In Shelter Mutual Insurance Co. v. Mid-Century Insurance Co., the Colorado Supreme Court affirmed the court of appeals’ resolution of how two insurers must share losses arising from an automobile accident. The first insurer is responsible for losses because it insured the vehicle’s owner, who permissively loaned the vehicle to his son, the driver. The driver, the son of the owner of the vehicle, also had his own insurance coverage through a different insurer.

Although the vehicle owner’s insurer had included in a renewal policy sent to its insured a “step-down” provision that reduced coverage for permissive drivers, the Supreme Court held that this provision is unenforceable for lack of adequate notice; the insurer failed to sufficiently negate its insured’s reasonable expectation that his renewal policy contained the same terms as his original policy. Because the “step-down” provision is unenforceable, the Supreme Court did not decide whether such provisions are void as a matter of public policy. In affirming the court of appeals, the Court ruled that both insurers must share losses equally until policy limits have been exhausted.
The supreme court holds that an excess clause contained in a vehicle owner’s insurance policy is valid under Colorado law, as a vehicle owner’s insurer need not be the primary insurer where there is more than one applicable insurance coverage. Because there is no compelling public policy basis for reading a primary-insurer requirement into the statutory scheme, insurers are not prevented from using other-insurance clauses.
The supreme court determines that because both insurers’ policies contain valid excess clauses, they are mutually repugnant and void. Accordingly, both insurers are co-primary, and they must share the losses on a dollar-for-dollar basis until the policy limits of one insurer have been exhausted.

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