. 2000 Plumbing Serv., No. 22-CV-5018 (JPO), 2025 LX 537452 (S.D.N.Y. Dec. 22, 2025)
[3] GuideOne August 31, 2026 Opinion and Order, at p. 6. GuideOne Nat'l Ins. Co. v. Sys. 2000 Plumbing Serv., No. 22-CV-5018 (JPO), 2026 LX 483238 (S.D.N.Y. Aug. 31, 2026)
[4] The Southern District discusses U.S. Underwriters Ins. Co. v. City Club Hotel, LLC, 822 N.E.2d 777, 780 (N.Y. 2004) but found that the Court of Appeals discussed obligations of a primary carrier, not excess carrier.
[5] GuideOne August 31, 2026 Opinion and Order, at p. 7. GuideOne Nat'l Ins. Co. v. Sys. 2000 Plumbing Serv., No. 22-CV-5018 (JPO), 2026 LX 483238 (S.D.N.Y. Aug. 31, 2026)
[6] Mighty Midgets, Inc. v Centennial Ins. Co., 47 NY2d 12 (1979).
[7] GuideOne August 31, 2026 Opinion at p. 8. GuideOne Nat'l Ins. Co. v. Sys. 2000 Plumbing Serv., No. 22-CV-5018 (JPO), 2026 LX 483238 (S.D.N.Y. Aug. 31, 2026)
[8] Liberty Surplus Insurance Corporation v. Segal Company, 20 F.3d 65, 69 (2d Cir. 2005) (per curiam) (finding that the excess carrier had no current duty to defend, thus, awarding fees to the insured there would be improper. However, “[t]here may be cases where an excess insurer’s duty to defend has not actually been triggered, but where it likely will be and the excess insurer has brought a declaratory judgment action to avoid a looming duty to defend” and “express[ed] no opinion on whether Mighty Midgets could support attorneys’ fees in such a situation.”
