Uninsured Motorist Coverage
Issue: Does an Uninsured Motorist Policy cover an accident caused by a rental car, when the rental company is self-insured yet exempt from liability?
Facts: Plaintiff was injured by driver in a rental vehicle, and sought his policy’s uninsured motorist coverage. Plaintiff’s insurance carrier denied coverage because the vehicle was owned by a rental car agency which self-insured, so the damages did not arise from an “uninsured” motor vehicle, as required by the policy. The trial court agreed with the insurance company and dismissed the case.
Appellate Decision: The intermediate court affirmed the dismissal of the case, holding that because the rental company is a self-insurer under Tennessee law, the car was not an “uninsured motor vehicle” as specified by the policy. The court rejected the Plaintiff’s argument that the car was not truly “insured” pursuant to the statute since federal law exempts rental agencies from liability for renter negligence.
Review Granted: August 13, 2015.
Prediction: Ben thinks the Supreme Court may reverse. Our uninsured motorist laws are remedial to protect persons injured by drivers who lack insurance with which to pay damages. To the extent the insurance policy precludes coverage in this case because the vehicle’s owner is self-insured, the provision should be void for public policy since federal law moots the rental company’s insurance coverage. As far as this Plaintiff is concerned, the offending vehicle is effectively uninsured.