Priority and Applicability of Auto Coverage

The provisions of this section is incorporated into the PP auto policy by ISO form PP 01 92 (01 09) and into the commercial policies by CA 01 46 (07 01). This law applies to liability only.

56-7-1101. Priority and applicability of coverages.

(a) (1) In all cases arising out of the use of a motor vehicle on which the owner of the motor vehicle has any insurance coverages, the owner's policy is primary if the vehicle is being operated with the permission of the owner and within the scope of the permission granted.

(2) Any other coverages which may be available to the permittee are not applicable unless and until the limits of all coverages provided by the owner's policy first are exhausted.

(b) Any provision of subsection (a) or (b) to the contrary notwithstanding, where the only insurance coverage provided by the owner of such vehicle is under a garage policy, then any coverage which may be available to the permittee shall be primary and the coverage under the owner's garage policy shall not be applicable unless and until the limits of all coverage available to the permittee shall be first exhausted; provided, that when any nonowned vehicle is in the possession, custody or control of a person who is in the business of storing, parking, servicing or repairing vehicles, then any insurance available to the owner shall not be applicable unless and until all insurance that is available under a garage policy of such person in possession has been exhausted.

(c) When a claim arises out of the operation of a motor vehicle which is leased, under a written lease agreement, and pursuant to which agreement the lessee provides coverage for the vehicle, then any other coverage which may be available for the vehicle through the lessor is not applicable unless and until the limits of all coverage provided by the lessee for the vehicle first are exhausted.

(d) Subsections (a) and (c) are effective as to all policies written after May 7, 1973, and to all renewals of existing policies made after May 7, 1973. Subsection (b) is effective as to all policies written after April 5, 1974, and to all renewals of existing policies made after April 5, 1974.