Southern Farm Bureau Casualty Insurance Co. v. Shelter Mutual Insurance Co.
506 S.W.3d 915
Ark. Ct. App.2016Background
- Tommy Roberson was injured when his vehicle (owned by a third party) was rear-ended by an uninsured motorist. Roberson was insured by Farm Bureau; the vehicle he was driving was insured by Shelter.
- Roberson sued both insurers under their uninsured motorist (UM) provisions; Shelter settled for $6,000 and obtained releases, then sought contribution from Farm Bureau for Farm Bureau’s share.
- Shelter’s policy contained an "other insurance" clause making its UM coverage excess over other UM insurance and providing for pro rata allocation if policies were irreconcilable.
- Farm Bureau’s policy provided UM coverage for nonowned autos but made that coverage excess over any uninsured motorist coverage that "applies to the auto as primary coverage." Farm Bureau argued primary coverage follows the vehicle.
- The trial court ruled the two insurers were equally liable and ordered Farm Bureau to reimburse Shelter $3,000; Farm Bureau appealed and Shelter cross-appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Farm Bureau's UM policy covers Roberson's claim | Farm Bureau: no coverage — UM follows the vehicle, so Shelter (vehicle insurer) is primary and Farm Bureau's nonowned coverage is excess | Shelter: Farm Bureau's policy covers Roberson; statutes do not mandate UM follows the vehicle and policy terms control; Shelter's policy is excess or, if irreconcilable, pro rata | Held for Farm Bureau on direct appeal: no coverage under Farm Bureau's policy; Shelter's policy was primary |
| Whether Shelter's policy should be prorated or split equally | Shelter: if multiple policies apply and are irreconcilable, Shelter's policy mandates pro rata allocation | Farm Bureau: trial court split equally; argued primacy makes contribution unnecessary | Held: moot (court reversed on direct appeal so cross-appeal not reached) |
Key Cases Cited
- Shelter Gen. Ins. Co. v. Williams, 315 Ark. 409, 867 S.W.2d 457 (Ark. 1993) (policy language approved by the insurance commissioner can be given weight in interpretation)
- Shelter Mut. Ins. Co. v. Williams, 69 Ark. App. 35, 9 S.W.3d 545 (Ark. Ct. App. 2000) (primary coverage generally rests with insurer of the vehicle; nonownership coverage is secondary)
- Foster v. Farm Bureau Mut. Ins. Co., 71 Ark. App. 132, 27 S.W.3d 464 (Ark. Ct. App. 2000) (insurance policies are interpreted like other contracts; plain meaning controls absent ambiguity)
- First Security Bank of Searcy v. Doe, 297 Ark. 254, 760 S.W.2d 863 (Ark. 1988) (Arkansas UM statute expresses legislative intent to include persons in liability coverage)
- Crawford v. Emcasco Ins. Co., 294 Ark. 569, 745 S.W.2d 132 (Ark. 1988) (UM statute provides automobile liability coverage with respect to ownership, maintenance, or use of a registered vehicle)
- State Farm Fire & Cas. Co. v. Amos, 32 Ark. App. 164, 798 S.W.2d 440 (Ark. Ct. App. 1990) (recognizes rule that primary liability is placed on insurer of the vehicle involved)