Warren L. HOFFMAN, Appellant, v. YELLOW CAB COMPANY OF LOUISVILLE, Appellee.
No. 1999-SC-0600-DG.
Supreme Court of Kentucky.
Sept. 27, 2001.
257
Armer H. Mahan, Jr., Petersen Thomas, Lynch, Cox, Gilman & Mahan, PSC, Louisville, Counsel for Appellee.
COOPER, Justice.
The issue presented by this case is whether a self-insured owner of a motor vehicle is required to pay uninsured motorist (UM) benefits to an occupant of the self-insured vehicle injured by the negligence of an uninsured motorist. The Jefferson Circuit Court held that the self-insurer was liable to the occupant for UM benefits. The Court of Appeals reversed. We granted discretionary review and now affirm the Court of Appeals.
Appellant Warren L. Hoffman leased a taxicab from Yellow Cab Company of Louisville. The lease agreement is not in the record and it is unknown if it contained any provision with respect to insurance; thus, we assume it did not. Hoffman testified he paid Yellow Cab $81.00 per day, plus the cost of gasoline, to lease the vehicle, and that he retained all income generated by his use of the vehicle. The vehicle was self-insured by Yellow Cab up to $60,000.00 for “public liability, property damage and cargo claims and losses.” In
On June 4, 1994, Hoffman was injured and the taxicab damaged in a collision with an uninsured motorist. Yellow Cab filed suit against the uninsured motorist to recover for the property damage to its vehicle. Hoffman filed an intervening complaint against Yellow Cab to recover personal injury damages under the UM statute,
Hoffman‘s theory is that UM coverage is mandated by statute, ergo, a self-insured is liable for that coverage the same as if it had procured a liability insurance policy. Our UM statute,
No automobile liability or motor vehicle liability policy of insurance insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto, in limits for bodily injury or death set forth in
KRS 304.39-110 under provisions approved by the commissioner, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom; provided that the named insured shall have the right to reject in writing such coverage; and provided further that, unless the named insured requests such coverage in writing, such coverage need not be provided in or supplemental to a renewal policy where the named insured had rejected the coverage in connection with a policy previously issued to him by the same insurer. (Emphasis added.)
Thus, by its terms, the statute applies only to policies of liability insurance delivered or issued for delivery in this state unless the named insured has rejected UM coverage in writing. The only policy of insurance in this case was Paratransit‘s excess policy, and its named insured, Yellow Cab, had rejected the UM coverage of that policy in writing. Thus, if Yellow Cab had not been partially self-insured and Paratransit‘s policy had provided coverage for Yellow Cab‘s full liability, not just its liability in excess of $50,000.00, Yellow Cab‘s written rejection of Paratransit‘s UM coverage would be conclusive of Hoffman‘s UM claim. Hoffman, however, asserts that a certificate of self-insurance, even partial self-insurance, is a substitute for a policy of insurance, and that a self-insurer must provide the same coverages and benefits that are required in policies of insurance, including UM coverage; and that Yellow Cab rejected only the UM coverage in Paratransit‘s excess policy, not the UM coverage which
As a general proposition, a self-insured is not subject to statutes regulating insurance companies. Cf. Davidson v. American Freightways, Inc., Ky., 25 S.W.3d 94, 98 (2000). A certificate or authorization of self-insurance does not ipso facto convert the owner of a self-insured vehicle into an insurance company. “The certificate merely shows that [the owner] had produced evidence of financial responsibility.” Reeves v. Wright & Taylor, 310 Ky. 470, 220 S.W.2d 1007, 1010 (1949). Whatever liability is imposed upon a self-insurer must be imposed either by the order or certificate of self-insurance or by the statute authorizing the issuance of that order or certificate. Yellow Cab‘s status as a partial self-insurer was granted by an order of the Department of Vehicle Regulation pursuant to
The minimum amounts of insurance to be carried on each taxicab shall be liability coverage of not less than twenty-five thousand dollars ($25,000) for all damages arising out of bodily injury sustained by any one (1) person, and not less than fifty thousand dollars ($50,000) for all damages arising out of bodily injury sustained by all persons injured as a result of any one (1) accident, plus liability coverage of not less than ten thousand dollars ($10,000) for all damages arising out of damage to or destruction of property, including the loss of use thereof, as a result of any one (1) accident arising out of ownership, maintenance, use, loading, or unloading of the insured vehicle. (Emphasis added.)
NOW THEREFORE, it is hereby ordered that the applicant: Yellow Cab Company of Louisville, be authorized to act as a partial self-insurer up to the first sixty thousand dollars ($60,000) of its responsibility for public liability, property damage and cargo claims and losses asserted against them as a motor common carrier operating under the jurisdictions of the Department subject to those terms and conditions herein above set forth.
Thus, the order authorized Yellow Cab to be partially self-insured for tort liability up to $60,000.00. Both the order and the enabling statute required Yellow Cab to be financially responsible for its own tortious conduct. Neither the order nor the statute required it to be financially responsible
Hoffman argues that UM liability is imposed upon all self-insurers by the Motor Vehicle Reparations Act (MVRA), subtitle 39 of the Kentucky Insurance Code, specifically
Self-insurance, subject to approval of the commissioner of insurance, is effected by filing with the commissioner in satisfactory form:
(a) A continuing undertaking by the owner or other appropriate person to pay tort liabilities or basic reparation benefits, or both, and to perform all other obligations imposed by this subtitle;
(b) Evidence that appropriate provision exists for prompt and efficient administration of all claims, benefits, and obligations provided by this subtitle; and
(c) Evidence that reliable financial arrangements, deposits, or commitments exist providing assurance, substantially equivalent to that afforded by a policy of insurance, complying with this subtitle, for payment of tort liabilities, basic reparation benefits, and all other obligations imposed by this subtitle. (Emphasis added.)
The statute does not mandate UM coverage. The UM statute,
Virtually all of the jurisdictions that have held that a certificate or authorization of self-insurance includes UM cover-
Even some states without “opt out” provisions in their UM statutes, but with statutory language otherwise similar to that in
In summary, Yellow Cab was not required to provide Hoffman with protection against injuries caused by an uninsured motorist. Yellow Cab rejected UM coverage under its excess policy with Paratransit; and, with respect to its status as a self-insured, there is neither a policy of insurance as prerequired by
GRAVES, JOHNSTONE, KELLER and STUMBO, JJ., concur.
LAMBERT, C.J., dissents by separate opinion, with WINTERSHEIMER, J., joining that dissenting opinion.
LAMBERT, Chief Justice, dissenting.
I respectfully dissent. A statutorily compliant self-insurance plan is merely a permissible substitute for a mandatory automobile insurance policy. Thus, once Yellow Cab made the decision to become a self-insured, it was required to take on the same responsibilities of complying with the law as would an insurance company. One of those responsibilities is to make available uninsured motorist coverage.
With a self-insured, the need to vigorously enforce the law with respect to making uninsured motorist coverage available is even greater than with owners of private vehicles. The owner of a private vehicle would be presumed to want uninsured motorist coverage to protect family members and friends injured by uninsured motorists. Under the majority‘s result here, any incentive for a corporation that owns a fleet of vehicles to purchase uninsured motorist coverage is destroyed. Thus, a primary goal of UM coverage has been defeated by this apparent loophole created for the “self-insured.”
WINTERSHEIMER, J., joins this dissenting opinion.
Barry Lewis THOMAS and his wife, Elizabeth Carol Thomas, Appellants, v. CABINET FOR FAMILIES & CHILDREN Appellees.
No. 1999-SC-0589-DG.
Supreme Court of Kentucky.
Sept. 27, 2001.