,;VUyrrUtr Courf of "ruf 'Pt

2008-SC-000781-DG

RENDERED : NOVEMBER 18, 2010

TO BE PUBLISHED

KENTUCKY FARM BUREAU MUTUAL APPELLANT

INSURANCE COMPANY

ON REVIEW FROM COURT OF APPEALS

V. CASE NOS. 2007-CA-001078-MR; 2007-CA-001132-MR

MONTGOMERY CIRCUIT COURT NO. 06-CI-90203

SHELTER MUTUAL INSURANCE COMPANY APPELLEE

OPINION OF THE COURT BY JUSTICE SCOTT

REVERSING

[OATE. A9 . . .. ~.

v V

I. Introduction

This is an appeal from an opinion of the Court of Appeals reversing the

Montgomery Circuit Court, which had imposed primary liability for a motor

vehicle accident on the vehicle's and vehicle owner's insurer, rather than on the

insurer of the permissive driver. Neither policy was for a business or

commercial coverage .

After paying the damages, the vehicle's and vehicle owner's insurer,

Shelter Mutual Insurance Company (Shelter), filed a declaratory judgment

action and subsequent motion for summary judgment against Kentucky Farm

Bureau Mutual Insurance Company (Farm Bureau), the permissive driver's

insurer, seeking to recover a pro-rata allocation of the damages between it and
Farm Bureau . Farm Bureau filed a cross-motion for summary judgment

asserting Shelter's primary liability as the primary insurer of the vehicle and

thus, Farm Bureau, with its "excess insurance clause," would be an excess

carrier only.

The trial court granted Farm Bureau's cross-motion for summary

judgment, holding Shelter liable for the damages. It did not, however, detail its

findings or reasoning in its summary judgment order. The Court of Appeals

subsequently reversed, finding-as contended by Shelter-that each of the

insurers' policies contained "mutually repugnant" excess insurance clauses,

and thus prorated the damages between the insurers.

Because we find that Shelter, the vehicle's and vehicle owner's insurer,

was the primary insurer as mandated by the spirit and intent of the Kentucky

Motor Vehicle Reparations Act (MVRA), KRS 304.39-010, et. seq., we hold that

the Court of Appeals erred when it reversed the Montgomery Circuit Court and

prorated the damages. We, therefore, reverse the decision of the Court of

Appeals and reinstate the decision of the trial court.

"In substance, [an excess clause] provide[s] that in the case of a loss . . . the policy

would be excess insurance over any other valid and collectible insurance."

Government Emp. Ins. Co. v. Globe Indem. Co., 415 S.W.2d 581, 581 (Ky. 1967) .

(internal citations omitted) . Compare this with a standard escape clause, which "in

most instances . . . negat[es] any liability if `other valid and collectible insurance' is

available to the driver." Id. at 582. On the other hand, a pro-rata clause "provides

that if more than one policy applies, the insurer is responsible only for that percent

of the total sum payable that the limit of liability of the coverage bears to the total

limits of liability under that coverage for all the policies ." Robert D. Monfort,

Kentucky Motor Vehicle Insurance Law §10.2 (2d ed. 1996) .
II. Background

This case stems from a two-car accident in which Farm Bureau insured

Kevin Watkins (Kevin), the non-owner, but permissive driver, of the vehicle,

while Shelter insured the vehicle through the owner's policy, and, thus, the

permissive driver . Although insured by Farm Bureau under his own separate

policy on his vehicle, Kevin was driving his parents' vehicle when he negligently

collided with another vehicle, causing injuries. Shelter was the insurer for the

parents' vehicle, while Farm Bureau insured Kevin personally.

The issue then is which of the companies--Farm Bureau insuring the

non-owner driver and Shelter insuring the vehicle, owner, and permissive

driver-is liable and therefore obligated to pay the damages. The complication

arises because each of the two policies arguably contains an "excess insurance

clause" purporting only to provide coverage in excess of the other's coverage . 2

Thus, normally we would be called on to determine which policy, if any, is

primary and which is excess, or if both are excess and mutually repugnant,

how the damages should be pro-rated between them.

In acknowledging the importance of the questions presented, we are

aware of Shelter's assertion in its brief to the Court of Appeals that:

[T]he issues presented in this case arise every time the policy forms

collide. Moreover, one or more of [the] policy forms at issue in this

case are used by [other] insurers, multiplying exponentially the

2 The Court of Appeals found that each insurance policy had a liability limit of:

$25,000 per person, $50,000 per accident for bodily injury, and $25,000 per

accident for property damages . However, it is undisputed that that the injured

parties' personal and property damages were less than either of these minimum

policy limits, as the total amount of damages was $2,000 .00 for personal injury,

$2,289 for medical expenses, and $954.26 for property damage.
number of times when the competing forms collide. Thus, there is

far more at stake than the amount in controversy.

In this same regard, we note Farm Bureau's concern in its brief that "[t]he

issues presented by this case arise each time the terms of separate policies are

at odds. The policy language at issue is used by multiple companies which

causes similar issues to arise on a frequent basis, making this case of far

greater significance than it may appear."

In this regard, Shelter's excess clause for its insurance on the vehicle

states : "[i]f there is other insurance which covers the insured's liability with

respect to a claim also covered by this policy, [liability] Coverages A and B of

this policy will apply only as excess to such other insurance ."

Yet, Farm Bureau's excess insurance clause (for Kevin's insurance)

states: "[a]ny insurance we provide for a vehicle you do not own shall be excess

over any other collectable insurance or self-insurance whether primary, excess

or contingent."

(Emphasis added) .

Notwithstanding that Farm Bureau's clause seems, at first blush, to be

an "excess over excess" in that it recognizes that another competing policy may

be an excess policy, but still asserts an excess position over such other excess

coverage, see Globe Indem. Co., 415 S.W.2d at 582, the Court of Appeals

determined that both clauses evince both insurers' intention to provide only

excess coverage. Hence, the Court of Appeals found the clauses mutually
repugnant and remanded the matter to the trial court for proration of the

damages between both insurers.

However, after due consideration, we reverse the Court of Appeals, and

hold that the insurer of the vehicle in this case, Shelter, had the primary

coverage and was thus liable for the damages to the extent of its coverage . In

so doing, we decline, in this instance, to further embroil Kentucky courts in

unduly complicated two-step insurance policy interpretations of continually

emerging and changing insurance avoidance clauses and the consequent

burden of apportionment because such considerations are inconsistent with

the policies and intent of the MVRA.3

III. Analysis

We are confronted here with a scenario wherein both automobile

insurance policies claim to provide only excess coverage. Logically, under the

circumstances, both cannot be excess insurers; rather, practically and

3 In so holding, we are mindful of Shelter's argument that Farm Bureau did not raise

this issue in the trial court and therefore, we have no authority to address it . Regional Jail Authority v. Tackett, 770 S.W.2d 225 (Ky. 1989) . It should be noted,

however, that in Tackett, the Court of Appeals reversed the trial court via an issue

that was never addressed by it . Here, the result of our opinion is to affirm the trial

court. See Emberton v. GMRI, Inc., 299 S.W.3d 565, 575-76 (Ky. 2009) ("[A]n

appellate court may affirm a lower court's decision on other grounds as long as the

lower court reached the correct result.") ; see also Fischer v. Fischer, 197 S.W.3d 98,

102-03 (Ky. 2006) ("Appellee's failure to raise the issue . . . does not prevent

Appellant from presenting it here as he had no duty to present it to the Court of

Appeals since he defended the trial court decision and it had to be affirmed if it was

sustainable on any basis .") . Of even greater concern is that such a requirement

could force this Court to affirm and publish an opinion that we know is erroneous

for other reasons. GMRI, 299 S .W .3d at 576 . Moreover, "we, as an appellate court,

may affirm the trial court for any reason sustainable by the record." Kentucky Farm

Bureau Mut. Ins. Co. v. Gray, 814 S.W.2d 928, 930 (Ky. App . 1991) . At any rate, in

this case, the issue was presented squarely to the Court of Appeals, but implicitly

rejected.
semantically, one must be primary with the other secondary (responsible for

the excess), or both must be deemed to be primary.

State Farm Mutual Insurance Co. v. Travelers Insurance Co., 184 So.2d 750,

753-54 (La. App. 1966) (Tate, J., concurring) ; see also Pioneer State Mut. Ins.

Co. v. TIG Ins. Co., 581 N.W.2d 802 (Mich. App. 1998) .

intent of Kentucky's 1974 enactment of the MVRA. KRS 304.39-010, et. seq.

In this regard, the MVRA policy and purposes section, KRS 304.39-010, states

in part:

Indeed, there is actually no way by logic or word-sense to reconcile two

such clauses, where each policy by itself can apply as a primary insurer,

but where the clause in each policy nevertheless attempts to make its

own liability secondary to that of any other policy issued by a similar

primary insurer: For then the primary and (attempted) secondary

liability of each policy chase the other through infinity, something like

trying to answer the question: which came first, the chicken or the egg?

And here, any contrary result would be in contravention of the spirit and

The toll of about 20,000,000 motor vehicle accidents nationally and

comparable experience in Kentucky upon the interests of victims, the

public, policyholders and others require that improvements in the

reparations provided for herein be adopted to effect the following

purposes:

(2) To provide prompt payment to victims of motor vehicle accidents

without regard to whose negligence caused the accident in order to

eliminate the inequities which fault-determination has created;

(3) To encourage prompt medical treatment and rehabilitation of the

motor vehicle accident victim by providing for prompt payment of needed

medical care and rehabilitation ;

(5) To reduce the need to resort to bargaining and litigation through a
system which can pay victims of motor vehicle accidents without the

delay, expense, aggravation, inconvenience, inequities and uncertainties

of the liability system;

(6) To help guarantee the continued availability of motor vehicle

insurance at reasonable prices by a more efficient, economical and

equitable system of motor vehicle accident reparations;

(7) To create an insurance system which can more adequately be

regulated; and

(8) To correct the inadequacies of the present reparation system,

recognizing that it was devised and our present Constitution adopted

prior to the development of the internal combustion motor vehicle.

Clearly, it would be a violation of the spirit and intent of the MVRA to

allow each insurer to deny coverage based on a claimed contractual excess

position, since without a primary insurer, there can be no excess. And while

admittedly, Shelter paid the claim promptly in this instance, there are no

guarantees that similar competing (and arguably) excess insurers will always

do so in the future, further inhibiting the clear mandate of the MVRA. See

Calvert Fire Ins. Co. v. Stafford, 437 S .W.2d 176, 177 (Ky. 1969) ("Neither of the

insurance companies would pay the loss . . . .") . Thus, any contrary logic must

carry with it the uncertainty and potential delays of the litigation necessary to

establish-and re-establish-the priority and coverage from which reparations

are to be made .

Generally, where the focus is on each insurer's competing avoidance of

liability clauses, courts take a bifurcated and sometimes complicated

approach, with the court examining the policies, and if the court finds them

mutually repugnant, it then apportions the loss in various ways between each
insurer. See 7A Am. Jur. 2d Automobile Insurance § 573 (2010) (listing

decisions from multiple state and federal courts finding clauses mutually

repugnant and holding each insurer liable for a share of the loss) .

A. The Two-Step Framework

Under this approach, the court must first examine each policy. If, after

examining the relevant clauses in each policy, "the two policies are

indistinguishable in meaning and intent, [and] one cannot rationally choose

between them [they are held] to be mutually repugnant and must be

disregarded ." Travelers Indem. Co. v. Chappell, 246 So.2d 498, 504 (Miss.

1971) (internal quotations omitted) . Once found to be mutually repugnant, the

trial court apportions liability between the insurers.

Once step one is resolved, and the court finds the competing clauses to

be mutually repugnant, there are three primary options for pro-rata

apportionment: policy limits, premiums paid, and the equal share method.

Reliance Ins. Co. v. St. Paul Surplus Lines Ins. Co., 753 F.2d 1288, 1291 (4th

Cir. 1985) . Under the policy limits approach, the court calculates the loss

amount between each insurer in accordance with the maximum coverage limits

of each insurance policy. Id. The second approach allocates the loss based on

the amount of the premium paid by each insured to each insurer. Id. The

third approach is a multi-step method, with the loss initially apportioned

equally between two insurers until the lesser coverage is exhausted. Id.
Thereafter, the remaining loss is absorbed by the insurance company with the

larger policy, up to its policy limits. Id.

1. Problems with the Two-Step Framework

Numerous problems arise, however, with the application of the two step

method. At the outset, as the parties somewhat acknowledge, it encourages

insurance companies to continuously draft specific clauses seeking to evade

primary liability; sometimes at odds with the premium charged on the

insurance required of the insured under the MVRA. In addition, the

apportionment methods can be replete with difficulty and complexityand one

might opine--unfairness.

a. The Mutually Repugnant Determination prompts Insurers

to Engage in a "Drafting Battle"

The first step, determining whether the policies are "indistinguishable in

meaning and intent," is a highly subjective determination. Chappell, 246 So.2d

at 504. Thus, unless the policies in question are virtually the same, two trial

courts could potentially examine the same policies and come to opposite

conclusions when determining whether they are mutually repugnant.

Consequently, there is a substantial risk this initial step will produce varying

results. And, with the nuances in wording, there is a plethora of precedent

with different results. See Oregon Auto. Ins. Co. v. U.S. Fidelity & Guaranty, 195

F.2d 958, 959 (9th Cir. 1952) ("These decisions point in all directions .") ; see

also W. R. Habeeb, Annotation, Apportionment of liability between automobile

liability insurers where one ofthe policies has an "excess insurance" clause and
the other a 'proportionate" or 'prorata" clause, 76 A. L.R.2d 502 (1961); C. C.

Marvel, Annotation, Apportionment of liability between liability insurers each of

whose policies provides that it shall be "excess" insurance, 69 A.L.R.2d 1122

(1960) ; C. C. Marvel, Annotation, Apportionment of liability between automobile

liability insurers one or more of whosepolicies provide against any liability if

there is other insurance, 46 A.L.R.2d 1163 (1956) ; see also Aetna Ins. Co. v.

4

State Auto. Mut. Ins. Co., 368 F. Supp . 1278, 1282 (W.D. Ky. 1973) ("[T]he

Court realizes that this opinion represents only an educated guess as to what

the Court of Appeals of Kentucky might say in a similar situation, but an

educated guess is mandated under the circumstances brought about by this

diversity action .") .

A solution to this problem is to draft a policy so specific in nature that it

is more distinguishable in meaning and intent than others. 4 And where

successful, the insurer avoids primary liability. Thus, as a reactionary

measure, each company may continuously draft and redraft provisions,

seeking to avoid the mutually repugnant analysis while placing primary liability

on the other company. This then leads to repetitive litigation between the old

and newly emerging clauses. "Reconciling the various other-insurance clauses

Our aversion to perpetuating a policy clause drafting battle under circumstances

involving the MVRA seeks to avoid specificity arguments such as the one

propounded here. Farm Bureau argues in the alternative that its non-standard

excess clause's specific language and intent prevails over Shelter's general excess

clause, i.e ., an "excess over excess" or "super excess" clause. Farm Bureau

construes our precedent, see GEICO, 415 S.W.2d at 582 (holding that a nonstandard escape clause prevails over a general excess clause), as being the logical

precursor to its proposed rule that specific excess clauses trump general excess

clauses.
in automobile-liability policies has forced some courts to referee the `battle of

the draftsmen' waged by insurance companies." Brown v. Travelers Ins. Co.,

610 A.2d 127, 130 (R.I . 1992) .

b. Pro Rata Apportionment Problematic

The second step, appropriating the loss between the companies, presents

its own set of problems with varying precedent. The inherent problems in each

of the three available methods led one court to conclude, "unfortunately, no

method of apportioning liability is entirely satisfactory ." Continental Cas. Co. v.

Aetna Cas. and Sur. Co., 823 F.2d 708, 711 (2nd Cir. 1987) .

The first apportionment method, proration based on the maximum policy

limits, has been criticized as inequitable . Reliance Ins. Co., 753 F.2d at 1291 .

The criticism stems from the buyer's proportionally lower additional cost to

purchase insurance in excess of the minimum amount. For example, where an

insured's policy limit is three times the minimum coverage level, thus tripling

the insurance company's exposure in an apportionment situation, the insured

has not paid triple the minimum premium amount. See Cosmopolitan Mutual

Insurance Company v. Continental Casualty Co., 147 A.2d 529, 534 (1959)

(stating that "[i]t is commonly known that the cost of liability insurance does

not increase proportionately with the policy limits.") . 5

5 "In other words, the cost of insuring the first million dollars of risk may be

substantially greater than the cost of insuring the second million dollars . . . .

[O]nce the unit cost of a million dollars of insurance coverage has been established,

the insurance companies use a factor of 1 .25 in pricing $2 million of insurance ; a

factor of 1 .4 in pricing $3 million; a factor of 1 .45 in pricing $4 million; and a factor

of 1 .5 in pricing $5 million." Continental Cas. Co., 823 F.2d at 711-712.
Furthermore, even if the loss amount is within the smaller policy limits,

the larger insurance company nevertheless covers a greater segment of the loss

since the calculus is based on the maximum policy limits. See Carriers Ins. Co.

v. American Policyholders' Ins. Co., 404 A.2d 216 (Me. 1979) (criticizing this

method as apportioning a greater amount of the loss on the larger insurer

regardless of the amount) .

The second apportionment method, prorating based on the premiums

paid, has limited practical application. At first blush, this method may seem

equitable as the amount each insured pays for a premium generally correlates

to the amount of the coverage provided by the insurance company. However,

this method is difficult to fairly apply when the two policies in question provide

different coverage . Reliance Ins. Co., 753 F.2d at 1291 . Many factors, aside

from those used in the liability calculation, account for the premiums an

insurance company charges a specific policyholder (e.g., payment history and

various discounts) . Id.

Finally, the third apportionment method, the equal share method,

provides a windfall for the smaller insurer in less than policy limits damages,

while in high damages situations, allocates a disproportionate share of the loss

	Under to the larger insurer. 6,7 this apportionment method, each insurer

6

7

This method has also been criticized "because [the] cost [of the higher limit policy]

does not increase in direct proportion to the amount of coverage," thus

"apportioning liability equally [does not] accurately allocat[e] liability according to

the cost of the burden each insurer contracts to carry." Continental Cas. Co, 823

F.2d at 712.

Equal Shares Apportionment Examples: Small Insurer ($100,000 policy limit) and

Large Insurer ($300,000 policy limit) . Hypothetical 1 : $150,000 in damages. Small
contributes matching dollar for dollar payments up to the limits of the lower

policy, with the larger insurer solely responsible for any remaining portion of

the loss, up to its policy limits. If, however, the damages are insufficient to

exhaust the smaller policy, the two insurers both split the loss evenly.

Having analyzed the existing options for apportionment, we agree

somewhat with the Second Circuit's conclusion that each of these methods of

apportioning liability between insurers is somewhat unsatisfactory .

Continental Cas. Co, 823 F.2d at 712. Furthermore, the apportionment

methods can provide a windfall for the lower limit policies and unnecessarily

burden the trial courts with the task of determining which factors (determining

apportionment) are relevant to the analysis required.

In addition, such an analysis promotes insurance clause writing

competition that rewards insurers that, through the "drafting game,"

successfully draft policies that avoid primary liability in these situations. And

by obscuring the initial identity of the primary insurer, it promotes inefficiency

in the prompt payment and treatment of vehicle accident victims, contrary to

the demands of the MVRA. KRS 304.39-010(2)-(5) .

Moreover, such a rule is inconsistent with our "simpler is better and less

litigious" view of the spirit and intent of the MVRA as stressed in Mitchell v.

Allstate Ins. Co., 244 S.W.3d 59, 63 (Ky. 2008) ("[w]e believe that the . . . rule

Insurer and Large Insurer both contribute $75,000; Small Insurer saves $25,000 .

Hypothetical 2: $250,000 in damages. Small Insurer and Large Insurer both

contribute $100,000, which exhausts Small Insurer's policy, thereby forcing Large

Insurer to contribute an additional $50,000 to satisfy the damages amount.
will further the goals of KRS 304.39-010 by speeding up the process of

compensating victims because determining the [issue] will no longer be as

complex, or litigation prone, as it was under the [old] rule .") .

B. The Vehicle Owner's Insurance is Primary

As we have detailed above, problems proliferate at each apportionment

step and with every method. Moreover, when faced with two conflicting excess

clauses, many courts recognize the absurdity of finding that neither policy is

primary. Thus, courts create the legal fiction that both insurers are de facto

primary and must share the loss. And some even do it in the hopes it will stop

the "drafting wars." See Brown, 610 A .2d at 130 ("[W]e do believe that ruling in

full for either Metropolitan or Travelers would lend more ammunition to the

battle of the drafters. We do not wish to encourage the complication of

insurance legerdemain at the expense of the policy holders' money or the

courts' time .") .

While we recognize that the apportionment methods are an attempt at

fairness and at times they must be adhered to, we can avoid the entire

framework under these circumstances by refusing to perpetuate the legal

fiction that both insurers are primary when the contest is between the insurer

of the vehicle and the insurer of the non-owner, permissive driver. It is simply

as we said in Motorists Mut. Ins. Co. v. Glass; "the insurer of the motor vehicle

involved in the accident, [Shelter,] was the `primary' insurer for this accident,

whereas Farm Bureau was the `excess' insurer." 996 S.W.2d 437, 442. (Ky.
1997) . "This accords with the general rule which places primary liability on the

insurer of the owner of the automobile involved rather than on the insurer of

the operator, where we are dealing with the standard automobile liability

policy." U.S. Fidelity & Guaranty Co. v. Safeco Ins. Co. ofAmerica, 522 S .W.2d

809, 821 (Mo. 1975); see also William J. Schermer and Irvin E. Schermer,

Automobile Liability Insurance §--7 .1 (4th ed . 2004) ("The driver of a nonowned

vehicle is ordinarily afforded primary coverage under the omnibus provision of

the owner's policy and excess coverage under the drive other cars provisions of

his own policy.").

We recognize that the Court of Appeals, under differing factual

circumstances involving commercial applications or policies, expressed a

different view in Royal-Globe Ins. Companies v. Safeco Ins. Co. ofAmerica, 560

S.W .2d 22, 24 (Ky. App. 1977), where it stated:

Compulsory insurance laws are intended to protect the public at

large who might otherwise suffer from being injured by uninsured

motor vehicles. Compulsory insurance laws are not intended to

protect other insurance companies. When the controversy is

between two insurers, the liability for a loss should be determined

by the terms and provisions of the respective policies without

regard to the rights injured third parties might assert under a

compulsory insurance law.

See also Omni Ins. Co. v. Kentucky Farm Bureau Mut. Ins. Co., 999 S.W .2d 724,

726 (Ky. App. 1999) ; State Farm Mut. Auto. Ins. Co. v. Register, 583 S.W .2d 705,

706-07 (Ky. App. 1979) ; but see Motorists Mut. Ins. Co. v. Grange Mut. Cas. Co.,

149 S.W.3d 437, 441 (Ky. App. 2004) ("Unlike the escape clause at issue in

Royal-Globe, the provision in Motorist Mutual's policy limiting coverage to
"bodily injury" clearly does not provide coverage for property damage as

required by KRS 190.033 .") . However, we are compelled to our contrary

position by our view of the legislative intent and spirit of the MVRA. Thus, to

the extent inconsistent herewith, Omni Ins. Co. v. Kentucky Farm Bureau Mut.

Ins. Co., 999 S .W.2d 724, State Farm Mut. Auto. Ins. Co. v. Register, 583 S .W.2d

705, and Royal Globe Ins. Companies v. Safeco Ins. Co. ofAmerica, 560 S.W .2d

22, are overruled.

Admittedly, parties may contract for such coverage as they wish . And

the terms of such policies "must control unless [they] contraven[e] public policy

or a statute." York v. Kentucky Farm Bureau Mut. Ins. Co., 156 S .W .3d 291,

294 (Ky . 2005) (quoting Meyers v. Kentucky Medical Insurance Co., 982 S.W.2d

203, 209 (Ky. App. 1997)) . Yet, to be valid in respect of the MVRA, such

contract, or clause thereof, must comply with its statutory scheme, including

its intent and purposes . See Bishop v. Allstate Ins. Co., 623 S.W.2d 865, 866

(Ky. 1981) ("Neither the drafters of the Uniform Act nor the writers of

Kentucky's MVRA included sections permitting exclusions to the minimum

required tort liability coverage.") .

This is consistent with our pronouncement that "the MVRA is social

legislation that must be liberally construed to accomplish [its] objectives ."

Mitchell, 244 S.W .3d at 63 (quoting Nat'l Ins. Assn v. Peach, 926 S.W.2d 859,

861 (Ky. App. 1996) . And we have also noted that the intent and purpose of
the MVRA are to be broadly applied to accomplish its public policy purpose and

thus "supercede general principles of insurance law as broadly applied ." Id.

We glean from the legislative intent underlying the MVRA that the

General Assembly intended, that in instances where both the vehicle owner

and non-owner driver are separately insured, the vehicle owner's insurance

shall be primary.

Since its inception in 1974, the MVRA has required every owner to

procure insurance covering liability arising out of ownership of a motor vehicle .

KRS 304.39-080.8 The basic underlying premise is that in the event of an

accident, the liable insurer will be readily identifiable and will promptly pay, up

to its policy limits, for the injuries suffered. The MVRA does not gamble that a

permissive driver may have insurance. See KRS 304.39-080(5) ("The owner of

a motor vehicle who fails to maintain security on a motor vehicle in accordance

with this subsection shall have his or her motor vehicle registration revoked in

accordance with KRS 186A.040 and shall be subject to the penalties in KRS

304.99-060. An owner who permits anotherperson to operate a motor vehicle

without security on the motor vehicle as required by this subtitle shall be

s We do note that KRS 304.39-080(5) was amended in 2007 to include the "or

operator" language. However, this inclusion does not detract from our conclusion

that the legislature, through the MVRA, intended to place the primary onus on the

owner to secure the insurance on the vehicle, thus the vehicle would be insured

whether the particular driver had separate insurance or not as the "or operator"

language was only added in response to our decision in Estes, which refused to

recognize criminal penalties for an operator of an motorvehicle uninsured by the

owner, a fact we acknowledged in Blakely. Estes v. Commonwealth, 952 S.W.2d 701

(Ky. 1997) ; Commonwealth v. Blakely, 223 S.W.3d 107 (Ky. 2007) . Thus, as we held

in Blakely, the "or operator" language of KRS 304.39-080(5) does not undercut the

underlying MVRA's policy that every vehicle operated be covered by insurance by its

owner. Cf. Blakely, 223 S .W.3d at 109 .
subject to the penalties in KRS 304.99-060."); see also KRS 304.39-080(1)

("The vehicle for which the security is so provided is the "secured vehicle .") .

Moreover, we have previously stated that, "[b]y enacting the MVRA, the

legislature intended to create a comprehensive compulsory insurance system

that requires owners to provide vehicle security covering basic reparation

benefits and that imposes legal liability on vehicle owners for damages or

injuries arising out of ownership of or use of the vehicle ." McGrew v. Stone,

998 S.W.2d 5 (Ky. 1999) (emphasis added) . And in McGrew, given the strong

mandates of the MVRA, we recognized a vehicle owner's liability for injuries

resulting from the permissive use of her uninsured vehicle, a "new tort of no

insurance" as described by Justice Cooper in his dissent. Id. at 7.

Finally, we find exceedingly inequitable the assertion that an insurance

company can, under mandates of the MVRA, collect premiums from its insured

while hiding behind an excess clause that purports to subvert its primary

liability for that of another. See Roth, 269 So.2d at 6 (finding that the

insurance company receiving the premium payment cannot escape primary

liability) .

Thus, under the mandates of the MVRA, our trial courts, under similar

circumstances, will no longer be mired in the quagmire of which policy is

primary. Moreover, the expedient resolution of this issue will streamline the

process as each insurer's role is clearly defined, thus facilitating a simple
determination of which policy is primarily liable under these circumstances

and hopefully without further drafting wars.

IV. Conclusion

For the above reasons, we reverse the Court of Appeals' opinion and

reinstate the summary judgment order of the Montgomery Circuit Court.

All sitting. Minton, C.J. ; Abramson, Cunningham, Schroder, and

Venters, JJ ., concur. Noble, J., concurs in result only.

COUNSEL FOR APPELLANT:

Grover Carrington

Farrah Williams Ingram

White Peck Carrington, LLP

P.O . Box 950

Mount Sterling, KY 40353-0950

COUNSEL FOR APPELLEE:

James Wendell Taylor

Amanda Pope Thompson

Taylor, Thompson & Brannon, PLLC

2365 Harrodsburg Road

Suite A200

Lexington, KY 40504