Arredondo v. Avis Rent a Car System, Inc.

RUSSON, Associate Chief Justice,

concurring:

121 I concur with the majority opinion that the Continental policy was not purchased to satisfy the statutory security requirement and therefore the coverage of that policy is governed by its own terms, exelud-ing coverage of Kai Walston. I write separately, however, because of my concern for the proper application of the statutes in this case. This is not a case involving insurance procured by the owner of an automobile but, *933rather, insurance procured by the operator of an Avis rental car. The distinction is important because of the statutory treatment of each. The parties, and consequently the trial court and the majority opinion, fail to take into consideration the distinction between insurance policies purchased by the owners of automobiles and insurance policies purchased by the operators of automobiles so clearly set forth in the applicable statutes. They also fail to consider those statutory sections dealing with car rental companies and "authorized drivers" in regard thereto. Proper analysis of the statutes is essential to reaching a correct conclusion in this case inasmuch as the insurance policies involved were operator policies purchased in conjunction with the rental of a car from Avis Rent A Car System, Inc.

122 The Utah statutes clearly recognize the distinction between insurance policies purchased by owners of automobiles and insurance policies purchased by operators of automobiles. Section 31A-22-308(1)(a)@i)(A) of the Utah Code provides that an owner policy must insure not only the person named in the policy but also any other person using the named automobile with the express or implied permission of the named insured, as well as relatives of the named insured who are residents of the household. That subsection specifically states:

(A) [I)f it is an owner's policy, designate by appropriate reference all the motor vehicles on which coverage is granted, insure the person named in the policy, insure any other person using any named motor vehicle with the express or implied permission of the named insured, and, except as provided in Subsection (7), insure any person included in Subsection (1)(a)(G@iii) against loss from the liability imposed by law for damages arising out of the ownership, maintenance, or use of these motor vehicles within the United States and Canada, subject to limits exclusive of interest and costs, for each motor vehicle, in amounts not less than the minimum limits specified under Section 31A-22-804. ...

(Emphasis added.) Subsection(1)(a)@M), referred to above, requires coverage under owner policies for relatives of the same household. That section states that "except as provided in Subsection (7), [the owner policy shall] insure persons related to the named insured ... who are residents of the named insured's household."

123 However, subsection (B) of the same statute has different requirements as to non-owners who purchase operator policies. Seetion 31A-22-803(1)(a)(ii)(B) provides that an operator policy insures only the named insured for claims arising out of the insured's use of the non-owned vehicle. Specifically, that subsection states:

(B) [I}f it is an operator's policy, insure the person named as insured against loss from the liability imposed upon him by law for damages arising out of the insured's use of any motor vehicle not owned by him, within the same territorial limits and with the same limits of liability as in an owner's policy under Subsection (1)ii)(A). ...

(Emphasis added.)

{24 This subsection does not insure permissive users, nor does it refer to or incorporate subsection (1)(a)(iii), pertaining to relatives of the same household, as does subsection (A), covering owner policies. If the legislature had wanted operator policies to cover permissive users and relatives of the household, the statute would have so stated and by reference to subsection (1)(a)(iii) as it did in subsection (A) dealing with owner policies.

125 In fact, this is made even clearer in that the said statute provides that in the case of owner policies, where relatives of the same residence are insured, they can be specifically excluded from coverage under certain circumstances. The statute pertaining to owner policies, subsection (A), makes a specific exception for coverage to such persons as provided in subsection (7). It states that "except as provided in Subsection 7, [an owner policy] insure[s] any person included in Subsection (1)(a)(ii)." Subsection (7) reads:

(7) A policy of motor vehicle liability coverage under Subsection 81A-22-302(1) may specifically exclude from coverage a person who is a resident of the named insured's household, including a person who usually makes his home in the same *934household but temporarily lives elsewhere, if....

It is significant that the subsection pertaining to an operator policy has no such exception. This obviously is so because by statute only the operator is insured under this subsection. In fact, the only qualification contained in the subsection covering operator policies is that the limits of Hability will be the same as an owner policy specified in section 81A-22-804. (That section provides that insurance Hiability policies may not limit coverage below designated dollar amounts.)

126 Most important are those statutory sections that pertain directly to car rental companies. A car rental company is obligated to provide primary insurance coverage to a renter, and "renter" is defined as any person obtaining the use of an automobile under the terms of a rental agreement.

127 Specifically, section 31A-22-314(1) states:

A rental company shall provide its renters with primary coverage meeting the requirements of Title 41, Chapter 122, Financial Responsibility of Motor Vehicle Owners and Operators Act, unless there is other valid or collectible insurance coverage.

(Emphasis added.)

(28 Section 814¥-22-311, dealing with rental cars, defines "renters." -It also defines "authorized drivers" and in doing so does not include permissive users or relatives of the same residence. That section states:

As used in Sections 31A-22-8312 [1] and 31A-22-814 [2];
(1) "Authorized driver" means the person to whom the vehicle is rented and includes:
(a) his spouse if a licensed driver satisfying the rental company's minimum age requirement;
(b) his employer or coworker if engaged in business activity with the renter and if they are licensed drivers satisfying the rental company's minimum age requirement;
(c) any person who operates the vehicle during an emergency situation;
- (d) any person who operates the vehicle while parking the vehicle at a commercial establishment; or
(e) any person expressly listed by the rental company on the rental agreement as an authorized driver.

Significantly, "authorized driver" of a rental car does not include relatives of the renter's household or persons who are permitted by the renter to drive the rented car.

129 It should also be noted that "authorized driver" is defined in the above statute as the person to whom the vehicle is rented and that "renter" is defined as that person obtaining the use of a private passenger motor vehicle from a rental company under the terms of a rental agreement.

1 30 Therefore, by statute, a rental company must provide primary liability insurance for the renter-that is, the person who rented the vehicle-and for his spouse, employer or co-worker, any person operating the vehicle in an emergency situation, any person parking the car in a commercial establishment, or any person expressly listed by the rental company on the rental agreement as an authorized driver. It is not obligated, however, to provide liability insurance for permissive users and/or relatives of the household.

131 As noted above, the insurance provided must meet the requirements of title 41, chapter 12a. Section 41-122-103(9) states, "'Owner's or operator's security, 'owner's security, or 'operator's security' means any of the following: (a) an insurance policy or combination of policies conforming to Section 31A-22-302. ..."

1 32 Section 81A-22-802(1)(a) states:

(1) Every policy of insurance or combination of policies purchased to satisfy the owner's or operator's security requirement of Section 41-12a-301 shall include:
*935(a) motor vehicle liability coverage under Sections 31A-22-308 and 31A-22-304[.]

T33 Section 81A-22-8083 is the provision set forth above pertaining to owner and operator policies. (Section -804 sets forth the minimum dollar amounts to be provided in liability policies.)

I 34 Therefore, the statutes of the state of Utah require a car rental company to provide operator coverage insuring the person who rented the car, his or her spouse, and those persons designated in the statute as set forth above. The statutes do not require such coverage for permissive users or relatives who are residents of the operator's household.

135 In the case before us, Mrs. Walston rented a car from Avis Rent A Car. The rental agreement provided:

17. WHO ELSE MAY DRIVE THE CAR, ONLY MY SPOUSE, MY EMPLOYER OR A REGULAR FELLOW EMPLOYEE INCIDENTAL TO BUSINESS DUTIES OR SOMEONE WHO APPEARS AT THE TIME OF RENTAL AND SIGNS AN ADDITIONAL DRIVER FORM, MAY DRIVE THE CAR BUT ONLY WITH MY PRIOR PERMISSION. THE OTHER DRIVER MUST BE AT LEAST 25 YEARS OLD AND A CAPABLE AND VALIDLY LICENSED DRIVER.

[ 36 As for liability insurance coverage, the rental agreement provided:

18, LIABILITY INSURANCE, ANYONE DRIVING THE CAR AS PERMITTED BY THIS AGREEMENT WILL BE PROTECTED AGAINST LIABILITY FOR CAUSING BODILY INJURY OR DEATH TO OTHERS OR DAMAGING THE PROPERTY OF SOMEONE OTHER THAN THE DRIVER AND/OR THE RENTER UP TO THE MINIMUM FINANCIAL RESPONSIBILITY LIMITS REQUIRED BY APPLICABLE LAW. THE LIMIT FOR BODILY INJURY SUSTAINED BY ONE PERSON INCLUDES ANY CLAIM FOR LOSS OF THAT PERSONS CONSORTIUM OR SERVICES. WHERE THE LAW EXTENDS COVERAGE TO A NON-PERMITTED DRIVER, THE SAME LIMITS SHALL APPLY.

T37 Therefore, the rental agreement had restrictions as to who was authorized to drive the rental car, and provided that those persons would be protected by lability insurance "up to the minimum financial responsibility limits required by applicable law." It should be noted that the agreement provided that "where the law extends coverage to a non-permitted driver the same limits shall apply." However, in Utah, nonpermissive drivers are not required by statute to be covered by insurance. Only those persons designated and those persons driving with express or implied permission of the owner are deemed to be additional insureds, and that applies only to owner policies. As to operator policies, such permissive users are not required to be covered.

138 However, while the statutes provide certain requirements that all automobile insurance policies must meet, that does not prevent an insurance policy from providing greater coverage than required by statute. The automobile insurance policy must be examined to determine the coverage provided. If it fails to meet minimum statutory requirements, it will be construed to do so. If it exceeds minimum statutory requirements, it will be applied accordingly.

€ 39 In this case, Mrs. Walston was provided with primary liability insurance coverage in the amount of $25,000. She was also provided with optional excess liability coverage in the amount of $1,000,000. The only issue before us is the applicability of the exeess policy to Mrs. Walston's son Kai Wal-ston, who was driving the car at the time of the accident. The trial court granted summary judgment in favor of Avis and Continental, ruling that the excess lability insurance policy did not provide liability coverage for Kai Walston.

40 The exeess Hability policy in question identified as insureds under the policy the named insured and as additional insureds "any authorized driver of the car ... as such drivers are described in the rental agreement." Policy paras. ILg, h, i.

141 As we have already seen, the rental agreement designated "authorized drivers" *936as the renter of the car, the renter's spouse, the renter's employer or a regular fellow employee incidental to business duties, and someone who appears at the time of the rental and signs an additional driver form. Kai Walston was not the named insured, nor was he the renter's spouse, nor was he the renter's employer or regular fellow employee incidental to business duties, nor was he someone who appeared at the time of rental and signed the additional driver form. Clearly, Kai Walston was not an authorized driver and was not covered by the excess liability policy. In fact, even if Kai Walston had been given permission by his mother to drive this rental car, he would not have been covered by the excess policy since this policy was an operator policy, not an owner policy.

£42 The majority opinion declares that because the Continental excess policy was not purchased to satisfy the statutory seeurity requirement, the coverage is governed by the terms of the policy which exclude coverage for Kai Walston. I agree with the majority opinion as far as it goes but believe that the complete reason for noncoverage of Kai Walston is that the Continental policy was not an owner policy but, rather, an operator policy with different statutory requirements as set forth above.

1 43 Chief Justice HOWE concurs in Associate Chief Justice RUSSON'S concurring opinion.

. Section 31A-22-312 pertains to the personal liability of authorized drivers under certain circumstances.

. Section 31A-22-314 is set forth above.