South Carolina Farm Bureau Mutual Insurance v. Kennedy
730 S.E.2d 862
S.C.2012Background
- Kennedy, employed by Irons Poultry Farms, was in Irons' truck and performing a work errand when an accident occurred involving Counts' truck.
- Kennedy left the engine running with a dog inside, then spoke with his half-brother near the truck before the collision.
- Kennedy sustained serious injuries and sought underinsured motorist (UIM) coverage under Irons' Farm Bureau policy.
- Farm Bureau denied UIM coverage, arguing Kennedy was not occupying the insured vehicle at the moment of injury.
- The trial court found Kennedy entitled to UIM coverage; the Court of Appeals reversed, citing lack of evidence Kennedy was pinned or in contact with the vehicle at the moment of impact.
- The Supreme Court granted certiorari to resolve whether Kennedy was ‘upon’ and thus ‘occupying’ the vehicle under the policy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was Kennedy 'occupying' the insured vehicle at the time of injury? | Kennedy maintained actual physical contact with the vehicle and was in its vicinity when danger approached. | Kennedy was not in contact with the vehicle at the moment of the collision and had abandoned the vehicle prior to impact. | Yes; Kennedy was 'upon' and thus 'occupying' the vehicle for UIM coverage. |
| Should the interpretation of 'occupying' be liberal to protect UIM remediability? | A liberal construction aligns with UIM statutes and purpose, and constraining contact timing would be unreasonable. | Policy language should be construed narrowly to require contact while occupying the vehicle. | Yes; interpret liberally to avoid an unconscionable result and uphold remedial purpose. |
| Does requiring continued contact to the last moment defeat the policy's remedial purpose? | Flexibly interpreting 'upon' is consistent with prior cases and avoids illusory coverage. | Maintaining rigid contact would preserve contract terms and avoid overreach. | No; rigid contact requirement would be unreasonable and contrary to legislative purpose. |
Key Cases Cited
- McAbee v. Nationwide Mut. Ins. Co., 249 S.C. 96 (S.C. 1967) (held that 'upon' may cover contact when not strictly on the vehicle)
- Whitmire v. Nationwide Mut. Ins. Co., 254 S.C. 184 (S.C. 1970) (coverage extends to hazards encountered while using an automobile)
- Chavez v. Arizona School Risk Retention Trust, Inc., 227 Ariz. 327 (Ariz.Ct.App.2011) (supports broad interpretation against exclusions not in statute)
- DeSaga v. West Bend Mut. Ins. Co., 391 Ill.App.3d 1062 (Ill.App.2010) (questions occupiable scope when physical contact occurs near vehicle)
- C & J Fertilizer, Inc. v. Allied Mut. Ins. Co., 227 N.W.2d 169 (Iowa 1975) (unconscionability of overly narrow vehicle-definitional terms)
- Potomac Ins. Co. v. Allstate Ins. Co., 254 S.C. 107 (S.C. 1970) (statutory definitions govern insured scope; policy cannot contravene)
- Floyd v. Nationwide Mut. Ins. Co., 367 S.C. 253 (S.C. 2005) (UIM remedial purpose; coverage construed liberally)
- O’Neill v. Smith, 388 S.C. 246 (S.C. 2010) (carriers must offer UIM coverage up to policy limits)
- Torrington Co. v. Aetna Cas. & Sur. Co., 264 S.C. 636 (S.C. 1975) (statutory and contractual interpretations in insurance limits)