The Tennessee Supreme Court has determined that a car rented from a national self-insured car rental agency qualifies as an “uninsured motor vehicle” for purposes of an insurance claim filed by a Williamson County man.
This case involves a lawsuit file by Edward Martin after he was struck by a vehicle driven by Gregory Powers, a patron of the bar Mr. Martin owns. Mr. Martin had refused to serve alcohol to Mr. Powers and asked him to leave the establishment. Mr. Martin then followed Mr. Powers outside. Mr. Powers got into his rental car and proceeded to intentionally hit Mr. Martin with the moving vehicle. Mr. Martin suffered a knee injury and incurred substantial medical expenses.
Mr. Martin later filed suit against Mr. Powers, Mr. Powers’s insurance company and Enterprise Rent-A-Car, which owned the car that Mr. Powers had rented and was driving. Mr. Powers’s insurance company denied any liability because his acts were intentional and not covered under the policy. The trial court agreed and granted summary judgment in the insurance company’s favor. Enterprise also asserted it was not liable for harm from the use and operation of the vehicle it rented to Mr. Powers, and Mr. Martin ultimately dismissed his claims against the rental agency.
Mr. Martin also served his own auto insurance company, IDS, with a copy of the summons and complaint for the purposes of bringing a claim under his uninsured motorist coverage policy. IDS claimed they were not liable in this instance because Enterprise was self-insured, meaning that while the company did not have an insurance policy, they acted as their own insurance company by guaranteeing they would be financially responsible for any appropriate claims against them. If the Enterprise vehicle was not considered an “uninsured motor vehicle,” then IDS would not have any liability for damages in the case.
The trial court and Court of Appeals sided with the insurance company and the Supreme Court agreed to hear the case to determine whether the rental car qualified as an uninsured motor vehicle under Mr. Martin’s auto insurance policy and Tennessee law.
The Supreme Court examined the IDS policy as well as applicable state and federal laws and determined that the policy was ambiguous as to the precise definition of an uninsured motor vehicle. Looking to the statutes, the Court concluded that federal law prohibits Enterprise from being liable for any risks caused by the renter, which would in effect, render the vehicle “uninsured” in this particular situation.
The case now returns to the trial court for further proceedings with the finding that the vehicle meets the definition of an uninsured motor vehicle under the Mr. Martin’s policy.
In a dissent, Justice Holly Kirby disagreed with the majority’s holding that a self-insured rental car is “uninsured” under Tennessee law. Instead, she writes, the case reveals a “hole” in Tennessee law. In enacting the statutes, the legislature likely did not contemplate for a scenario in which “a vehicle can be considered ‘insured’ if owned by a self-insurer, even though the owner/self-insurer cannot legally be held liable for the damages caused by the vehicle operator based on federal law or otherwise,” she writes in her opinion.
Read the majority opinion in Edward Martin v. Gregory Powers, et al., authored by Chief Justice Jeff Bivins, and the dissent, authored by Justice Holly Kirby.