Court Opinion

ID: 9678143
Source: CourtListenerOpinion
Date Created: 2023-08-24 06:12:46.590105+00
Date Added: 2024-06-11T18:17:02.248714
License: Public Domain

OPINION
HARBISON, Justice.
This case involves the question of whether punitive damages may be recovered from an uninsured motorist insurance carrier under the provisions of the applicable statutes, T.C.A. §§ 56-7-1201 to 1206 or under the provisions of the policy issued to the claimant, who is appellant here.
Appellant sustained personal injuries when her automobile was struck by a vehicle operated by Wendell Miller in Dalton, Georgia. Miller was intoxicated and was driving recklessly. He was not covered by any policy of liability insurance. Appellant had a liability policy issued by appellee Insurance Company of North America with uninsured motorist coverage.
In a suit against Miller for personal injury, property damage and punitive damages, appellant also brought in her uninsured motorist carrier pursuant to T.C.A. § 56-7-1206, and in a subsequent trial she received an award for personal injury, property damage, and $2000 in punitive damages. In post-trial proceedings the trial judge set aside the award of punitive damages, and this action was affirmed by the Court of Appeals.
T.C.A. § 56-7-1201(a) requires that any automobile liability insurance policy issued in this state must also provide cover*670age with limits no less than those required under the Financial Responsibility Law, T.C.A. § 55-12-107,
“... for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom.”
Subsequent amendments to the statutes also require that the policy holder be given an opportunity to purchase property damage coverage. T.C.A. § 56-7-1201(c).
Originally the coverage required under these statutes was basically geared to the limits of coverage provided under the financial responsibility law, supra. Over a decade ago, however, the General Assembly amended the statutes so as to require underwriters to offer an insured limits equal to those for bodily injury liability in the insured's motor vehicle liability policy, and the same is now true with respect to property damage coverage. Subsequent amendments required that policies automatically provide such additional coverage, unless the insured rejects it in writing. Present statutes also require that if the insured carries any “umbrella insurance policy” which includes automobile liability insurance, the underwriter must offer uninsured motorist coverage with limits equal to those provided in the umbrella policy. T.C.A. § 56-7-1201(a)(3).
As pointed out in the dissenting opinion, records of the legislative debates and such other history as is available contain no express reference to the coverage of awards for punitive damages. Originally the statutes made no provisions whatever for property damage and simply covered awards for personal injuries. As pointed out above, however, subsequent amendments required broadened coverage for property damage and a mandatory offer to the policyholder of bodily injury coverage equivalent to that contained in the policyholder’s own liability coverage.
In our opinion, these amendments indicate a legislative intent to equate uninsured motorist coverage with liability insurance coverage in many respects. There is no evidence in the record before us as to premium structures, costs of underwriting, and the like. Nevertheless, it is clear that, basically, an uninsured motorist policy is to be treated generally as a motor vehicle liability policy in many essential respects. The General Assembly at no point has expressed any intention that coverage be limited to compensatory damages only. In requiring property damage coverage and in requiring limits equivalent to those purchased in liability policies, it seems to us that the General Assembly has expressed its intention that all damages which can legally be recovered under a liability policy shall also be recoverable under an uninsured motorist policy.
It seems illogical to us, for example, that an insured, motorist could recover $10,000 in compensatory damages and $40,000 in punitive damages if he were struck by an insured drunken driver with $50,000 limits, but that he could only recover $10,000 if he were struck by an uninsured drunken driver, even though the insured’s own policy provided limits of $50,000 for damages caused by an uninsured motorist. We do not believe that this result was envisioned or intended by the General Assembly in requiring underwriters to offer increased limits equivalent to those carried in liability insurance policies.
It is true that uninsured motorist insurance is written on a somewhat different basis from liability insurance. See Hill v. Nationwide Mutual Insurance Co., 535 S.W.2d 327, 330 (Tenn.1976). Strictly speaking, uninsured motorist coverage is neither first-party nor third-party insurance. It has aspects of both. The insured pays the premiums, and to that extent it is somewhat like first-party insurance. Unlike that type of insurance, however, the uninsured motorist policy does not pay benefits unless and until liability of a third party — the uninsured motorist — is established. The insurance carrier may avail itself of all defenses available to that third party — such as lack of negligence, lack of *671causation, extent of damages, contributory fault, and the like. It thus has available to it numerous defenses other than regular policy exclusions and conditions as approved by the Commissioner. It is, therefore, basically liability insurance for a third party — the uninsured motorist — as was recognized by this Court in one of the early cases dealing with the first versions of the statutes. See Glover v. Tennessee Farmers Mutual Insurance Co., 225 Tenn. 306, 313, 468 S.W.2d 727, 730 (1971) (intent and purpose of statutes is to provide protection “by making the insurance carrier stand as the insurer of the uninsured motorist
It is well settled in this state that a policy of liability insurance covers punitive damages as well as compensatory damages. Lazenby v. Universal Underwriters Insurance Co., 214 Tenn. 639, 383 S.W.2d 1 (1964). In that case policy language almost identical to that contained in the uninsured motorist statutes and to the policy in the present case was held to cover punitive damages.
As pointed out in the dissenting opinion, courts in other states which have considered this issue have reached divergent results. The matter is primarily one of legislative intent, and the General Assembly clearly could exclude punitive damages from coverage, and limit awards to compensatory damages only, if it saw fit to do so. We do not believe that the language contained in the statutes at the time of the accident involved in this case or in the present statutes is restrictive, and we do not construe it as requiring coverage for compensatory awards alone. If the General Assembly desires to make this change, the result can be achieved by a very brief amendment to the statutes.
Further, even if the statute should be construed not to require coverage for punitive damages, still it seems to us that the policy in question did cover them. It provided coverage to its insured for all sums which the insured
“... shall be legally entitled to recover as damages from the owner or operator of an uninsured highway vehicle because of bodily injury sustained by the insured
Punitive damages surely are sums which can be recovered as damages from the owner or operator of a motor vehicle because of bodily injury inflicted upon a plaintiff. Punitive damages are clearly covered under policies of liability insurance obligating the insured to pay all sums for which the insured is legally liable. See Lazenby v. Universal Underwriters Insurance Co., supra. Unless the holding of the Lazenby case or its interpretation of the policy language is to be altered or overruled, then, in our opinion, punitive damages are as clearly included in all sums which the insured is entitled to recover as they are in all sums for which an insured is legally liable.
Again, if the uninsured motorist statutes themselves should be construed as not to require coverage for punitive damages as a matter of law, it would be a very simple matter for insurance carriers to so write their policies as to limit insurance coverage to compensatory damages only, if permitted by the Commissioner. The present policy contains no such limitations but obligates the insurance carrier to pay all sums which the insured is legally entitled to recover from an uninsured motorist. In our opinion this coverage includes awards of punitive damages up to the policy limits.
For these reasons, the judgments of the courts below are reversed. The jury verdict awarding punitive damages is reinstated. The cause is remanded to the trial court for any further proceedings which may be necessary. All costs are taxed to appellee.
COOPER, C.J., and BROCK, JJ., concur.
DROWOTA, J., files dissent in which FONES, J., joins.