Smith v. Shelter Mut. Ins. Co.

• Decision Date: 10 February 1997
• Docket Number: No. 96-217,96-217
• Citation: 937 S.W.2d 180,327 Ark. 208
• Parties: Judy SMITH, Appellant, v. SHELTER MUTUAL INSURANCE COMPANY, Appellee.
• Court: Arkansas Supreme Court

Page 180

937 S.W.2d 180

327 Ark. 208

Judy SMITH, Appellant, v. SHELTER MUTUAL INSURANCE COMPANY, Appellee.

No. 96-217.

Supreme Court of Arkansas.

Feb. 10, 1997.

James F. Swindoll, Little Rock, for appellant.

John E. Moore, Julia L. Busfield, Little Rock, for appellee.

ARNOLD, Chief Justice.

This is an appeal from a summary judgment entered in favor of appellee Shelter Mutual Insurance Company upholding a clause in an automobile liability insurance policy that excluded coverage to the minor son of the insured. The sole issue on appeal is whether the trial court erred in refusing to find that the exclusion was void as against public policy. We find no error and affirm.

The facts in this case are not in dispute. On February 14, 1994, Jason Lockett, a minor, was driving a 1993 Dodge van on a public road in Saline County, Arkansas, when it collided with a dump truck driven by Gerald Hobby. Tammy Smith, minor daughter of appellant Judy Smith, was a pedestrian in the area and allegedly sustained injuries as a result of the accident.

The van was insured under a policy issued by Shelter to Jason's father, John Lockett. The policy contained a driver-exclusion endorsement providing that:

No insurance is provided by this policy while any automobile is being driven by or is under the direct control of:

....

Jason Lockett

This endorsement was signed by John Lockett, the policyholder.

On March 3, 1994, Smith sued John Lockett on a negligence theory. On June 3, 1994, Shelter, relying on the named-driver exclusion, filed suit for declaratory judgment, claiming that no defense or coverage was owed to Lockett. Thereafter, on June 27, 1994, Smith filed suit against Shelter, contending that she was entitled to both personal-injury protection and uninsured motorist benefits under the Lockett policy. After consolidating the Shelter declaratory-judgment action with Smith's contract action, the trial court granted summary judgment against Smith on the basis that the policy's exclusion of Jason Lockett as a named driver was explicit and unambiguous, and that Shelter owed no coverage and no duty to defend under the policy. The trial court further found that the named-driver exclusion was not violative of public policy. It is from this adverse ruling that Smith appeals.

When reviewing insurance policies, we adhere to the longstanding rule that, where the terms of the policy are clear and unambiguous, the policy language controls; absent statutory strictures to the contrary, exclusionary clauses are generally enforced according to their terms. Noland v. Farmers Ins. Co., 319 Ark. 449, 892 S.W.2d 271 (1995); State Farm Mutual Ins. Co. v. Cartmel, 250 Ark. 77, 463 S.W.2d 648 (1971). In construing the meaning of insurance policies:

It is unnecessary to resort to rules of construction in order to ascertain the meaning of an insurance policy when no ambiguity exists. McKinnon, Admx. v. Southern Farm Bureau Casualty Ins. Co., 232 Ark. 282, 335 S.W.2d 709 (1960). The terms of an insurance contract are not to be rewritten under the rule of strict construction against the company issuing it so as to bind the insurer to a risk which is plainly excluded and for which it was not paid.

State Farm Fire & Casualty Co. v. Midgett, 319 Ark. 435, 439, 892 S.W.2d 469, 471 (1995); quoting Southern Farm Bur. Cas. Ins. Co. v. Williams, 260 Ark. 659, 664, 543 S.W.2d 467, 470 (1976).

We initially observe that, in 1984, the Arkansas Insurance Commissioner promulgated the requirement that driver exclusion endorsements contain the insured's signature. The Commissioner's Bulletin No. 17-83, issued on January 2, 1984, approved exclusionary endorsements provided that the policy includes the signature of the named insured who accepts and acknowledges the restricted coverage. See also Shelter Gen. Ins. Co. v. Williams, 315 Ark. 409, 867 S.W.2d 457 (1993). Smith makes no allegation that Shelter failed to comply with the Commissioner's requirements in this regard; rather, she claims that the exclusion of Jason Lockett violates public policy.

In advancing her public-policy argument, Smith chiefly relies on Ark.Code Ann. §§ 27-19-701 et seq. and 27-22-101 et seq. (Repl.1994). In her brief, she recites the provision of the Motor Vehicle Safety Responsibility Act that mandates that an automobile owner or operator who has been in an accident provide proof of his or her financial responsibility for the future by filing a certificate of insurance showing that there is in effect a motor-vehicle liability policy. Particularly, § 27-19-702 sets out the circumstances under which an owner or operator must demonstrate proof of future-financial responsibility:

The provisions of this subchapter requiring the deposit of proof of financial responsibility for...