IN THE SUPREME COURT OF TENNESSEE

AT NASHVILLE

May 4, 2005 Session Heard at Knoxville

JANICE W. PURKEY, ET AL. v. AMERICAN HOME ASSURANCE

COMPANY d/b/a AIG INSURANCE COMPANY, ET AL.

Rule 23 Certified Question of Law

 United States District Court for the Eastern District of Tennessee

No. 3:04-CV-331 James H. Jarvis, II, Judge

No. M2005-00044-SC-R23-CQ - Filed September 30, 2005

We accepted three questions certified to this Court from the United States District Court for the

Eastern District of Tennessee concerning whether provisions in automobile insurance liability

policies that exclude coverage for bodily injury to household or family members of the insured are

void as against Tennessee law or public policy. We conclude that such provisions are valid.

Tenn. Sup. Ct. R. 23 Certified Question of Law

E. RILEY ANDERSON,J., delivered the opinion of the court, in which FRANK F. DROWOTA, III, C.J.,

and ADOLPHO A. BIRCH, JR., JANICE M. HOLDER, and WILLIAM M. BARKER, JJ., joined.

A. James Andrews and SidneyW. Gilreath, Knoxville, Tennessee, for the Plaintiff/Petitioner, Janice

W. Purkey.

Melinda Meador and Erica Greene, Knoxville, Tennessee, and Sylvia H. Walbolt, Tampa, Florida,

for the Defendant/Respondent, American Home Assurance Company d/b/a AIG Insurance Company.

R. Layne Holley, Germantown, Tennessee, for the Amicus Curiae, The Property Casualty Insurers

Association of America.
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OPINION

Pursuant to Rule 23 of the Tennessee Supreme Court, the United States District Court for the

Eastern District of Tennessee has certified three questions to this Court. The questions arose in the

course of a lawsuit brought by petitioner Janice W. Purkey (“Purkey”) against her automobile

insurer, respondent American Home Assurance Company (“AHA”). 

Background

Purkey’s complaint alleged the following facts. Purkey purchased an automobile insurance

policy from an agent of AHA. The policy included liability coverage. On June 24, 2003, Purkey

was a passenger in her insured vehicle when the driver negligently lost control of the car and struck

a guardrail, injuring Purkey. Purkey submitted a claim to AHA seeking coverage for the injury she

sustained in the accident. AHA refused the claim, citing an exclusion in the policy which provided,

“We do not provide liability Coverage for any ‘insured’ for ‘bodily injury’ to you or any ‘family

member.’” This type of exclusion is referred to as a “household” or “family” exclusion.

Purkey filed a class action complaint in Knox County Circuit Court seeking class action

certification, injunctive relief, and a declaratory judgment that the exclusion was void as contrary

to Tennessee law and public policy. AHA removed the case to the United States District Court, and

the parties submitted cross motions for summary judgment. Prior to entering a ruling, the District

Court issued a certification order certifying the following questions of law to this Court:

(1) Whether provisions in automobile insurance liability policies that exclude

coverage for bodily injury to household or family members of the insured are

void as contrary to Tennessee law or public policy as a result of the 1997 and

2001 amendments to the Tennessee Financial Responsibility Act.

(2) If the answer to (1) is yes, is coverage only required up to the specified

statutory limits or to the policy limits?

(3) If the answer to (1) is yes, on what date did these provisions become void?

We accepted the certified questions. Because we answer the first question in the negative,

we do not reach the second and third questions.

Analysis

This Court has twice held that household and family exclusion clauses in automobile

insurance contracts are valid and enforceable. Dockins v. Balboa Ins. Co., 764 S.W.2d 529, 530

(Tenn. 1989); Holt v. State Farm Mut. Auto. Ins. Co., 486 S.W.2d 734, 735 (Tenn. 1972). Purkey

argues that such household and family exclusions are no longer compatible with Tennessee public

policy as expressed in the Financial ResponsibilityLaw, TennesseeCode Annotated sections 55-12-
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101 to -140 (2004), in light of a two-step development. First, Purkey notes that this Court has

abolished intrafamily tort immunity. Broadwell by Broadwell v. Holmes, 871 S.W.2d 471, 476-77

(Tenn. 1994) (greatly abrogating parent-child immunity); Davis v. Davis, 657 S.W.2d 753, 757-58

(Tenn. 1983) (abolishing interspousal tort immunity). Second, Purkey argues that because the

Legislature failed in its 1997 and 2001 amendments to the Financial Responsibility Law to permit

household or family exclusions after our abolition of intrafamily immunity, such exclusions must

be held invalid. AHA counters that household and family exclusions do not violate long-established

Tennessee law or public policy.

Insurance policies are contracts between the insurer and the insured and as such are subject

to ordinary rules of contract interpretation. Am. Justice Ins. Reciprocal v. Hutchison, 15 S.W.3d

811, 814 (Tenn. 2000). Contract provisions that are contrary to public policy may be invalidated.

Alcazar v. Hayes, 982 S.W.2d 845, 851 (Tenn. 1998). 

It is well-settled that the public policy of Tennessee “is to be found in its constitution,

statutes, judicial decisions and applicable rules of common law.” Id. (quotation and citations

omitted). Because the determination of public policy is primarily a function of the Legislature, the

judiciary may only determine public policy “in the absence of any constitutional or statutory

declaration.” Id. (citation omitted). The General Assembly has legislated extensively in the area of

automobile insurance. See, e.g., Tenn. Code Ann. § 55-12-122 (2004); id. §§ 56-7-1101 to -1305

(2000). Before turning to an analysis of the pertinent statutes, however, we review briefly the

abolition of intrafamily tort immunity upon which Purkey predicates her argument. 

Abolition of Intrafamily Tort Immunity

Until relatively recently, the common law prevented family members from suing each other

in tort. Interspousal tort immunity was predicated on the longstanding concept that there was a

“unity of interest of husband and wife in each other’s respective rights and duties . . . .” Davis, 657

S.W.2d at 754 (quoting Tobin v. Gelrich, 34 S.W.2d 1058, 1058 (Tenn. 1931)). Parent-child

immunity, a more recent development, was based upon the notion of preserving family peace

coupled with the parent’s right to discipline and control his or her child. See Barranco v. Jackson,

690 S.W.2d 221, 223 (Tenn. 1985) (Drowota, J., dissenting). Following the modern trend, this Court

eliminated interspousal tort immunity in 1983 in Davis, 657 S.W.2d at 757-58, and greatly limited

parent-child immunity eleven years later in Broadwell, 871 S.W.2d at 476-77. 

One practical effect of intrafamily tort immunity was to act as a sort of exclusionary clause.

If a husband’s negligent operation of the family auto inflicted injuries on the wife, for example, the

wife simply could not bring suit against the husband to collect on the auto liability policy. In Davis,

this Court acknowledged that abolition of spousal immunity would affect insurance coverage,

suggesting that, “to the extent that insurance companies may fear collusive actions, they have the

right to protect themselves by either restricting the scope of their coverage or adjusting premiums

accordingly.” 657 S.W.2d at 758 (quoting Luna v. Clayton, 655 S.W.2d 893, 897 (Tenn. 1983)); see

also Dockins, 764 S.W.2d at 530 (“the Legislature ha[s] not required the carrier to provide coverage
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in situations that it unquestionably could exclude from liability coverage, namely, injuries to the

insured caused by his own negligence or that of a family member or permittee.”).

Notwithstanding this Court’s statements in Davis and Dockins, Purkey argues that the

abolition of intrafamily tort immunity makes it impermissible to treat family members as a single

unit for automobile tort purposes. Because household and family exclusions in automobile insurance

policies essentiallyrestore the immunitybetween familymembers, she argues that they must be void

in light of Davis and Broadwell, unless the Legislature has acted specifically to permit them. She

argues that because the Legislature has not so acted, the exclusions violate Tennessee public policy

as expressed in the Financial Responsibility Law. We turn next to an examination of that law. 

Financial Responsibility Law

Tennessee first enacted a Financial Responsibility Law in 1949. 1949 Tenn. Pub. Acts ch.

75 (effective July 1, 1949); see also The Tennessee Motor Vehicle Financial Responsibility Act, 21

Tenn. L. Rev. 341, 342 (1950). The current law was enacted in 1977, see Tenn. Code Ann. § 55-12-

101, but its core provisions are largely unchanged from the 1949 law. Compare 21 Tenn. L. Rev.

at 342-43 with Tenn. Code Ann. §§ 55-12-104-05. 

Briefly, the Financial Responsibility Law requires motorists who have been involved in an

accident where anyone is killed or injured, or an accident resulting in more than $400 in damage to

the property of any one person, to show proof of financial responsibility. Tenn. Code Ann. § 55-12-

105; see also id. § 55-12-139. Failure to comply can result in revocation of the motorist’s license

and registration. Id. § 55-12-105. As amended in 2001, the law requires drivers to provide proof

of financial responsibility to an officer at the scene of an accident or a moving violation. Id. § 55-12-

139(b). Failure to comply is a Class C misdemeanor punishable by a fine of up to $100. Id. § 55-12-

139(c). 

The purpose of Tennessee’s Financial ResponsibilityLaw is to protect innocent members of

the public from the negligence of motorists on the roads and highways. Specifically, “[t]he financial

responsibility laws of this State are concerned with the ability of an automobile driver to pay for

bodily injury and property damage for which he may be legally liable.” Schultz v. Tenn. Farmers

Mut. Ins. Co., 404 S.W.2d 480, 484 (Tenn. 1966). The Financial Responsibility Law is not,

however, a compulsory insurance law. McManus v. State Farm Mut. Auto. Ins. Co., 463 S.W.2d

702, 703 (Tenn. 1971). Although the law applies to “every vehicle subject to the registration and

certificate of title provisions,” Tenn. Code Ann. § 55-12-139(a) (eff. Jul. 1, 2005), as we have

previously explained, 

the Legislature stopped short of requiring public liability insurance as

a condition precedent to the owning or operating of a motor vehicle.

The sanctions of this statute are not involved unless and until the

owner or operator is involved in an accident resulting in bodily
 Or, under the 2001 amendments, until the driver is charged with a moving violation. Tenn. Code Ann. § 55- 1

12-139(b).

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injuries or property damage in excess of $[400.00] ; until such occurs 1

a person is at liberty to own and operate a motor vehicle without any

insurance coverage or with as little insurance coverage as desired. 

Id.

Although the Financial Responsibility Law does not, by its express terms, require drivers to

obtain liability insurance in order to comply, the Law clearly contemplates that most drivers will

comply by purchasing liability insurance. Forthis reason, the Financial ResponsibilityLaw also sets

forth requirements for the contents of motor vehicle liability policies. Tenn. Code Ann. § 55-12-122.

The law requires that motor vehicle liability policies “shall insure the person named therein, and any

other person 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 arising out of the

ownership, maintenance, or use of such motor vehicle . . . .” Id. § 55-12-122(a). 

Purkey argues that because the Financial Responsibility Law sets forth a public policy in

favor of compensating all innocent victims of motorists’ negligence, it contravenes that public policy

to exclude from liability insurance policies an innocent class of victims, namely, the family and

household members of a negligent driver. Although the Financial Responsibility Law establishes

a public policy in favor of compensating innocent victims, it does not establish a policy in favor of

all-inclusive insurance coverage for the following reasons. 

First, although the Financial Responsibility Law evinces a preference for liability policies,

as we have stated, it does not by its plain terms require them. Rather, it requires drivers involved

in accidents or cited for moving violations within the terms of the statute to show proof of financial

responsibility. As of January 1, 1990, proof of financial responsibility is defined as:

(i) A written proof of liability insurance coverage provided by a

single limit policy with a limit of not less than sixty thousand dollars

($60,000) applicable to one (1) accident;

(ii) A split-limit policy with a limit of not less than twenty-five thousand dollars ($25,000) for bodily

injury to or death of one (1) person, not less than fifty thousand dollars ($50,000) for bodily injury

to or death of two (2) or more persons in any one (1) accident, and not less than ten thousand dollars

($10,000) for damage to property in any one (1) accident;

(iii) A deposit of cash with the commissioner in the amount of sixty

thousand ($60,000); or
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(iv) The execution and filing of a bond with the commissioner in the

amount of sixty thousand dollars ($60,000).

Tenn. Code Ann. § 55-12-102(12)(C). As this statute demonstrates, it is not necessary to prove that

one has coverage for all possible victims. Rather, it is simply necessary to prove that one has a

policy or other means of satisfying the above provisions. Doing so puts a motorist in compliance

with the Financial Responsibility Law for all purposes, including compliance with the misdemeanor

provisions.

Second, the Financial Responsibility Law is not the only source of public policy with regard

to insurance contracts. The Financial Responsibility Law resides in Title 55 of the Tennessee Code,

which covers “Motor and Other Vehicles.” However, automobile insurance is also covered by Title

56 of the Tennessee Code, which is applicable to all insurance contracts in the state of Tennessee,

including automobile liability policies. Among its many provisions, Title 56 includes the following:

Notwithstanding any other provision of law to the contrary, an insurer

may exclude coverage pursuant to a contractual agreement; provided,

that such exclusion complies with this title.

Tenn. Code Ann. § 56-7-121 (2000). This section was initially enacted in 1995, one year after our

decision in Broadwell completed the elimination of intrafamily tort immunity. We see nothing in

Title 56, and Purkey points us to no provision in Title 56, that allows us to conclude that family or

household exclusions do not comply with that title. 

Purkey nonetheless argues that permitting family or household exclusions contravenes the

express terms of section 55-12-122(a) that liability policies “shall insure the person named therein,

and any other person 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.” (Emphasis

added.) She also argues that because the Financial Responsibility Law specifically excludes from

its coverage employees and those covered by workers’ compensation, see id. § 55-12-122(d), we

must infer under the doctrine of expressio unis est exclusio alterius (the expression of some is the

exclusion of others) that no other exclusions are permitted. 

While we agree with Purkey that family and household exclusions might arguably seem

contrary to the legislative intent expressed in the Financial Responsibility Law, we are nevertheless

constrained by section 56-7-121. The wording of that section is particularly strong: exclusions are

permitted “[n]otwithstanding any other provision of law to the contrary.” Tenn. Code Ann. § 56-7-

121 (emphasis added). Moreover, the provision is not limited by its terms to Title 56. Id. 

By stating that section 56-7-121 controls “notwithstanding” any contrary provisions, the

Legislature clearly intended for this provision to trump all others. Representative Rhinehart

explained the effect of the section when the bill in which it was contained came before the House

for a final vote:
 The legislature again amended the Financial Responsibility Act, after this case was briefed and argued. 2

However, the amendments are not relevant to our analysis. See 2005 Pub. Acts ch. 401 (eff. Jul. 1, 2005) (providing

that Act applies to all vehicles subject to registration and title provisions and providing a grace period for soldiers

returning from duty overseas). 

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the [section] maintains affordability of insurance by affirming the

validity of coverage. It furthers Department of Insurance anti-fraud

efforts and it preserves the freedom to contract. This is an important

piece of legislation if we are to maintain affordable rates for

homeowners and automobile insurance. Insurance contracts have a

common-sense exclusion designed specifically to combat fraud and

collusion and to keep premiums affordable.

Tape H-67, 99th Gen. Assem., 1995 (Apr. 26, 1995) (Statement of Rep. Rhinehart re: HB1303).

This statement bolsters our conclusion that section 56-7-121 was intended to permit the very

exclusions Purkey challenges here.

The Legislature amended the Financial Responsibility Law in 1997 and again in 2001. None

of the amendments related in any way to household exclusions. See 1997 Pub. Acts ch. 394, § 1

(restricting insurers from cancelling a policy based on an accident in which the insured was not at

fault); 2001 Pub. Acts ch. 292, § 1 (various provisions intended to increase compliance with the law,

including making failure to comply a misdemeanor). Purkey reasons that because these 2

amendments were the first changes to the Financial Responsibility Law after this Court’s decisions

in Davis and Broadwell, and because the Legislature did not enact provisions specifically permitting

household and family exclusions, the Legislature intended to disallow them. We disagree.

This Court and the appellate courts of this state have consistently held that family exclusions

are valid and not contrary to public policy. Dockins, 764 S.W.2d at 530; Holt, 486 S.W.2d at 735;

see also Nat’l Ins. Ass’n. v. Simpson, 155 S.W.3d 134, 138 n.1 (Tenn. Ct. App. 2004) (perm. app.

denied Dec. 6, 2004); Setters v. Permanent Gen. Assurance Corp., 937 S.W.2d 950, 952-53 (Tenn.

Ct. App. 1996); Dressler v. State Farm Mut. Auto Ins. Co., 376 S.W.2d 700, 702 (Tenn. Ct. App.

1963). Additionally, section 56-7-121, which gives broad authority for exclusionary clauses, was

enacted in 1995, prior to the 1997 and 2001 amendments upon which Purkey relies. Because we

assume that the Legislature is aware of the state of the law, Still v. First Tenn. Bank, N.A., 900

S.W.2d 282, 285 (Tenn. 1995), we must also assume that, rather than silently intending to work a

major change in this state’s insurance law, the Legislature by its silence intended to preserve the

status quo permitting family and household exclusions. Cf. id. at 284 (holding that where statute

conflicted with previously-enacted statute which controlled “notwithstanding any provisions of law

to the contrary,” later statute did not repeal earlier statute by implication).

Faced with the above Tennessee statutory and case law, Purkey urges this Court to adopt the

rationale of many of our sister states that have held family and household exclusions void as against

public policy. See, e.g., Mut. of Enumclaw Ins. Co. v. Wiscomb, 643 P.2d 441, 444-45 (Wash.
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1982) (exclusions void because they “exclude[] from protection an entire class of innocent victims

for no good reason” and because such clauses are not truly bargained-for; rather, they are a “take-itor-leave-it proposition”); see also Kaiama v. AIG Hawai’i Ins. Co., 930 P.2d 1352, 1355 (Haw.

1997); Estep v. State Farm Mut. Auto. Ins. Co., 703 P.2d 882, 885-87 (N.M. 1985). However, while

we do not find the reasoning in these cases to be without merit, we simply are not at liberty to ignore

the clear policy articulated by the General Assembly in favor of exclusions in section 56-7-121.

Finally, Purkeyargues that familyand household exclusions have the effect of shifting health

care costs for household members from automobile insurers to private health insurers and TennCare.

AHA and amicus counter that forcing auto insurers to cover currently excluded medical costs will

drive up auto insurance premiums. The choice of who will bear the burden for medical costs

associated with automobile accidents is, however, a policy choice for the Legislature and not for this

Court. We must assume that the Legislature considered the impact of exclusions on insureds as well

as on insurers and decided that the public policy of this state is best served by broadly permitting

exclusions in insurance contracts. 

Conclusion

After considering the applicable authority and the arguments of the parties, we conclude that

family or household exclusions in automobile liability insurance policies do not violate Tennessee

law or public policy. We therefore answer the first certified question in the negative and do not

reach the second and third questions.

Costs of the appeal shall be assessed equally among the parties, Janice W. Purkey and

American Home Assurance Company.

___________________________________ 

E. RILEY ANDERSON, JUSTICE