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02/13/87 State Farm Mutual v. State Farm Mutual

February 13, 1987

APPELLATE COURT OF ILLINOIS, THIRD DISTRICT INSURANCE CAR RENTALS, INC., PLAINTIFF-APPELLEE

v.

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, DEFENDANT-APPELLANT AND COUNTERPLAINTIFF-APPELLANT (PLANET INSURANCE COMPANY ET AL., DEFENDANTS-APPELLEES; PLANET INSURANCE



Company et al.,

Counterdefendants-Appellees)

504 N.E.2d 256, 152 Ill. App. 3d 225, 105 Ill. Dec. 387 1987.IL.172

Appeal from the Circuit Court of Peoria County; the Hon. Robert E. Manning, Judge, presiding.

APPELLATE Judges:

PRESIDING JUSTICE SCOTT delivered the opinion of the court. BARRY and WOMBACHER, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE SCOTT

This appeal arises out of an action and a counterclaim for declaratory judgment, filed by Insurance Car Rentals, Inc., and State Farm Mutual Automobile Insurance Company, respectively, to determine liability for damages incurred as a result of an automobile accident involving the renters of a vehicle owned by Insurance Car Rentals, Inc. The circuit court rendered a declaratory judgment in favor of Insurance Car Rentals, Inc., and Planet Insurance Company, the insurance carrier of the rental agency.

On October 24, 1983, Robert Wille (Wille) rented a 1982 Chevrolet Chevette from Insurance Car Rentals, Inc. (Car Rentals), after being referred to Car Rentals by an adjuster for State Farm, for the use of himself and his wife during a period of time in which his personal auto was being repaired.

Car Rentals rents cars and trucks on a temporary basis to replace disabled vehicles and had, at the time of Wille's rental, filed a motor vehicle liability policy in compliance with the Illinois Vehicle Code (Motor Vehicle Code) (Ill. Rev. Stat. 1985, ch. 95 1/2, par. 9-101), which requires car rental agencies to file proof of financial responsibility with the Illinois Secretary of State. The business automobile policy was issued by Planet Insurance Company (Planet) which insures against bodily injury in the amount of $100,000 per person (or $300,000 per accident) and against property damage in the amount of $50,000. Car rentals paid insurance premiums to Planet for rental vehicles on a per-use basis.

Car Rentals offers its customers two options with respect to insurance coverage. First, a rental program can be obtained whereby the customer pays $18 per day for a rental car with complete insurance coverage provided through Car Rentals' Planet policy. Second, a customer may, as in Mr. Wille's instance, rent a car for $13.50 per day and rely on his insurance company to provide insurance coverage. Mr. Wille signed a form entitled "Temporary Substitute Automobile Rental Agreement for Insurance Car Replacement Only," which, in pertinent part, states, "INSURANCE PROTECTION FOR TEMPORARY SUBSTITUTE AUTOMOBILE TO BE PROVIDED BY CUSTOMER'S EXISTING INSURANCE. IF CUSTOMER'S INSURANCE FAILS FOR ANY REASON TO AFFORD COVERAGE, CUSTOMER SHALL BE SOLELY RESPONSIBLE."

As the usual course of business for Car Rentals, where a customer chooses to rely on his own insurance coverage, Car Rentals checks the customer's driver's license for pertinent information and also checks with the customer's insurance company in order to confirm the policy number, expiration date, and several items of coverage. Before renting to Willes, Car Rentals contacted State Farm agent Norm Geier in order to verify Mr. Wille's insurance coverage. There is no discrepancy as to whether Mr. Geier confirmed the policy; the Willes were insured by State Farm. There is, however, a question as to whether Mr. Geier confirmed that the Willes' policy would cover the automobile from Car Rentals. The Willes' policy, in pertinent part, reads:

"3. Temporary Substitute Car, Non-Owned Car, Trailer.

If a temporary Substitute Car . . . has other vehicle liability coverage on it, then this coverage is excess. THIS COVERAGE SHALL NOT APPLY:

A. IF THE VEHICLE IS OWNED BY ANY PERSON OR ORGANIZATION IN A CAR BUSINESS; AND

B. IF THE INSURED OR THE OWNER HAS OTHER LIABILITY COVERAGE WHICH APPLIES IN WHOLE OR IN PART AS PRIMARY, ...


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