Alliance Mut. Cas. Co. v. Duerson

• Decision Date: 11 February 1974
• Docket Number: No. C--380,C--380
• Citation: 518 P.2d 1177,184 Colo. 117
• Parties: ALLIANCE MUTUAL CASUALTY COMPANY, Petitioner, v. Barbara L. DUERSON and Mary W. Duerson, Respondents.
• Court: Colorado Supreme Court

Page 1177

518 P.2d 1177

184 Colo. 117

ALLIANCE MUTUAL CASUALTY COMPANY, Petitioner, v. Barbara L. DUERSON and Mary W. Duerson, Respondents.

No. C--380.

Supreme Court of Colorado, En Banc.

Feb. 11, 1974.

Duane O. Littell, Peter F. Jones, Denver, for petitioner.

Rector, Melat & Wheeler, Leo W. Rector, Colorado Springs, for respondents.

LEE, Justice.

Certiorari to the Court of Appeals was granted to review the decision in Alliance Mutual Casualty Company v. Duerson, Colo.App., 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 issured 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 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, Colo., 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 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.

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 instance, 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, 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 on 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 May 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 in Certified Indemnity dictates a contrary result.

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 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 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...