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Allstate Insurance Co. v. Avis Rent-A-Car System Inc11/10/1997
Certiorari to the Colorado Court of Appeals
EN BANC
JUDGMENT AFFIRMED
JUSTICE HOBBS delivered the Opinion of the Court.
JUSTICE MULLARKEY concurs in the Opinion of the Court as to Parts I, II.A., II.B., and III, but does not participate as to Part II.C.
We granted certiorari to review the court of appeals' decision in Avis Rent-A-Car System, Inc. v. Allstate Insurance Company, 937 P.2d 802 (Colo. App. 1996). Allstate Insurance Company (Allstate) requests us to void the excess clause in the Avis Rent-A-Car System, Inc., (Avis) rental agreement and enforce the excess clause in the Allstate policy. We decline. The court of appeals held that Allstate and Avis each had issued liability coverage for the property damage caused by the driver of the rented automobile, that the excess clauses contained in the policies of both companies conflicted with each other and were unenforceable, and that both insurers must respond as co-primary to cover the loss. We affirm the judgment of the court of appeals. We determine that the competing excess clauses violate Colorado public policy and conclude that the loss must be apportioned between the insurers on a co-primary basis.
I.
On July 2, 1994, Chinh Viet Pham (Chinh) was driving a rented Avis 1994 Oldsmobile Achieva when he struck a 1988 Eagle 15 bus head-on, causing property damage. The record before us does not disclose the amount of the loss. In this declaratory judgment action, each insurer attempted to have the other's coverage be declared as primary and its own coverage excess.
The Colorado Auto Accident Reparations Act (CAARA), section 10-4-705(1), 3 C.R.S. (1997), mandates that:
Every owner of a motor vehicle who operates the motor vehicle on the public highways of this state or who knowingly permits the operation of the motor vehicle on the public highways of this state shall have in full force and effect a complying policy under the terms of this part 7 covering the said motor vehicle . . . .
The Avis rental agreement covered Chinh with regard to "liability for . . . damaging the property of someone other than the driver and/or the renter up to the minimum financial responsibility limits required by applicable law." Thus, the Avis policy covered Chinh's property damage liability up to $15,000. See (s) 10-4-706(1)(a), 3 C.R.S. (1997). Chinh's policy with Allstate also covered property damage arising from his liability for operation of a non-owned automobile. The record does not disclose any of the limits of the Allstate policy.
Both coverages contained substantially similar excess insurance clauses which sought to compel the other insurer to respond as the primary insurer. Avis is self-insured under the act; the coverage conferred through its rental agreement provided that:
The coverage provided by [Avis] shall be excess over any applicable insurance available to [the driver], from any other source, whether primary, excess, secondary or contingent in any way.
The Allstate policy contained an excess clause which stated that:
If an insured person is using a substitute auto or non-owned auto, [Allstate's] liability insurance will be excess over other collectible insurance. If more than one policy applies on a primary basis to an accident involving your insured auto, [Allstate] will bear proportionate share with other collectible liability insurance.
In its ruling, the district court relied on 1992 amendments to CAARA to hold that the renter's non-owned automobile liability coverage provided by Allstate must respond as primary. Allstate contended on appeal that Color
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