SCHMIDT V. LEPPERT AND NATIONWIDE MUT. INS. CO.
INSURANCE: No fault personal injury protection and subrogation against out of state driver
PUBLISHED: AFFIRMING; MINTON
DATE RENDERED: 2/22/2007
The Supreme Court of Kentucky affirms the Jefferson Circuit Court decision that the negligent driver is personally liable for basic reparation benefits (BRB) as he is not a “secured person” under Kentucky’s Motor Vehicle Reparations Act (MVRA). The tortfeasor’s out-of-state auto liability policy, sold by American Family Insurance Company, did not provide coverage for BRB.
Kentucky’s MVRA provides that a carrier providing BRB is subrogated against anyone but a “secured person.” A “secured person” is the owner, operator or occupant of a “secured motor vehicle,” legally responsible for the tort. Although “secured motor vehicle” is not defined, “security” is defined to include BRB. Thus, in order to have “security” on a motor vehicle, an insured’s policy must include BRB. In fact, the S.Ct. recently held that BRB reimbursement is only available from the secured person’s reparation obligor, not directly from the secured person. City of Louisville v. State Farm, 194 S.W.3d 304 (Ky. 2006).
In its opinion, the S.Ct. notes that it may come as a surprise to out-of-state “insured” tortfeasors that they are not covered for this loss, but it is likely not a surprise to their insurance companies.
By John Hamlet