Kentucky Farm Bureau Mutual Insurance Co. v. Shelter Mutual Insurance Co.
2010 Ky. LEXIS 269
| Ky. | 2010Background
- Two-car crash involving permissive non-owner Kevin Watkins insured by Farm Bureau and vehicle owner insured by Shelter; damages paid promptly by Shelter under the owner's policy; dispute over primary versus excess liability between Shelter and Farm Bureau under MVRA; Court of Appeals remanded for pro rata allocation due to mutually repugnant excess clauses; Kentucky MVRA governs priority of coverage to promote prompt reparations; Kentucky trial court granted Farm Bureau’s summary judgment asserting Shelter’s primary liability; this Court reverses and reinstates the trial court’s ruling that Shelter is the primary insurer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who is primary insurer under MVRA when both policies claim excess | Farm Bureau: Shelter is primary; Farm Bureau is excess | Shelter: policies are mutually repugnant; pro rata apportionment | Shelter is the primary insurer; Farm Bureau is excess |
| Whether the MVRA should reject the two-step framework and designate vehicle owner’s insurer as primary | Farm Bureau argues framework fosters drafting wars and uncertainty | Shelter argues the two-step approach is appropriate | MVRA requires the vehicle owner's insurer to be primary; rejects mutual repugnant-proration approach |
Key Cases Cited
- Travelers Indem. Co. v. Chappell, 246 So. 2d 498 (Miss. 1971) (mutually repugnant analysis prerequisite to apportionment; indistinguishable policies)
- Globe Indem. Co. v. Government Employees Ins. Co., 415 S.W.2d 581 (Ky. 1967) (excess clause interpretation; contrasts with escape clause)
- Mitchell v. Allstate Ins. Co., 244 S.W.3d 59 (Ky. 2008) (MVRA liberal construction to speed compensation to victims)
- McGrew v. Stone, 998 S.W.2d 5 (Ky. 1999) (MVRA obligations on vehicle owners; no no-insurance no fault)
- Royal-Globe Ins. Co. v. Safeco Ins. Co. of America, 560 S.W.2d 22 (Ky.App. 1977) (application of compulsory insurance within insurer disputes)
- State Farm Mut. Auto. Ins. Co. v. Register, 583 S.W.2d 705 (Ky.App. 1979) (policy interpretation in insurer disputes; application to MVRA)