Missouri Stacks Statutory Liability Under Auto Policies

8/30/2010 - Missouri Supreme Court Stacks Statutory Liability Coverage Under Auto Policies

The Missouri Motor Vehicle Financial Responsibility Law (MVFRL) provides that vehicle owners and operators must maintain a certain degree of financial responsibility.  The MVFRL, in turn, imposes certain requirements for insurers and the liability insurance policies they issue to Missouri drivers.  Sections 303.010-303.370, R.S.Mo. 2000.

Section 303.025 requires owners and operators of motor vehicles to “maintain… financial responsibility… with a motor vehicle liability policy which conforms to the laws of this state.”  To determine what kind of liability policy conforms to Missouri law, a review of the MVFRL is necessary.

Section 303.190.2 states an owner’s policy shall designate which vehicles it covers and “shall insure the person named therein and any other person, as insured, using any such motor vehicle or motor vehicles with the express or implied permission of such named insured, against loss from the liability imposed by law for damages,” as follows: $25,000 because of bodily injury to or death of one person in any one accident, $50,000 because of bodily injury to or death of two or more persons in any one accident, and $10,000 because of injury to or destruction of property of others in any one accident.  Section 303.190.3 requires an operator’s policy to “insure the person named as insured therein . . . for damages arising out of the use by him or her of any motor vehicle not owned by him or her” up to the same minimum limits.

When an insurance policy has an exclusionary clause that would bar coverage, these provisions of the MVFRL -- providing coverage for $25,000, $50,000, and $10,000 -- can render an otherwise valid exclusion partially invalid up to the statutory minimum requirements.  Halpin v. American Family Mut. Ins. Co., 823 S.W.2d 479, 480 (Mo. banc 1992).  Missouri courts so hold to give effect to the MVFRL, the plain purpose of which “is to make sure that people who are injured on the highways may collect damage awards, within limits, against negligent motor vehicle operators.”  Id.

On January 12, 2010, the Missouri Supreme Court handed down its decision in Karscig v. McConville, 303 S.W.3d 499 (Mo. banc 2010), which addressed two significant aspects of the MVFRL.  First, the Court clarified the difference between an owner’s and an operator’s policy – and, thus, whether Section 303.190.2 or Section 303.190.3 dictates the policy’s requirements.  Not surprisingly, the Court held the distinguishing feature is  ownership.  The Court explained: “An ‘owner’s policy’ insures a person who owns a vehicle, while an ‘operator’s policy’ insures a person who operates a vehicle owned by another.”  The Court emphasized “the distinction between the two should rest on the insured’s ownership or lack of ownership of the vehicle involved in the accident.”

Second, the Supreme Court in Karscig reiterated that the minimum statutory coverage under the MVFRL may be stacked.  In that case, Mark Karscig was injured by a vehicle driven by Jennifer McConville.  McConville was driving a vehicle owned and insured by her parents but also held a separate operator’s policy.  The Court held the insurer under each of these two policies provided coverage to Karscig for the statutory minimum of $25,000 despite an anti-stacking provision in the operator’s policy issued to McConville.  The Court reasoned the statutory scheme of the MVFRL did not limit coverage for this amount to one particular type of policy or to one particular statutory recovery.

From the Court’s decision, another important lesson can be drawn.  When determining whether a given owner’s or operator’s policy provides coverage, it is important to note that Missouri courts have defined the word “use” very broadly as it appears in the MVFRL.  State Farm Mut. Auto. Ins. Co. v. Liberty Mut. Ins. Co., 883 S.W.2d 530, 532-34 (Mo. App. E.D. 1994).  One may be “using” a vehicle while doing anything that “involves employment of the vehicle for some purpose or object of the user,” rather than simply the operation of the vehicle, which is limited to “the driver’s direction and control of its mechanism for the purpose of propelling it as a vehicle.”  For instance, courts have held the operation of rental vehicles by drivers not authorized under the rental contract can constitute “use” by the renter “in the sense that it was something he wanted to bring about, as is shown by his lending of assistance in making the vehicle available.”  Royal Indem. Co. v. Shull, 665 S.W.2d 345, 347 (Mo. banc 1984).

McConville’s “use” of the vehicle in Karscig was obviously not an issue; she was involved in a very serious accident while behind the wheel.  However, Missouri courts’ broad definition of the word “use,” when considered in tandem with Karscig’s holding permitting the stacking of multiple auto liability policies -- owner’s and operator’s policies alike -- for damages arising out of an auto’s “use,” suggests that in the future there may be many more claims for coverage for the statutory minimum under the MVFRL.

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