Opinion ID: 1196538
Heading Depth: 1
Heading Rank: 2

Heading: S.A. 1992 Supp. 40-3103(u), K.S.A. 1992 Supp. 40-3104(f), K.S.A. 40-3106, and K.S.A. 40-3107(b)

Text: Strange reasons that when the Court of Appeals determined that KCPL was not responsible for the judgment against him, it erroneously relied on K.S.A. 1992 Supp. 40-3104(f), which applies only to Kansas self-insurers of vehicles registered in Kansas. We agree. The KCPL vehicle involved in the accident was registered in Missouri; consequently, K.S.A. 40-3106 applies. K.S.A. 40-3106 requires a nonresident either to qualify as a self-insurer under K.S.A. 1992 Supp. 40-3104(f) or comply with 40-3107. K.S.A. 40-3107 makes the self-insurer liable for judgments against permissive users such as Strange up to the monetary limits imposed. Strange overlooks the alternative route for nonresident self-insurer operation of motor vehicles in Kansas, i.e., qualifying under K.S.A. 1992 Supp. 40-3104(f). We have no signal from the record as to which statutory alternative KCPL used. Use of K.S.A. 1992 Supp. 40-3104(f) only would require KCPL to pay any judgment obtained against such person, i.e., KCPL and not Strange. We think the ambiguity created by the two standards for qualification for a nonresident self-insurer in K.S.A. 40-3106 is resolved in the instant action by K.S.A. 1992 Supp. 40-3103(u), which defines self-insurer as any person effecting self-insurance pursuant to subsection (f) of K.S.A. 40-3104, and amendments thereto, or any nonresident self-insurer that has filed the form prescribed in subsection (b) of K.S.A. 40-3106, and amendments thereto. We find no indication in the record that KCPL filed the 40-3106(b) form; however, KCPL informs us in its brief that [b]y opting to become a self-insurer, KCPL has represented that it will pay any damages caused by Strange while operating covered vehicles. We reason that KCPL was subject to K.S.A. 40-3107. Contentions of Amici Curiae Amicus KADC supports the contentions of KCPL. In discussing the absence of a common-law basis for imposing a duty to defend, KADC observes that commentators have found that [t]here is no apparent overriding reason why a liability insurer ... must be required to provide a defense.... [L]iability insurance can be provided which only commits the insurer to indemnify the insured for amounts which the insured is legally obligated to pay. Keeton & Widiss, Insurance Law § 9.4(c)(4) (1988). KADC explains that the Kansas Legislature has acted in the public interest to protect citizens who are injured in an automobile accident and are entitled to damages by requiring assurances of financial responsibility but has not, at the same time, perceived a need to impose a duty to defend on self-insurers. Amicus KTLA supports the contentions advanced by Strange. KTLA asserts that the Court of Appeals has, in essence, said that the filing of a self-insurance certificate creates no duty on the part of the self-insurer to pay judgments against anyone other than the self-insurer itself. The result is that no duty is imposed to defend permissive users of a self-insurer's vehicle. KTLA argues that the Court of Appeals opinion means that either the self-insurer is required to comply with or provide coverage as outlined in K.S.A. 40-3107 or else it pays only those judgments entered against it on some type of agency or negligent entrustment theory. This leaves an employee who is allowed to take the company car home and use it for personal business without insurance when he takes the car to the grocery store. We would submit the self-insurer is then guilty of a class B misdemeanor by permitting the operation of an uninsured motor vehicle in violation of K.S.A. 40-3104. Our modification of the Court of Appeals opinion addresses KTLA's concern. KCPL's nonresident registration of the vehicle involved brings KCPL under K.S.A. 40-3107. KTLA advances the view that the legislature intended insurance companies and self-insurers to be treated the same under the Kansas Automobile Injury Reparations Act (KAIRA), K.S.A. 40-3101 et seq. For example, self-insurers and insurance companies are (1) each required to provide personal injury protection benefits and have identical subrogation rights in regards to payment of the same (K.S.A. 40-3107, K.S.A. 40-3108, and K.S.A. 1992 Supp. 40-3113a); (2) treated the same in regard to the determination of who is to provide the primary benefit coverage (K.S.A. 1992 Supp. 40-3109[b]); and (3) treated the same in that both are required to participate in the assigned claims plan under K.S.A. 1992 Supp. 40-3116. KTLA claims that the intention of the legislature regarding the similar treatment of insurers and self-insurers would be defeated if the nonresident self-insurer is allowed to deny responsibility for judgments against permissive users. We agree. KTLA observes that, practically speaking, the issue of a self-insurer's duty to defend will rarely arise. Again, we agree.