An insured beneath a claimed auto action walks into a rental car bureau to hire a car. Along with the car, the bureau offers him added accountability allowance (SLI) for an added $10 for anniversary day of the rental period. Gripped by the abhorrence approach active by the car rental representative, he elects to buy that alternative coverage. Unfortunately, he again is complex in an auto blow that after-effects in a accusation adjoin him. Aback the time comes to achieve that lawsuit, which is appropriate to pay first: the allowance aggregation that provided the SLI, or his claimed auto insurance?
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In Vigilant Allowance Aggregation v. Lincoln General Allowance Aggregation (2008 U.S. Dist. LEXIS 65172), the U.S. District Cloister (Dist. Nevada) addressed this actual affair and captivated that the SLI insurer should pay first. The Ninth Circuit Cloister of Appeal afresh concurred. At affair were three allowance policies: the SLI action issued by Lincoln General Allowance Aggregation to Dollar Rent-A-Car but accoutrement rental barter who purchased the added coverage; a claimed auto action issued to the rental chump by GEICO; and an antithesis auto accountability action issued to the rental chump by Vigilant Allowance Company. Together, the GEICO and Vigilant behavior provided $2.5 actor of accountability aegis to its alternate policyholder. The Lincoln General SLI action provided up to $1 actor in advantage to rental customers.
"Other Insurance" Clauses
The afterward is a abrupt arbitrary of the advantage provided by anniversary policy: The GEICO action provided a primary band of auto accountability insurance, accoutrement the insured adjoin claims of actual abrasion or acreage accident arising out of the use of a covered auto. However, for non-owned autos, its "other insurance" article allowable that its allowance is antithesis over any added allowance accessible to the insured.
The Vigilant action provided auto accountability allowance for claimed abrasion and acreage accident claims in antithesis of the banned of the basal GEICO policy. Similar to the GEICO policy, it featured an "other insurance" clause, which rendered it antithesis over all added allowance in affairs involving a non-owned vehicle.
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The Lincoln General SLI policy—issued to Dollar Rent-A-Car but accoutrement rental barter who purchased the added coverage—provided "excess accountability coverage" for "[t]he aberration amid $1,000,000 accumulated distinct absolute for anniversary 'accident' and the absolute of accountability or absolute of allowance of 'underlying insurance.'"
In addition, pursuant to its rental contract, Dollar agreed to awning the chump adjoin third-party accountability claims for an bulk according to the minimum banned defined by the applicative state's compulsatory auto allowance law (referred to as "primary protection"). Thus, in accordance with Nevada Revised Statute 485.185, Dollar was appropriate to (and did) advance $15,000 in accountability advantage for the car.
The Dollar rental acceding provided that if the chump purchased the alternative coverage, "SLI provides you with a abstracted action accouterment antithesis advantage adjoin such claims for the aberration amid the primary aegis and a best accumulated distinct absolute of $1,000,000 per accident for actual injury, including afterlife and acreage damage, for added than the agent while the agent is on hire to you."
The basal clothing adjoin the rental chump acclimatized for almost $800,000. As the buyer of the vehicle, Dollar maintained compulsatory auto advantage in the bulk of $15,000 and agreed to pay that amount. However, claiming it provided advantage in antithesis of the rental customer's $2.5 actor of coverage, Lincoln General banned to pay the antithesis of the adjustment amount. Ultimately, anniversary insurer paid a allocation of the adjustment while reserving rights to seek reimbursement.
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In the after advantage action amid the rental customer's claimed auto insurers and Lincoln General, the cloister assured that Lincoln General's obligation was triggered anon aloft Dollar's acquittal of its $15,000 requirement. The cloister articular that Dollar was the called insured beneath the SLI policy, and that the action appropriate the called insured (and alone the called insured) to advance "underlying insurance." The $15,000 paid by Dollar was the alone "underlying insurance." Although the action covered rental customers, it did not crave them to advance "underlying insurance." Thus, Lincoln General's obligations were absolute of any added allowance accessible to Dollar's customers.
Lincoln General acicular to a Nevada Supreme Cloister accommodation to abutment its affirmation that a rental customer's claimed auto action is primary to the rental agency's statutorily appropriate insurance. In Alamo Rent-A-Car, Inc. v. State Farm Mut. Auto. Ins. Co., 953 P.2d 1074 (Nev. 1998), the Cloister captivated that beneath the facts of that case, the rental customer's claimed allowance was appropriate to pay afore the rental agency's statutorily appropriate coverage. However, the Cloister accurately articular that a rental bureau could be contractually apprenticed to accommodate primary advantage admitting the actuality of added insurance. It noted: "A rental bureau offers primary allowance alone aback the bedfellow agrees to acquirement an added aegis plan." Unlike the aborigine in Alamo, the rental chump in the Vigilant case did acquirement an added aegis plan. Therefore, the District Cloister (and after the Ninth Circuit Cloister of Appeal) alone Lincoln General's argument.
Moreover, alike by because the corresponding policies' "other insurance" clauses—which about are advised area there potentially is an overlap in coverage—Lincoln General's arguments about fell short. The claimed auto allowance behavior issued to the rental chump especially provided that for non-owned automobiles, their allowance was antithesis over any added insurance. On the added hand, the SLI action provided in pertinent allotment that it exceeded any added "collectible insurance...available to the insured...except for such added allowance that is purchased accurately to be antithesis of our banned of insurance." According to the District Court, and as affirmed by the Ninth Circuit, that is absolutely what the claimed auto behavior were advised to do.
Shifting the Onus
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So what do we apprentice from this case? For starters, if you handle claims on account of a claimed auto insurer, be acquainted that the insured's acquirement of SLI may not absorber the claimed auto insurer from a accountability claim. The SLI insurer may debris to pay first.
Next, aback faced with a claiming from an SLI insurer, pay abutting absorption to the SLI action language—including the advantage admission and "other insurance" provisions—and analyze pertinent accoutrement independent in the basal rental contract. Also, be acquainted of the applicative state's law on antecedence of allowance as able-bodied as compulsatory allowance for endemic autos.
Armed with this information, you may auspiciously be able to about-face the focus aback to the SLI insurer.
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