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Farm Bureau Mutual Insurance Co., Inc. v. Alamo Rent A Car

December 22, 2000


The opinion of the court was delivered by: Justice Quinn

Appeal from the Circuit Court of Cook County Honorable Michael B. Getty, Judge Presiding.

This appeal arises out of an action for declaratory judgment filed by plaintiff, Farm Bureau Mutual Insurance Company, Inc., (Farm Bureau), to determine liability for damages incurred as a result of an automobile accident involving its insured, the renter of a vehicle owned by defendant, Alamo Rent A Car, Inc. (Alamo). Both parties filed cross- motions for summary judgment. The circuit court granted summary judgment in favor of Alamo and Farm Bureau appeals, contending that Alamo, as vehicle owner, is required to provide primary liability insurance coverage. We affirm.

The following facts are undisputed. On September 30, 1996, Donna Fletcher rented a 1996 Corsica from Alamo. The record indicates that Alamo filed a certificate of self-insurance in accordance with sections 9-101 and 9-102 of the Illinois Vehicle Code (the Vehicle Code) (625 ILCS 5/9-101, 9-102 (West 1996)). Although a complete copy of the rental agreement is not a part of the record, it is undisputed that Fletcher was offered the option to purchase liability insurance from Alamo when she rented the car. Fletcher declined and instead chose to rely on her own personal liability policy with Farm Bureau, which was in full force and effect during the rental period.

In its "Terms for Renting an Alamo Car" section, the Alamo rental agreement contained the following provision entitled "Liability Insurance":

"Unless contrary to state law or otherwise provided by this agreement, if there is no other valid and collectible insurance whether primary, excess or contingent, available to the renter (or to any authorized driver while operating the car) sufficient to meet minimum financial responsibility requirements, then, except as to rental occurring in California, Alamo shall provide protection against liability for bodily injury, death or property damage to others up to the minimum financial responsibility limits required by applicable law. Such protection shall be provided through either an insurance policy or a certificate of self insurance (if provided, you have no duty to defend after tendering minimum limits). I agree that any amounts over this minimum will be covered by me or by my liability policy and I will indemnify you for any losses that exceed the minimum limits."

The record indicates that Alamo's insurance coverage also provided an amendatory endorsement and defined an insured as "any rentee/lesee who purchases the Extended Protection (EP) Option, but only while the Alamo vehicle is being driven by the rentee/lesee or an 'Alamo Authorized Additional Driver' and all terms and conditions of the Rental Agreement have been met." However, this amendatory endorsement was effective on June 30, 1997. As the accident occurred on October 1996, this provision does not apply to the instant case.

On October 5, 1996, Fletcher, while driving the Alamo rental car, was involved in an accident with Richard and Lucy Smith. At the time of the accident, State Farm Insurance Company (State Farm) insured the Smiths' vehicle. After the accident, State Farm paid benefits to the Smiths in the amount of $9,257.74 and sought recovery of this amount from Farm Bureau and Alamo. As Alamo denied that it provided liability coverage to Fletcher, Farm Bureau reimbursed State Farm for amounts paid to the Smiths.

Farm Bureau's insurance policy contained the following provision entitled "Other Insurance":

"If there is other applicable liability insur- ance on a loss covered by this Part, we will pay our proportionate share as our limits of liability bear to the total of all applicable liability limits. Any insurance afforded under this Part for a vehicle you do not own or lease, however, is excess over any other liability insurance and shall be limited to the difference between the liability limits on the non-owned vehicle and the liability limits on the described vehicle."

Farm Bureau's policy also contained an amendatory endorsement. Of particular note is the section entitled "Exclusions," which provided as follows:

"2. For damage to property owned by, rented to, in charge of or transported by any insured person but this exclusion does not apply to damages to a rented residence, a rented private garage, or any of the following:

a. a rented auto."

Farm Bureau subsequently filed an amended complaint for declaratory judgment seeking a declaration that Alamo owed primary liability protection to Fletcher and reimbursement by Alamo of all monies that Farm Bureau paid to State Farm. Farm Bureau specifically argued that pursuant to the financial responsibility provisions of the Vehicle Code (625 ILCS 5/9-101 et seq. (West 1996)), Alamo was required to provide primary liability coverage.

After Alamo filed an answer to Farm Bureau's amended complaint for declaratory judgment, Farm Bureau filed a motion for summary judgment (735 ILCS 5/2-1005 (West 1996)) and reiterated its argument that Alamo was required to provide primary liability coverage to those who rent its vehicles. Farm Bureau asserted that it is the public policy of the state that the owner of the vehicle, rather than the vehicle operator, provide primary coverage. Alamo responded with a cross-motion for summary judgment and argued ...

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