In August of 2009, the Court of Appeals of Kentucky heard a case involving a car accident. The Court held that “[T]he automobile insurer for a driver’s personal vehicle was responsible for basic reparation benefits (BRB) to a passenger who was injured while the driver was operating a rental vehicle. Therefore, the insurer for the rental vehicle could recover in a subrogation action from the driver’s insurer. The driver did not purchase any extended coverage on the rental vehicle. As a result, and under the contract of insurance the driver had with his own insurer, his primary insurer was his own insurer.” (Progressive Max Insurance Company v. National Car Rental Systems, Inc., 2009 WL 1256647 (Ky.App. 2009). The facts are as follows.
A Mr. Jones rented a car from National on October 26, 2001. Id. On November 1, 2001, Mr. Jones was involved in a car accident. Id. Ms. Wilkerson was a passenger in the car at the time of the car accident. Id. At the time of the accident, Mr. Jones had Progressive insurance on his personal car and that policy included liability benefits should Mr. Jones have an accident while in a rented car. Id. Ms. Wilkerson received $10,000 in BRB from National. Id. National then sought reimbursement of the $10,000 in BRB that it paid out, from Progressive. Id. Progressive argued that since Ms. Wilkerson had filed suit and since National did not partake in the car accident lawsuit, that National was barred from recovering from Progressive. Id. National argued that it was never placed on notice of the car accident lawsuit and did not know of it and that is why it filed its car accident lawsuit to recover the monies it had spent on the BRB. Id.
Progressive tries to argue that National cannot bring a lawsuit to recover reparation benefits against a liability insurer. Id. It argues that national’s exclusive remedy is to pursue a subrogation claim via arbitration. Id. National argues that in that there are two insurance companies for whom liability exists, that priority must attach to one over another. Id.
In this case, Mr. Jones did not purchase the extended coverage on the car from National. Id. Thus, Progressive became the primary insurer. Id. Progressive thus covered the rented car. Id. Progressive was primarily liable for the BRB and had to pay back National for the car accident medicals it had initially paid out.
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