The appeals court reviewed the garage policy and concluded that the Webbs are excluded from coverage. The policy declared that a customer was excluded from the definition of “insured” unless the customer possesses insufficient insurance to meet the minimum requirements set forth in New York’s financial responsibility laws. It was clear, the appeals court noted, that the Webbs had auto liability insurance and the limits contained in the Progressive policy exceeded the minimum statutory requirements. Thus, the no liability clause in the Harco policy is given effect and Progressive is the primary insurer for the Webbs.

Progressive had argued that the other insurance clause in the Harco policy rendered Harco liable for the coverage. However, the appeals court said that the clause does not render Harco liable to provide insurance coverage as a general matter of fact. Rather, the clause simply clarifies the point that where coverage exists under the substantive provisions of the Harco policy, coverage is primary with respect to all vehicles owned by the insured and excess with respect to non-owned vehicles. And, in this situation, coverage did not exist under the Harco policy since the Webbs had sufficient insurance coverage of their own, so the other insurance language is not actionable.

The court reversed the trial court ruling and concluded that Progressive provided primary coverage for the subject accident. Harco was not obligated to defend or indemnify the Webbs.

Editor’s Note: The language in the Harco garage policy differs slightly from that found in the standard ISO garage coverage form. The ISO garage form states that a customer is considered an insured upfront; but if the customer has no insurance, the coverage is only for the financial responsibility law limits, and if the customer has insurance but the limits are less than the financial responsibility law limits, the coverage is only for the amount by which the financial responsibility law limits exceed the limit of the customer’s policy. The Harco policy considered a customer to be an insured only if the customer had no other insurance or had insurance with limits less than the financial responsibility law limits.

In this case, the difference in wording between the ISO garage form and the Harco policy made no difference in the ultimate court ruling. But the point is, that no matter how a customer is viewed under a garage policy, customers and their auto insurers cannot expect the customers to automatically receive the same type and amount of coverage as the named insured. Moreover, the other insurance clause in a garage policy that makes coverage primary for vehicles owned by the named insured is not going to force coverage for a customer if in fact the customer is not considered an insured and thus has no coverage in the first place.