FARMERS TEXAS COUNTY MUTUAL v. HERTZ CORPORATION; HERTZ CORPORATION v. FARMERS INSURANCE COMPANY, INC., et al., SC 17643

Judicial District of Hartford

Insurance; Uninsured Motorist; Whether Automobile Rental Company is Obligated to Provide Primary Liability Insurance Coverage to Renters.  This dispute arises out of two unrelated automobile accidents involving Hertz rental cars.  The renters did not purchase supplemental liability insurance offered to them by Hertz.  The rental agreements provided that, should a renter decline the supplemental insurance, the renter's own insurance would be deemed primary.  Both renters had personal auto liability policies issued by Farmers Insurance Company (Farmers) providing that, for automobiles not owned by the insured, the Farmers coverage would be in excess of any other collectible or applicable insurance.  After the renters were involved in accidents that resulted in their being sued by third parties, Farmers and Hertz brought these declaratory judgment actions seeking a determination as to whether the Farmers or the Hertz coverage would be deemed primary in those suits.  The trial court compared the Hertz rental agreements with the Farmers policies and ruled that, as the renters had declined to purchase the supplemental liability insurance, any liability protection provided by Hertz was secondary to that provided by Farmers.  The court also found that Hertz had no statutory obligation to provide liability coverage to its rental customers.  Farmers appeals, claiming that Hertz is obligated to provide statutorily-mandated minimum coverage on a primary basis to renters.  Farmers contends that, because Hertz is self-insured, and because the courts have deemed self-insurance as the functional equivalent of commercial auto liability insurance, the documents filed by Hertz with the state insurance department to obtain self-insured status effectively constitute an insurance policy.  Farmers argues that the trial court should have compared the terms of the Farmers policies with the terms of Hertz' self-insurance filing to determine which coverage was primary and, had it done so, would have found the Hertz coverage primary.  Finally, Farmers claims that the Hertz rental agreements cannot be deemed to have diminished the coverage provided for in Hertz' self-insurance filing because Hertz did not give written notice of its intention to alter or reduce its uninsured motorist coverage.