(518 P.2d 1177)
No. C-380Supreme Court of Colorado.
Decided February 11, 1974.
Declaratory judgment action by petitioner, which had issued a family automobile liability policy, seeking a declaration of its rights and obligations as insurer of respondents, namely, mother to whom policy had been issued and daughter who was injured while riding as passenger on motorcycle owned by another. District court found that the “other insurance” clause of petitioner’s policy was valid and enforceable and that it barred recovery from petitioner as an excess insurer when its policy limits were the same as those of the primary insurer. The Court of Appeals, 32 Colo. App. 157, 510 P.2d 458, reversed and certiorari was granted.
Reversed
1. INSURANCE — Family Automobile Policy — Payment — Exceed — Limit — Other Similar Insurance — Unambiguous. In declaratory judgment action by issuer of family automobile policy for a determination of its rights and obligations as insurer of mother, to whom policy had been issued, and as insurer of daughter who was injured while riding as passenger on motorcycle owned by another, policy — which provided that insurer would pay all sums due as result of accident with uninsured motorist and that where insured was injured in vehicle not owned by him which was covered by other similar insurance applicable as primary insurance, recovery could be had only to extent that limit of liability policy exceeded limit provided in other similar insurance — was not ambiguous with respect to its limitation of excess uninsured motorist coverage; actually, recovery could be had only if limit of liability stated in excess carrier’s policy exceeded that stated in primary carrier’s policy, and here it did not.
2. “Other Insurance” Provision — Family Automobile Policy — Offensive — — Public Policy — Negative. “Other insurance” provision contained in family automobile liability policy — which provides that, where insured is
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injured in a vehicle not owned by him and which is covered by other similar insurance applicable as primary insurance, recovery may be had only to the extent that the limit of liability of the policy exceeds the limit provided in the other similar insurance — was not offensive to public policy as expressed by uninsured motorist statute.
Certiorari to the Colorado Court of Appeals
Duane O. Littell, Peter F. Jones, for petitioner.
Rector, Melat Wheeler, Leo W. Rector, for respondents.
En Banc.
MR. JUSTICE LEE delivered the opinion of the Court.
Certiorari to the Court of Appeals was granted to review the decision i Alliance Mutual Casualty Company v. Duerson, 32 Colo. App. 157, 510 P.2d 458. The controversy involves the validity and application of uninsured motorist provisions in automobile public liability policies.
The case was submitted to the trial court on stipulated facts. In November 1969, Mary Duerson was injured while riding as a passenger on a motorcycle owned and operated by Dennis W. Wade, which was struck by an automobile driven by an uninsured motorist. Wade was covered by a liability insurance policy with State Farm Mutual Auto Insurance Company (State Farm) which provided uninsured motorist protection for passengers on Wade’s motorcycle. Mary Duerson was covered by a family automobile liability insurance policy with Alliance Mutual Casualty Company (Alliance), issued to her mother, Barbara Duerson. The Alliance policy insured Mary Duerson while a passenger in other motor vehicles and also provided uninsured motorist protection. Both the State Farm and the Alliance policies limited the uninsured motorist liability to $10,000.
State Farm paid its policy limit of $10,000 to Barbara Duerson as guardian for Mary Duerson, in full settlement of Mary’s uninsured motorist
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claim against it. Alliance, however, refused payment on the uninsured motorist claim made thereafter against it. Alliance then instituted this declaratory judgment action to have a determination of its rights and obligations as insurer of respondents Barbara and Mary Duerson.
The district court found that the “other insurance” clause of the Alliance policy was valid and enforceable and that it barred recovery from Alliance as an excess insurer when its policy limits were the same as those of the primary insurer. The Court of Appeals reversed, finding the “other insurance” clause to be contrary to public policy as expressed by the uninsured motorist statute, 1965 Perm. Supp., C.R.S. 1963, 72-12-19 and 20. As we understand the Court of Appeals decision, it appears to have misapprehended our pronouncement in Certified Indemnity Company v. Thompson, 180 Colo. 341, 505 P.2d 962.
The pertinent provisions of the Alliance policy, which are the same as those of the State Farm policy, as recited in the Court of Appeals opinion, are set forth below.[1] In substance they provide (1) that Alliance
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will pay “all sums” due as a result of an accident with an uninsured motorist; (2) that where the insured in injured in a vehicle not owned by him, which is covered by other similar insurance applicable as primary insurance, recovery may be had from Alliance only to the extent that the limit of liability of the policy of alliance exceeds the limit provided in the other similar insurance; and (3) that where recovery from Alliance may be had, its indemnity costs are to be shared on a pro-rata basis with other similar insurers.
The Court of Appeals described the critical question to be decided in this case as whether “stacking” or “pyramiding” is permissible under the uninsured motorist insurance policy provisions where more than one policy is involved. We do not view the issue to be so broad. A variety of stacking or pyramiding situations may require different and diverse results, and no general answer may be given to the question as posed. As we view the question, we are concerned with the narrow issue of validity and interpretation of the uninsured motorist provision as set forth above, in light of the uninsured motorist statute, 1965 Perm. Supp., C.R.S. 1963, 72-12-19 and 20, and the claims of the parties as made in the fact situation hereinbefore described.
[1] Contrary to the contentions of respondents in their argument in support of the Court of Appeals decision, we do not find the uninsured motorist provisions of the Alliance policy to be ambiguous. They provide uninsured motorist protection but, in specified instances, only as excess
coverage. Simply stated, this means that recovery can be had only if the limit of liability stated in the excess carrier’s policy exceeds that stated in the primary carrier’s policy. In the present case it does not.
In Certified Indemnity Company v. Thompson, supra, construing an identical “other insurance” provision, we said: “We believe this provision [other insurance] is applicable only when those who fall within the definition of an insured are injured while occupying an automobile not
owned by the principal named insured. In the present factual context this provision would apply to a situation where the principal named insured,
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Thompson, Jr., his spouse, members of his household and those who come under the definition of ‘insured’ are injured by an uninsured motorist while occupying a car ‘not owned’ by Thompson, Jr. In such a situation the coverage under Thompson, Jr.’s policy would be excess over any other uninsured motorist’s coverage available to those injured. In short, the coverage of the automobile in which they are injured is primary and the coverage on the automobiles which are not involved, such as Thompson, Sr.’s, in the instant case, is ‘excess.’ [Citations omitted.]”
We denied a reduction of liability in Certified Indemnity because Certified Indemnity Company was the primary insurer and the insured family member was injured while occupying an automobile owned by the named insured. It, therefore, became liable under its uninsured motorist provision to the fullest extent as a primary insurer, and the fact that the excess insurer there made an improvident, premature settlement with the claimant could not relieve Certified Indemnity Company of compliance with its total obligation as a primary carrier. Here, Mary Duerson was not
occupying an automobile owned by the named insured in the Alliance policy, Barbara Duerson. Rather, the vehicle on which Mary Duerson was riding when injured — the motorcycle — was owned by Dennis W. Wade, and was insured by State Farm which we regard as the primary insurer as defined by Certified Indemnity. In this posture, Alliance thus becomes the excess insurer under the other insurance provisions of the Alliance policy. Nothing we said i Certified Indemnity dictates a contrary result.
[2] We next consider whether Alliance’s “other insurance” provision is repugnant to the public policy expressed by the uninsured motorist statute. The statute, set forth below,[2] requires that insurance companies
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issuing policies on motor vehicles registered or principally garaged in this state offer uninsured motorist coverage. If not rejected by the named insured, the minimum amount of coverage required is as provided in the Motor Vehicle Financial Responsibility Law, which in this case was $10,000 per claimant and $20,000 per occurrence.[3]
Alliance contends, and we agree, that its policy guarantees the victim of an accident with an uninsured motorist protection in the statutory amount of $10,000 should the primary carrier fail to make payment. Here, the primary carrier, State Farm, did make full payment.
We note that a person purchasing a policy has three options: that of rejecting uninsured motorist coverage; that of purchasing it in a minimum amount; or that of purchasing it in an amount greater than that specified by statute. Rates are adjusted accordingly. In view of these options, we
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find nothing offensive to public policy in an “other insurance” clause which denied recovery of additional sums over and above that provided by the primary insurance carrier.
The legislative “declaration of purpose” to the uninsured motorist statute, 1965 Perm. Supp., C.R.S. 1963, 17-12-20, expresses no intention to require full indemnification from all insurers of uninsured motorist victims.[4] Rather, the express intent is “to induce and encourage” all motorists to provide for their financial responsibility for the protection of others from financially irresponsible uninsured motorists. Had the legislature intended full indemnification it would not have granted the option of totally rejecting the uninsured motorist coverage.
In view of the foregoing, we will not speculate that the legislature intended to invalidate provisions in an insurance contract designed to limit liability as an excess insurer when there is available to the injured person primary insurance in the required statutory minimum amount. Our statute mandates only that insurance companies make available uninsured motorist coverage in an amount as prescribed by the Motor Vehicle Financial Responsibility Law.
Unlike Illinois, the coverage is not mandatory and may be rejected. Nevertheless, the Supreme Court of Illinois, construing its statute i Putnam v. New Amsterdam Casualty Co., 48 Ill. 2d 71, 269 N.E.2d 97, concluded:
“The question of public policy, it seems to us, is largely manufactured.
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Construing an insurance contract accurately and giving it the effect which its language clearly commands, is not ipso facto a breach of public policy merely because it disappoints the innocent victim of an uninsured motorist.”
See also, Morelock v. Millers’ Mutual Insurance Ass’n., 49 Ill. 2d 234, 274 N.E.2d 1; Tindall v. Farmers Automobile Management Corp., 83 Ill. App. 2d 165, 226 N.E.2d 397.
The Court of Appeals chose to follow contrary decisions on this public policy question. See, e.g., Sellers v. United States Fidelity Guaranty Co., 185 So.2d 689 (Fla.); Moore v. Hartford Fire Insurance Co. Group, 270 N.C. 532, 155 S.E.2d 128; Bryant v. State Farm Mutual Automobile Ins. Co., 205 Va. 897, 140 S.E.2d 817.
In our view, however, the legislative intent is satisfied by coverage which assures that one injured by an uninsured motorist will be compensated at least to the same extent as one injured by a motorist who is insured in compliance with the Motor Vehicle Financial Responsibility Law. 1965 Perm. Supp., C.R.S. 1963, 13-7-1 et seq.
Adoption of the opposite rule would produce the anomalistic result of double recovery described by the Supreme Court of Illinois in Putnam v. New Amsterdam Casualty Co., supra:
“* * * [W]e should consider the effect of plaintiffs’ proposal that the policies should be ‘stacked’ to allow full compensation. If such were mandated as a matter of public policy, motorists would be in the unusual position of preferring that any injuries sustained be at the hands of uninsured motorists rather than motorists who comply with the Financial Responsibility Law. In the case before us, for instance plaintiffs have already recovered from their host’s policy the amount they would have received had the tortfeasor been insured to the extent required by statute; but plaintiffs plead that they should be entitled to greater compensation, as a matter of public policy or legislative dictate, by virtue of the fact that the tortfeasor was not only a careless driver, but a financially irresponsible one as well.”
Double recovery is neither contemplated by the insurance contract nor by
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the uninsured motorist statute. The insurance contract assigns primary and excess liability postures to the company in uninsured motorist cases depending on whether or not the insured is riding in the named insured’s vehicle at the time of injury. This we recognized as valid in Certified Indemnity Company v. Thompson, 180 Colo. 341, 505 P.2d 962. The policy permits recovery from the “excess” carrier if its coverage exceeds that of the primary carrier. Its rates are adjusted according to the amount of coverage requested and the anticipated primary and excess liability. Nothing in the policy, however, reduces recovery to less than that required by the Motor Vehicle Financial Responsibility Law. The minimum amount required by that statute is guaranteed in the event the primary carrier fails to make payment.
We conclude that the “other insurance” provision of the Alliance policy is not offensive to the public policy as expressed by the uninsured motorist statute. We are fortified in this view by the following jurisdictions which are in accord: Werley v. United Auto. Assoc., 498 P.2d 112 (Alaska); Transportation Insurance Co. v. Wade, 106 Ariz. 269, 475 P.2d 253; Harris v. Southern Farm Bureau Casualty Ins. Co., 247 Ark. 961, 448 S.W.2d 652; Kirby v. Ohio Casualty Ins. Co., 232 Cal. App.2d 9, 42 Cal. Rptr. 509; Burcham v. Farmers Ins. Exchange, 255 Iowa 69, 121 N.W.2d 500; LeBlanc v. Allstate Ins. Co., 194 So.2d 791 (La.App.); McCarthy v. Motor Vehicle Accident Indemnity Corp., 16 App. Div. 2d 35, 224 N.Y.S.2d 909; Lyon v. Hartford Accident and Indemnity Co., 25 Utah 2d 311, 480 P.2d 739; Miller v. Allstate Ins. Co., 66 Wash. 2d 871, 405 P.2d 712.
We reverse the judgment of the Court of Appeals, with directions to remand the cause to the trial court for reinstatement of the judgment in favor of petitioner.
MR. CHIEF JUSTICE PRINGLE dissents.
MR. JUSTICE ERICKSON does not participate.
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