Auto-Owners Ins. Co. v. Safeco Ins. Co. of America, AUTO-OWNERS

• Decision Date: 08 April 1980
• Docket Number: AUTO-OWNERS,No. 35792,35792
• Parties: INSURANCE COMPANY v. SAFECO INSURANCE COMPANY OF AMERICA.
• Court: Georgia Supreme Court

Page 175

266 S.E.2d 175

245 Ga. 558

AUTO-OWNERS INSURANCE COMPANY v. SAFECO INSURANCE COMPANY OF AMERICA.

No. 35792.

Supreme Court of Georgia.

Submitted Jan. 4, 1980.

Decided April 8, 1980.

Kelly, Denney, Pease & Allison, John W. Denney, Joel O. Wooten, Columbus, for appellant.

Page, Scrantom, Harris, McGlamry & Chapman, John T. Laney, III, Tom B. Slade, Columbus, for appellee.

HILL, Justice.

Meadows Motors, Inc., a new and used car dealer, furnished Mrs. Arnold with a "loaner" automobile while Meadows Motors was repairing her car. Mrs. Arnold was involved in an accident in which the loaner was damaged in the amount of $2,328. Meadows Motors had a policy of insurance with Safeco Insurance Company of America providing, among other coverages, collision coverage on Meadows' loaner automobiles, which policy contained an "other insurance" clause which provided that such collision coverage would be inapplicable or excess if there were any other policy available to the insured. ¹

Safeco paid Meadows for the loss (less the $100 deductible), took an assignment from Meadows and brought this suit against Mrs. Arnold's insurer, Auto-Owners Insurance Company, asserting a claim under a 1976 amendment to the 1974 Georgia Motor Vehicle Accident Reparations (no-fault) Act, Ga.L.1976, p. 1523; Code Ann. § 56-3405b(e).

Mrs. Arnold's policy with Auto-Owners provided, among other coverages, collision coverage on her automobile and, if her automobile was out of service for repairs, it provided collision coverage on temporary substitute automobiles subject to certain limitations. ²

Thus, the Safeco policy issued to Meadows Motors has a provision saying that it is inapplicable, or provides excess collision coverage only, if there is other applicable insurance available to the insured (footnote 1, above). On the other hand, the Auto-Owners policy issued to Mrs. Arnold has a provision saying that, although it covers a temporary substitute vehicle, it does not insure the owner of such vehicle and does not insure the insured (Mrs. Arnold) if the owner has insurance (see footnote 2). Thus, this case does not involve a determination of which of two applicable policies has primary responsibility because neither of the policies here is applicable in this case according to its terms. ³

The parties are in agreement that the central issue in this case is the 1976 amendment (Ga.L.1976, p. 1523) to the 1974 Georgia Motor Vehicle Accident Reparations Act (Ga.L.1974, p. 113). The 1976 amendment, codified in the Annotated Code as § 56-3405b(e), provides as follows: "Each policy of liability insurance issued in this State providing coverage to motor vehicles owned by (an automobile dealer) shall provide that when an accident involves the operation of a motor vehicle by a person who is neither the owner of the vehicle involved in the accident nor an employee of the owner, and the operator of the motor vehicle is an insured under a complying policy other than the complying policy insuring the motor vehicle involved in the accident, primary coverage as to all coverages provided in the policy under which the operator is an insured shall be afforded by the policy insuring the said operator and any policy under which the owner is an insured shall afford excess coverages." (Emphasis supplied.) The words "complying policy" refer to a policy complying with the 1974 Georgia Motor Vehicle Accident Reparations Act as amended.

As applied to this case, the 1976 amendment provides in effect that every "policy of liability insurance" issued in Georgia providing "coverage" to vehicles owned by auto dealers shall provide that when an accident involves a loaner (a temporary substitute vehicle furnished by a dealer) driven by a customer ⁴ and the customer-driver has his or her own insurance protection other than under the auto dealer's policy, primary coverage as to "all coverages" provided by the driver's policy shall be afforded by that policy, and the dealer's insurance shall be excess.

Auto-Owners defended against Safeco's claim, challenging the applicability and constitutionality of the 1976 amendment, Code Ann. § 56-3405b(e). On stipulated facts, both companies filed motions for summary judgment. Plaintiff Safeco was granted summary judgment and Auto-Owners appeals, enumerating three errors. Auto-Owners contends that Code Ann. § 56-3405b(e) is not applicable to its collision coverage, but that if it is, then the section is unconstitutional as containing matter different from that contained in the title to the 1976 Act.

1. Auto-Owners asserts that collision insurance is not included within the phrase "policy of liability insurance" as used in Code Ann. § 56-3405b(e). ⁵

Our so-called "no-fault" law is more aptly called the Georgia Motor Vehicle Accident Reparations Act because it provides (Code Ann. § 56-3403b(a)) that motor vehicle liability insurance required by the Motor Vehicle Safety Responsibility Act, Code Ann. Title 68C, must provide certain minimum benefits "without regard to fault" (i. e., no-fault benefits) (Code Ann. § 56-3403b(b)). Standard etc., Ins. Co. v. Davis, 145 Ga.App. 147, 148, 243 S.E.2d 531 (1978).

Code Ann. § 56-3405b(a)(2) provides that all insurers which issue motor vehicle liability insurance coverage shall include in such policies provisions for at least the minimum no-fault benefits. As was stated by the Court of Appeals in Standard, etc., Ins. Co. v. Davis, supra, 145 Ga. at 149, 243 S.E.2d at 534: ". . . motor vehicle liability insurance policies issued in this state contain two separate, basic coverages, liability and no-fault." Thus the Court of Appeals recognized that "liability policies" in this state are not limited to liability coverage. The Davis case is not otherwise applicable here because of the factual differences between these two cases and the 1976 amendment here in issue.

Moreover, Code Ann. § 56-3404b provides for certain optional coverages and § 56-3404b(b) provides that "Each application for a policy of motor vehicle liability insurance . . . must contain separate spaces for the insured to indicate his acceptance or rejection of each of the optional coverages listed in subsection (a) . . ." (Emphasis supplied.) Subsection (a)(2) provides for collision coverage. Code Ann. § 56-3404b(a)(2). Collision coverage thus is an optional coverage contemplated within a policy of liability/no-fault insurance. The insured is not required to have such coverage, but where he or she elects to do so, that coverage becomes part of the insurance policy.

More specifically, Code Ann § 56-3405b(e), the section in issue in this case, provides that ". . . primary coverage as to all coverages provided in the policy under which the operator is an insured shall be afforded by the policy insuring the said operator . . ." All coverages includes not only no-fault but collision coverage in a policy of liability insurance where collision coverage is included in the operator's own insurance policy.

We find that the allocation of insurance coverage and responsibility mandated by Code Ann. § 56-3405b(e) was not intended to be limited to liability insurance but was intended to apply to "all coverages," or at least all coverages required as well as optional under the Georgia Motor Vehicle Accident Reparations Act.

2. Auto-Owners next challenges the constitutionality of Ga.L.1976, p. 1523; Code Ann. § 56-3405b(e), as violative of what is now Art. III, Sec. VII, Par. IV of the Constitution of 1976 (Code Ann. § 2-1304)....