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UNISUN INSURANCE CO. v. HERTZ RENTAL CORP.8/23/1993
wner's
liability, are the same as the minimum limits
required by the automobile financial
responsibility law of the jurisdiction in
which the accident occurs . . . (not to exceed
$100,000 per person and $300,000 each accident
and $25,000 for property damage for each
accident,) which accident results from the use
of the Car as permitted by this Agreement.
* * * * In the event that such coverage is
imposed, by operation of law, then the limits
of such coverage shall be the minimum required
by the law of the jurisdiction in which the
accident occurred. Hertz warrants that the
protection described in this paragraph is
primary with respect to any insurance coverage
you or any Authorized Operators may have.
It is undisputed that Gilliem was 17 years old and did not have a valid driver's license. He did not appear at the time of the rental and sign an Additional Authorized Operator form. Hertz, therefore, contends that he was not authorized to operate the car and that Hodge breached the car rental agreement and voided all insurance coverage by permitting him to drive it.
This case is controlled by the decision of the New York Court of Appeals in Motor Vehicle Accident Indemnification Corporation v. Continental National American Group Co., 35 N.Y.2d 260, 319 N.E.2d 182, 360 N.Y.S.2d 859 (1974). In that case, the Court of Appeals held that an insurer issuing a
This case is indistinguishable from the Continental National American case. Accordingly, the circuit court properly held that, under the law of New York, the restrictive terms of the car rental agreement were of no legal effect and the agreement afforded insurance coverage for the accident in which the rental car was involved.
III.
Unisun cross appeals, claiming Hertz should reimburse it for the cost of providing a defense for Hodge and Gilliem in the York suit. The question presented on cross appeal is: If a primary insurer has a duty to defend its allegedly negligent named insured and the allegedly negligent driver in a
An insurer that breaches its duty to defend and indemnify the insured may be held liable for the expenses the insured incurs in providing for his own defense. United States Fidelity and Guaranty Co. v. Copfer, 48 N.Y.2d 871, 400 N.E.2d 298, 424 N.Y.S.2d 356 (1979); Fuller v. Eastern Fire & Casualty Insurance Co., 240 S.C. 75, 124 S.E.2d 602 (1962). Similarly, one who is required to pay a legal obligation which ought to have been met by another is entitled to be equitably subrogated to the rights of the obligee against the obligor. See Town of Winnsboro v. Wiedeman-Singleton, Inc., 307 S.C. 128, 414 S.E.2d 118 (1992), aff'g 303 S.C. 52, 398 S.E.2d 500 (Ct.App. 1990). This rule rests on the principle of equity that a party should not be made to bear a loss that
In this case, Hertz's coverage was primary; Unisun provided uninsured motorist coverage. Because Hertz refused to defend the York action, although it had a legal duty to do so, Unisun was forced to assume the expense of providing a defense to Hertz's insureds. Accordingly, under the principle of equitable subrogation, Unisun may recover from Hertz its expenses resulting from Hertz's refusal to provide a defense. We reverse the holding of the circuit court to the contrary and remand for a determination of the amount which Hertz must reimburse to Unisun.
Affirmed in part, reversed and remanded in part.
CURETON, J., and LITTLEJOHN, Acting J., concur.
Page 1 2 South Carolina Personal Injury Attorneys
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