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Allstate Insurance Co. v. Avis Rent-A-Car System Inc11/10/1997
e must be given effect and that the Avis excess clause must be negated as an impermissible attempt to dilute, condition, or limit coverages mandated by CAARA. See Bukulmez v. Hertz Corp., 710 P.2d 1117, 1120 (Colo. App. 1985), rev'd in part by, Blue Cross of W. New York v. Bukulmez, 736 P.2d 834 (Colo. 1987). But the Avis coverage was in effect under the act, and Allstate wrongly contends that the plain meaning of sections 10-4-705 and 10-4-706(1)(a) requires the Avis liability insurance always to be "primary" and the Allstate coverage to be "excess."
We must give effect to every word of a statute, if possible, and cannot presume that the General Assembly used distinctions in language idly. See Colorado Ground Water Comm'n v. Eagle Peak Farms, 919 P.2d 212, 218 (Colo. 1996); McMillin v. State, 158 Colo. 183, 185, 405 P.2d 672, 674 (1965). The wording distinctions utilized here are meaningful. Under section 10-4-707(4), with regard to PIP benefits, "primary coverage . . . shall be afforded by the policy insuring the said operator . . . and any policy under which the owner is an insured shall afford excess coverage" when a person is driving a non-owned automobile. In marked contrast, the operative term "primary coverage" is not utilized in the context of minimum liability coverage within section 10-4-706(1)(a) or any other applicable section of CAARA. The legal liability provisions of CAARA, as opposed to the no-fault provisions, do not specify who must carry the primary coverage.
B.
Competing Excess Clauses
Here the insured person held two policies covering the loss caused by his operation of the rental car, yet each insurer claimed that its excess clause required the other to respond first. Normally, an excess clause attempts to shift the priority of payments as between coverages when two or more policies apply to the liability. See Western Cas. & Sur. Co. v. Universal Underwriters Ins. Co., 657 P.2d 576, 578 (Kan. 1983) ("'Other insurance' [clauses] . . . seek only to establish priority as to which policy should be exhausted first in satisfying the liability."). When one insurance policy is "primary" and the other policy is "excess," the primary insurer pays for damages up to the limits of its policy; when that policy is exhausted, the excess insurer covers any remaining damages up to the limits of its policy. See Appleman, Insurance Law and Practice (s) 4909 (1981) (explaining that excess clause triggers coverage only for liability above the maximum coverage of the primary policy or policies).
While Colorado recognizes a strong policy of freedom of contract, City & County of Denver v. District Court, 939 P.2d 1353, 1361 (Colo. 1997), and while we must construe contracts in a way that best effectuates the intent of the parties and allows each party to receive the benefit of the bargain, id., where the terms of applicable contracts are ambiguous they must be strictly construed against the parties drafting the contracts. See USF&G;v. Budget Rent-A-Car, 842 P.2d 208, 211 (Colo. 1992).
Any ambiguity in the operation of the excess clauses must be resolved against the insurers and in favor of the insured. If literal effect were given to the Allstate and Avis excess clauses, no coverage for the liability in this accident would apply. Because neither policy would cover the loss, an unintended consequence or absurdity contrary to public policy would result. See Allstate Ins. v. Frank B. Hall & Co., 770 P.2d 1342, 1345 (Colo. App. 1989); 7A Am. Jur. 2d Auto Ins. (s) 434 (1980 & Supp. 1996). We have previously ruled that conflicting excess clauses in insurance policies cannot be given effect. See Empire Cas. Co. v. St. Paul Fire &am
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