Avis Rent-A-Car System, Inc. v. Allstate Insurance Co.

Citations: 937 P.2d 802; 1996 WL 350913Docket: 95CA0431

Court: Colorado Court of Appeals; May 19, 1997; Colorado; State Appellate Court

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Allstate Insurance Company appeals the Colorado Court of Appeals' decision, which denied its motion for summary judgment and granted that of Avis Rent-A-Car System, Inc. The case arises from an accident involving a rented car, leading to a dispute over which insurer—Allstate or Avis—holds primary liability coverage. The trial court ruled that Allstate's coverage was primary based on 1992 amendments to Colorado's statute 10-4-707, which Allstate contends was misinterpreted. Before the amendments, the statute stipulated that when an insured person operates a non-owned vehicle, their insurance policy provides primary coverage, while the owner's policy offers excess coverage. Allstate argues that the trial court erred in applying the amended statute, asserting that it incorrectly determined Allstate's liability coverage should be considered secondary. The court's ruling rejected Allstate’s argument regarding the legality of an excess clause in Avis's policy. The appellate court has reversed the trial court's decision and remanded the case for further proceedings.

In cases where an injured individual is entitled to benefits under the Colorado Workmen's Compensation Act, the insurance coverages specified in section 10-4-706(1)(b) to (1)(e) will be reduced by the amount of benefits available under that Act during the designated payment period outlined in section 10-4-708. The Colorado Supreme Court clarified in 1976 that "all coverages" in 10-4-707(4) refers specifically to personal injury protection (PIP) benefits outlined in 10-4-706(1)(b) to (1)(e). Amendments made in 1992 added a new subsection (3) to 10-4-706 for low-income PIP coverage but did not alter 10-4-707(4). Instead, 10-4-707(1) and (5) were revised to refer generally to "section 10-4-706," omitting specific subsections. Avis argued that these changes incorporated liability coverage into 10-4-707(4), a view supported by the trial court but ultimately deemed incorrect. The court emphasized that the amendments did not suggest a change in 10-4-707(4) and maintained that its focus remains solely on PIP coverage. The 1992 amendments did not address liability coverage and were deemed technical adjustments to include low-income PIP coverage. Thus, the trial court's interpretation requiring Allstate to provide primary liability coverage was found to be erroneous, affirming that the primary coverage rule in 10-4-707(4) pertains only to PIP benefits.

Allstate argues that Avis should provide primary liability coverage because it is statutorily required to do so for its vehicles, claiming that Avis's "other insurance" excess clause contradicts public policy. Avis does not contest Allstate's excess clause. The court determines that Avis's excess clause does not violate public policy, referencing multiple cases where competing excess clauses are considered mutually repugnant and void. The court notes that the General Assembly has not addressed the primacy of liability coverage. Consequently, the court concludes that both Allstate's and Avis's excess clauses are mutually repugnant and therefore both must be treated as primary, leading to apportionment of liability coverage between them. The analysis begins with the insurance policy provisions, which reveal that both companies attempt to avoid primary coverage. The court ultimately finds that the trial court erred by upholding Avis's excess clause over Allstate's and reverses the judgment, remanding the case for further proceedings consistent with its findings.