Stokes v. Reliance Insurance Co.

521 A.2d 638, 1986 Del. Super. LEXIS 1534
CourtSuperior Court of Delaware
DecidedOctober 28, 1986
StatusPublished
Cited by3 cases

This text of 521 A.2d 638 (Stokes v. Reliance Insurance Co.) is published on Counsel Stack Legal Research, covering Superior Court of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Stokes v. Reliance Insurance Co., 521 A.2d 638, 1986 Del. Super. LEXIS 1534 (Del. Ct. App. 1986).

Opinion

TAYLOR, Judge.

This is a declaratory judgment action to require Reliance Insurance Company [Reliance] to defend Matthew Stokes [Stokes] and provide liability protection with respect to a suit brought against Stokes by James W. Brooks [Brooks] for injuries received in an automobile collision in which Stokes was the driver and Brooks was a passenger in a car which had been rented from Allstate Auto Leasing Company t/a National Car Rental [Allstate]. At all times pertinent to this case an automobile liability insurance policy issued by Reliance was in effect with respect to Allstate’s rental car.

Peerless Insurance Company [Peerless], which maintained automobile liability insurance coverage for Stokes’ father, has undertaken to defend Stokes in the Brooks suit and joins Stokes in this action. Plaintiffs have moved for summary judgment.

Reliance resists this action on the ground that (1) the Reliance coverage does not extend to Stokes and (2) even if coverage applies, it should be limited to the minimum required statutory coverage.

Stokes’ relationship to the rental car is that the rental agreement was signed by John Clifton [Clifton] in order for Clifton, Stokes, Brooks and William Teis, all of whom were students at the University of Delaware, to take a vacation trip to Florida. The four agreed to share expenses of the trip including the car rental and fuel cost. The car was for the use of all with no restriction as to who could drive it. On the occasion of the accident in which Brooks was injured, Stokes and Brooks had used the car to try to find Clifton and having failed to find Clifton, were returning to their hotel. Stokes was driving and Brooks was a passenger.

I

Reliance contends that the language of its policy governs and since Stokes was not listed in the rental agreement as an authorized driver, under the policy language it has no liability to plaintiffs. Plaintiffs contend that under 21 Del.C. § 6102 Reliance is liable.

The Reliance policy in its National Car Rental Endorsement provided:

The Coverage of this policy will be extended to include primary insurance to the renter/driver as a named insured under a car rental contract, subject to the policy provisions, endorsements and exclusions as applicable to an insured under this policy.1

21 Del.C. § 6102 establishes a requirement that a person who engages in the business of renting motor vehicles without drivers must carry or cause to be carried public liability insurance in specified amounts insuring the lessee against liability arising out of the negligent operation of the rented vehicle. Hamon v. Richards, Del.Super., 190 A.2d 612 (1963); Schwartz v. Centennial Insurance Co., Del.Ch., C.A. No. 5350, letter opinion, Hartnett, Y.C. (March 6, 1979). Subsection (c) of § 6102 requires that the public liability coverage [640]*640shall extend to “any person operating the rented vehicle by or with the permission of the person” leasing the vehicle.

The Auto Rental Endorsement on the Reliance policy provides:

Each and every exclusion set forth elsewhere in this policy or its endorsements shall apply in addition to the following exclusions. This policy does not apply:
(a) To the rentee [lessee] while such auto is used or operated in violation of the terms and conditions of the rental agreement under which such auto is rented.

Reliance points out that the rental agreement which Clifton signed provided a space for inserting names of “Additional Authorized Driver[s]” in which none was named. Because the rental agreement does not permit anyone to drive the rented car who is not named in the rental agreement, Reliance contends that Clifton could not give permission to Stokes to drive the rented car. This agreement calls for consideration of whether the policy limitation which provides protection only when the rented vehicle is operated by a person named in the rental agreement provides the coverage required by 21 Del. C. § 6102.

The legislative objective of § 6102, as in the case of other forms of compulsory liability insurance coverage, is to provide protection of the public. Cf. Allstate Insurance Co. v. Nationwide Mutual Insurance Co., Del.Supr. 273 A.2d 261 (1970); Government Employees’ Ins. Co. v. Brainard, Del.Super., C.A. No. 83C-MR-94, Ltr.Op., Stiftel, J. (April 23, 1984). The legislature has required that this coverage shall extend to any driver who has the lessee’s permission to drive the rented vehicle. Thus, the legislature has left to the lessee the right to permit others to drive the rented car. The statute gives no such power of permission to the rental company or its insurer. Whatever may be the right of the rental company with respect to the use of the vehicle, the statute does not give the lessor the power to limit the public protection provided by § 6102. Similar results have been reached in Allstate Insurance Co. v. Royal Globe Insurance Co., N.J.Super.App., 195 N.J.Super. 598, 481 A.2d 298 (1984); Tom Sawyer Country Day School v. Providence Washington Insurance Co., N.Y.App.Div., 108 A.D.2d 810, 485 N.Y.S.2d 126 (1985); State Farm Mutual Automobile Insurance Co. v. Budget Rent-A-Car Systems, Inc., Minn. App., 359 N.W.2d 673 (1984); and Milbank Mutual Insurance Co. v. U.S. Fidelity and Guaranty Co., Minn.Supr., 332 N.W.2d 160 (1983).

Reliance cites Whittaker v. Royal Globe Insurance Companies, N.H.Supr., 124 N.H. 300, 471 A.2d 1149 (1983) in support of its position. Whittaker involved a New Hampshire accident involving a car which was rented in Massachusetts and which, at the time of the accident, was driven by a member of the lessee’s family whose name was not listed as an authorized driver. Apparently, applying Massachusetts common law, the New Hampshire Supreme Court held that the insurance policy carried by the lessor controlled the rights of the parties and that under the terms of the policy, coverage was limited to persons listed as authorized drivers in the lease. However, the Court noted that if the accident had occurred in Massachusetts, the insurer would have been liable by virtue of a Massachusetts statute, notwithstanding the policy language. Therefore, Whittaker does not aid Reliance.

I conclude that the insurance provided by Reliance for Allstate's cars rented in Delaware is required to be coextensive with 21 Del. C. § 6102 and that the policy provision discussed above, which excludes a driver who had the lessee’s permission to drive the rented car, violates that statute. Accordingly, that provision of the policy must be disregarded in determining the extent of Reliance’s liability. Cf. State Farm Mut. Auto Ins. Co. v. Abramowicz, Del.Supr., 386 A.2d 670

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Bluebook (online)
521 A.2d 638, 1986 Del. Super. LEXIS 1534, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stokes-v-reliance-insurance-co-delsuperct-1986.