Founders Insurance Co. v. Walker
2015 IL App (1st) 141301
| Ill. App. Ct. | 2015Background
- Morrison purchased a Founders auto policy that included Part I (liability) but not Part III (collision) for her 2010 Hyundai for Mar 1–Sept 1, 2012.
- Morrison rented a car from Enterprise, declined Enterprise’s optional collision waiver, and the rental was damaged in a hit-and-run while driven by an acquaintance.
- Enterprise sued Morrison for damage to its rental vehicle; Founders then sued for a declaratory judgment that it had no duty to defend or indemnify Morrison or Walker.
- Founders denied Morrison’s physical-damage claim because she had not purchased collision coverage under Part III.
- Founders alternatively argued that even if Part I liability coverage applied, exclusion (j) (excluding property "rented to or in charge of the insured") barred coverage.
- The trial court granted summary judgment for Founders; the appellate court affirmed based on exclusion (j).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Part I (liability) covers Morrison’s liability for damage to a rental car | Founders: liability v. collision distinction means Part I doesn’t cover damage to the rented vehicle because that is collision (Part III) coverage | Enterprise/Morrison: Part I covers "property damage arising out of operation ... of non‑owned automobiles," which includes a rented car owned by a third party | Court: Part I’s plain language includes liability for damage to a rental car, so Part I would apply |
| Whether exclusion (j) in Part I excludes coverage for damage to property rented to the insured | Founders: exclusion (j) excludes liability for property "rented to or in charge of the insured," so no coverage | Enterprise/Morrison: exclusion (j) should not apply to a rental vehicle (argued "property" means real property; "injury" implies persons) | Court: exclusion (j) plainly excludes damage to property rented to the insured (including a rental car); exclusion governs, so no coverage |
Key Cases Cited
- Outboard Marine Corp. v. Liberty Mut. Ins. Co., 154 Ill. 2d 90 (Ill. 1992) (policy construed as whole; ambiguities against insurer)
- State Farm Mut. Auto. Ins. Co. v. Enterprise Leasing Co. of Chicago, 386 Ill. App. 3d 945 (Ill. App. Ct. 2008) (policy interpretation focuses on insured's purchased coverage)
- Kohen v. State Farm Fire & Cas. Co., 98 Ill. App. 3d 860 (Ill. App. Ct. 1981) (similar exclusion for property rented to insured excludes liability coverage)
- Welborn v. Illinois Nat'l Cas. Co., 347 Ill. App. 65 (Ill. App. Ct. 1952) (distinguishes collision vs. liability coverage; discusses exclusions)
- Skorka v. Amica Mut. Ins. Co., 563 A.2d 442 (N.H. 1989) (held "property damage" includes a rental car)
- Founders Ins. Co. v. Munoz, 237 Ill. 2d 424 (Ill. 2010) (dictionary definitions may be used when policy terms are undefined)