Multiple Other Insurance Excess Clauses Will Cancel Each Other Out
Ramos Movers, Inc (Ramos) is a moving company which owns two trucks. On behalf of Ramos, Author Jones (Jones) rented a truck from Elite Rental (Elite) to complete a scheduled move. During the move, Jones and Jose G. Torres (Torres) were in a collision. Mr. Torres sustained injuries as a result of the collision.
Ramos owned an insurance policy from American Service. The policy included general liability coverage for the two trucks for a combined limit of $750,000 for bodily injury and property damage. Elite owned a commercial automobile policy from National Casualty Company (National) for up to $1 million per occurrence. The policy from National provided that it shall be the primary insurer unless otherwise provided for in a rental agreement between the insured and a rental agency. The agreement between Jones and Elite provided that all coverage from the renter (Elite) would come into effect after the rentee’s (Jones) policies have been exhausted.
The main issue is whether American Service was the primary coverage provider. The court rejected American Service’s argument that the truck was not covered under the policy. Further, the court held that according to Illinois law, there is no requirement for a rental car company to provide primary insurance if primary coverage is available from another source. The general rule is, where two insurance policies each purport to offer only secondary coverage, the insurance of the vehicle’s owner is primary while that of the driver is secondary.
However the general rule does not apply with respect to rental vehicles. Elite did not offer primary insurance to Ramos, therefore Ramos did not choose to rely on its own insurance. The general rule is that the insurance of the vehicle’s owner is treated as primary. However, because Elite did not offer the choice of primary coverage, National was also deemed a primary insurer. Ultimately, where two primary policies (American Service and National) contain “other insurance” clauses stating that the coverage provided is “excess,” the two “excess” clauses cancel each other out, and any loss is prorated between the two providers.
