Low, Ball & Lynch’s
WEEKLY LAW RESUME
December
2, 2004 Issue By: Mark
Hazelwood
Insurance - Priority of Coverage -
Tractor and Leased Trailer Policies
Wilshire Insurance Co. Inc. v.
Sentry Select Insurance Company
Court of Appeal, Fourth District
(November 15, 2025)
This case involves an interpretation of California Insurance Code section
11580.9 in determining whether tractor and leased trailer policies should
provide primary or excess coverage following a motor vehicle accident.
In July 1999, Ken Holm, dba Kenway Enterprises, was driving a Kenworth
tractor hauling a Great Dane semi-trailer. The tractor-trailer rig was involved
in a serious accident in
At the time of the accident, Wilshire Insurance Co. insured Kenway and
Sentry Select Insurance Co. insured Statewide. During the course of
litigation, Wilshire demanded that Sentry share in the costs of litigation and
contribute to settlement. Sentry refused to do so. Kenway undertook the defense
of both Kenway and Statewide, reserving its right to seek a pro rata
contribution from Sentry. After expending over $43,000 in attorneys fees and
costs, Wilshire proceeded to settle the wrongful death action for $210,000.
Wilshire then filed a declaratory relief action and brought a motion for
summary judgment seeking one-half the expenses incurred by Wilshire in
defending and settling the wrongful death case. Sentry, in turn, filed its own
motion for summary judgment arguing that it provided only excess coverage for
the accident, and was under no obligation to make a contribution.
The trial court granted Wilshire’s motion for summary judgment. On appeal,
the Fourth Appellate District affirmed the trial court. The Court noted
that Kenway was hauling a load for Statewide under the terms of a written
agreement. Pursuant to the agreement, Statewide leased the tractor from Kenway
and hired a Kenway driver. In return, Kenway agreed to indemnify Statewide for
all third party claims arising out of accidents.
To protect itself Kenway purchased the Wilshire policy with policy limits of
$1 million. Statewide also had its own motor vehicle policy from Sentry, which
provided up to $1 million in coverage for any driver hauling a Statewide
trailer with Statewide’s permission. Kenway’s tractor was scheduled as an
“owned” vehicle on the Wilshire policy, and Statewide’s trailer was scheduled
as an “owned” vehicle on the Sentry policy.
The Wilshire policy contained an “other insurance” clause stating that
Wilshire’s coverage would be primary where a covered vehicle (the tractor) was
hired by another (Statewide) and Kenway was obligated by written agreement to
hold harmless the lessee (Statewide). The Wilshire policy also set forth,
however, that if a covered trailer was connected to a covered tractor,
that coverage for both the trailer and the tractor would be primary.
The Sentry policy provided coverage for damages arising from use of the
trailer. However, under the Sentry policy’s “other insurance” clause, where the
covered trailer was connected to a tractor that was not covered under the
Sentry policy, the Sentry coverage would be excess.
The trial court and the Court of Appeal both agreed that Insurance Code
section 11580.9 applied to the facts of this case. Section 11580.9 was created
by the California Legislature to deal with conflicts among insurers as to
whether various policies are primary or excess. Under section 11580.9(d),
“Where two or more policies affording valid and collectible liability insurance
apply to the same motor vehicle or vehicles in an occurrence out of which a
liability loss shall arise, it shall be conclusively presumed that the
insurance afforded by that policy in which the motor vehicle is described or
rated as an owned automobile shall be primary and the insurance afforded by any
other policy or policies shall be excess.”
The Court of Appeal found that both the Wilshire and Sentry policies
afforded valid and collectible insurance. The Court further reasoned that
Sentry argued that co-primary coverage is contrary to the public policy of determining
an order of coverage. The Court of Appeal disagreed holding that there is
nothing in the statute that prohibits an equal ranking of the policies. While
Sentry had an equitable argument that its insured was not getting what it
bargained for (excess coverage), the Legislature’s conclusive presumption
(contained in section 11580.9) regarding the priority of coverage must take
precedence. Wilshire’s summary judgment was therefore affirmed, and Sentry was
ordered to pay one-half of Wilshire’s costs and fees in resolving the
underlying wrongful death action.
Comment
The Fourth Appellate district commented on the apparent inequity of the
decision. Even though Sentry contracted with its’ insured to only provide
excess coverage, it was ordered to pay for half of the loss. The Court felt it
was obligated , however, to follow the “bright line rule” set forth in section
11580.9.
Insurers and insureds dissatisfied with the operation of section 11580.9 can
overcome the conclusive presumption by written agreement signed by all insurers
who have issued policies for a loss and all named insureds. (Section
11580.9(f)). This process, however, is cumbersome. Insurers, such as Sentry,
may also depend entirely on tractor owner coverage, by providing a “trucker’s
endorsement” which eliminates all coverage when the trailer is towed by
another. Finally, insurers can lobby to have section 11580.9 re-written.
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