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Allstate Insurance Co. v. Avis Rent-A-Car System Inc11/10/1997
ado law requires the liability coverage of the car owner always to respond as the primary insurer and forbids Avis from including an excess clause in its rental car liability coverage.
In reversing the district court, the court of appeals concluded that the Avis and Allstate excess clauses canceled each other as mutually repugnant, that both coverages were in effect up to their full policy limits, and that each insurer was required to respond as primary to bear its share of the loss due to the liability of their insured. We agree.
II.
We conclude as a matter of Colorado public policy that the competing excess clauses in the Allstate and Avis policies are unenforceable. Both insurers must bear their share of the actual loss on a dollar-for-dollar basis until the limits of one of the policies is exhausted; the second policy must continue to pay to its limits or until the loss has been fully compensated, whichever occurs first.
A.
Liability Coverage Under CAARA
The Colorado General Assembly adopted CAARA in 1973 as part of a sweeping reform requiring minimum no-fault insurance and mandatory minimum liability insurance for automobiles. See Committee on Automobile Insurance, Colorado Legislative Council, Report to the Colorado General Assembly, Res. Pub. No. 190 (1972)(Committee Report). CAARA'S purpose is to: (1) avoid inadequate compensation to victims of automobile accidents; (2) require registrants of motor vehicles in the state to procure insurance covering liability arising out of ownership or use of such vehicles; and (3) provide benefits to persons occupying such vehicles and to persons injured in accidents involving such vehicles. See (s) 10-4-702, 3 C.R.S. (1997).
To achieve these goals, CAARA changed the state's compensation scheme by replacing parts of the common law tort liability system with minimum required no-fault insurance. This coverage, known as Personal Injury Protection (PIP), is provided to the injured party by his or her own insurance company regardless of "fault." Committee Report at 5. PIP coverage applies not only to the named insured, but also to members of the automobile owner's family, passengers of the owner's automobile, and pedestrians in accidents involving the automobile. See (s) 10-4-707(1)(a)-(c), 3 C.R.S. (1997). PIP coverage includes compensation for medical, rehabilitative, income loss, and death benefits. See (s) 10-4-706(1)(b)-(e), 3 C.R.S. (1997).
While PIP coverage was a primary focus of the statutory reform, the General Assembly also intended to retain features of pre-existing tort liability law while prescribing minimum liability coverage. Committee Report at 5, 8. It chose in CAARA to mandate minimum coverages not only for PIP benefits but also for tort liability for bodily injury or death and for property damage arising from the use of a motor vehicle. See (s) 10-4-706(1)(a), 3 C.R.S. (1997). The liability coverage mandated by CAARA provides personal injury compensation based on the fault of the tortfeasor when PIP benefits are inadequate to compensate for the loss. Committee Report at 5. For bodily injury or death, the mandatory coverages are $25,000 for any one person in any one accident and $50,000 for all persons in any one accident; for property damage, the coverage must be at least $15,000 for any one accident. See (s) 10-4-706(1)(a), 3 C.R.S. (1997). Because PIP coverage does not include property damage, CAARA retains a fault-based liability coverage compensation system for all property damage claims. See (s) 10-4-706(1)(a), 3 C.R.S. (1997); Committee Report at 15.
Though the legislature in CAARA instituted mandatory coverage for both no-fault PIP i
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