Warren Grimes and Johanna Grimes v. Alfa Mutual Ins. Co.: Where there is not an omnibus or other clause requiring it in an automobile liability policy, neither Alabama law nor public policy require an insurer to provide coverage for the driver of a motor vehicle who did have not the express permission of the owner or drivers covered by the policy.
Facts and Procedural History
In May 2010, Teresa Boop added liability and UM/UIM coverage on a truck to her auto policy with Alfa. Boop also added her minor son as a driver under the policy, and as the primary driver of the truck. Later in May 2010, Amy Arrington was operating the truck when she collided with a vehicle owned and occupied by the Grimeses, both of whom suffered bodily injuries arising from the accident. The Grimeses had insurance with Liberty Mutual.
In April 2012, Liberty Mutual sued Arrington, seeking recovery for damages to the Grimeses’ vehicle. In May 2012, the Grimeses sued Arrington (negligence and wantonness) and Boop (negligent entrustment), seeking damages for bodily injuries. Arrington filed answers and argued that she was insured under Boop’s insurance policy with Alfa, and Alfa should provide her a defense in both lawsuits.
The Declaratory Judgment Action
In October 2012, Alfa filed a declaratory judgment complaint seeking a determination from the court that the Alfa policy did not require it to defend or indemnify Arrington as to the lawsuits by either Liberty Mutual or the Grimeses. In February 2014, Liberty Mutual filed a partial summary judgment motion, arguing that Alfa was required to extend coverage to drivers of insured autos who have implied permission from the insured to operate the vehicle, pursuant to the Alabama Motor Vehicle Safety Responsibility Act (“MVSRA”) and the Alabama Mandatory Liability Insurance Act (“MLIA”). The trial court denied the motion.
At trial for the declaratory judgment action, the court found in favor of Alfa, holding that (1) the MVSRA was inapplicable, and (2) Boop’s policy with Alfa only provided coverage to users having express permission to operated the vehicle. It determined that Arrington did not have the express permission of either Boop or her son to use the truck. Therefore, Alfa had no contractual or legal obligation to defend or indemnify Arrington related to either the suits brought by the Grimeses or Liberty Mutual. The Grimeses appealed. Warren Grimes and Johanna Grimes v. Alfa Mutual Ins. Co. [Ms. 1150041 Jan. 27, 2017], ___ So.3d ___ (Ala. 2017).
Applicability of the MVSRA and MLIA
The Grimeses argued on appeal that Alabama Code § 32-7-22 (part of the MVSRA) requires the liability policy issued by Alfa to provide coverage for individuals operating insured vehicles with either express or implied permission of the insured. They contend that Billups v. Alabama Farm Bureau Mut. Cas. Ins. Co. stands for the premises that an insured’s liability insurance policy must insure the named insured and any other person who is using the vehicle with the insured’s express or implied permission.[1] Ultimately, the Alabama Supreme Court determined that the MVSRA was not applicable to the facts of this case.
The Grimeses argue the MLIA also requires such coverage. Alfa contends that certain types of policies, including the one in question, do not require coverage to be extended to users of an insured vehicle whose permission is only implied. And Alfa argued that the MLIA precludes a requirement that a liability policy provide coverage to a driver with only implied permission to use a vehicle.
Express or Implied Permission
There is a long line of cases in which the Alabama Supreme Court has held that liability policies extend coverage only to drivers who have the named insured’s express permission to operate the insured vehicle.[2] But the case at hand differs from those cases in that none of the other cases determined the issue of whether Alabama law requires a liability insurance policy to provide coverage for users with either express or implied permission.
While the MLIA requires that motor vehicle in Alabama be covered by liability insurance of not less than $25,000 for bodily injury to one person, the statute does not expressly direct that coverage under that policy must provide coverage for drivers operating the vehicle with the express or implied permission of the insured. Therefore, whether such coverage exists is to be determined by the language of the policy. The law does not require personal auto policies to have an omnibus clause.[3] The purpose of omnibus clauses is to protect the public against damage resulting from accidents arising from the negligent use of automobile; this goal is achieved through omnibus clauses by including persons operating the vehicle with the express or implied permission of the named insured, therefore protecting accident victims by including permissive users.
There is no requirement by the MLIA on the insurer that it provide coverage for someone operating a vehicle with the express or implied permission of the insured. The MLIA requires only and specifically that owners and operators of automobiles have minimum liability insurance.[4]
A Public Policy Question
The Alabama Supreme Court considered in this case whether public policy in Alabama requires coverage for drivers who are using a vehicle with the express or implied permission of the named insured. The court recognized the majority of American states require such coverage, while Alabama does not, and to create such a construction would require a determination that to do otherwise would violate public policy. However, the court must balance public policy with other factors, such as Alabama law allowing insurers to write exclusions into insurance policies. Such exclusions include household exclusions, which may prevent fraud and collusion among an insured and a driver.[5]
Based on existing Alabama law and using the strict rules of statutory interpretation, the Supreme Court of Alabama found that the trial court did not err in concluding that Alfa’s liability insurance policy did not provide coverage for the driver of a motor vehicle who did not the express permission of the owner or drivers covered by the policy.
Footnotes
[1] Billups v. Alabama Farm Bureau Mut. Cas. Ins. Co., 352 So.2d 1097 (Ala. 1977).
[2] See, e.g., Alfa Mut. Ins. Co. v. Small, 829 So.2d 743 (Ala. 2002); Pharr v. Beverly, 530 So.2d 808 (Ala. 1998); Alabama Farm Bureau Mut. Cas. Ins. Co. v. Hudson, 432 So.2d 1208 (Ala. 1983); Crawley v. Alabama Farm Bureau Mut. Cas. Ins. Co., 326 So.2d 718 (Ala. 1976); Alabama Farm Bureau Mut. Cas. Ins. Co. v. Mattison, 243 So.2d 490 (Ala. 1971); and Alabama Farm Bureau Mut. Cas. Ins. Co. v. Government Emps. Ins. Co., 240 So.2d 664 (Ala. 1970).
[3] An omnibus clause generally includes coverage for the named insured, members of the insured’s household, and drivers operating the insured’s vehicle with the permission of the insured. See Alabama Farm Bureau Mut. Cas. Ins. v. Government Emps. Ins. Co., 286 Ala. 414, 240 So. 2d 664 (1970)(noting that most omnibus clauses in insurance policies provide coverage for drivers using the vehicle with the permission of the insured and that courts have interpreted such permission to include express or implied permission).
[4] Alabama Code (1975) § 32-7A-4(a): “No person shall operate, register, or maintain registration of, and no owner shall permit another person to operate, register, or maintain registration of, a motor vehicle designed to be used on a public highway unless the motor vehicle is covered by a liability insurance policy, a commercial automobile liability insurance policy, motor vehicle liability bond, or deposit of cash.”
[5] Household exclusions generally exclude liability coverage for any member of the insured’s family residing in the insured’s home who was injured by the insured’s negligence.
