Opinion ID: 1990920
Heading Depth: 1
Heading Rank: 4

Heading: ELRAC v American Home Assurance Co.

Text: Sergio Sabaris, who was insured by defendant American Home Assurance Company, rented a car from ELRAC and signed the standard indemnification clause. While driving the rental car, Sabaris was involved in an accident. The occupants of the other vehicle were Peter, Etheline and Sharon Warner. The Warners brought personal injury and property damage claims, which ELRAC settled for a total of $22,700 ($6,000 each for injuries to Etheline and Sharon; $8,000 for injuries to Peter; and $2,700 for property damage). ELRAC then brought the present action seeking indemnification from Sabaris under the rental agreement. ELRAC also sought a declaration that American Home Assurance was obligated to defend and indemnify Sabaris. Supreme Court held that the indemnification clause was unenforceable, stating that the rental company was required by law to provide primary insurance to the renter, and that any attempt by the lessor to assert its right to contractual indemnification from the lessee after payment to a third party is an attempt to transfer the loss to its own insured and is barred by the antisubrogation rule. The Appellate Division modified the judgment and held that Sabaris was required to indemnify ELRAC under the rental agreement. The Appellate Division stated that the indemnification clause was valid and enforceable, and that ELRAC is not the primary insurer of the renter of its vehicle    and therefore, the antisubrogation rule does not apply (273 AD2d 344, 345). We granted leave, and now reverse the Appellate Division orders in all four cases and remit to Supreme Court for application of the proper legal standard to the particular facts of each case.