Zurich American Insurance v. Key Cartage, Inc.

JUSTICE GARMAN

specially concurring:

I agree with the majority that the insurance policy at issue is unambiguous and that the reciprocal coverage provision works to preclude coverage for Key Cartage. I further agree that the reciprocal coverage provision does not violate the public policy of the State of Illinois. However, because I consider it unnecessary to reexamine whether the word “Act” as used in section 7 — 317 applies to the entire Vehicle Code, I must specially concur.

The majority opinion relies on distinguishing Universal Underwriters by determining that although the word “Act” applies to the entire Vehicle Code, it does not apply to the Commercial Transportation Law. The majority concludes “Act” cannot apply to that law because it would create inconsistencies that arise to absurd, inconvenient or unjust results. 236 Ill. 2d at 127. I consider it unnecessary to address this question, because even if we were to assume that the word “Act” applies throughout the Vehicle Code, including the Commercial Transportation Law, this does not change the result in this case.

Given the definition of “motor vehicle liability policy” as set forth in section 7 — 317, and the mandate contained in section 7 — 601 of the Safety and Family Financial Responsibility Law, all operators of a motor vehicle generally are required to carry a “liability insurance policy,”1 which under section 7 — 317 must include an omnibus clause, unless the operator falls under any of the listed exemptions in section 7 — 601. However, even if an operator or vehicle qualifies for an exemption under section 7 — 601, it may nonetheless be required by some other statute to carry a “motor vehicle liability policy” or “liability insurance policy.”

Based on the record, it is evident that the vehicle insured by Zurich falls under the exemption in section 7 — 601(b)(2). Under the plain language of section 7 — 601(b)(2), “vehicles required to file proof of liability insurance with the Illinois Commerce Commission” are exempt from being covered under a motor vehicle liability policy. There is no dispute that the vehicle involved in this accident, as it was used in commercial trucking, was required to file proof of liability insurance with the Illinois Commerce Commission. The Safety and Family Financial Responsibility Law therefore cannot be the source of an omnibus clause requirement. Thus, the vehicle’s insurance policy need only contain an omnibus clause if another statute within the Vehicle Code requires commercial truckers and their vehicles to be covered by a motor vehicle liability policy.

The statute applicable to commercial truckers, which is the source of the requirement that commercial trucks file proof of insurance with the Illinois Commerce Commission, is the Commercial Transportation Law. Through the Commission’s rules, this statute heavily regulates the trucking industry within Illinois. Regarding insurance coverage, the Commercial Transportation Law requires that before a trucking registration may be issued, the carrier must have complied with Illinois Commerce Commission regulations regarding proof of insurance. 625 ILCS 5/18c — 4402 (West 2006). The Commission regulations on insurance have adopted the federal regulations governing interstate motor carriers of property. 92 Ill. Adm. Code §1425.30. Setting aside the question whether it would be appropriate to assign our legislature’s definitions of “motor vehicle liability policy” or “liability insurance” to the agency responsible for adopting the federal regulations, the regulations lack any reference to those phrases. There is, therefore, no requirement anywhere within the Commercial Transportation Law or the Commission’s regulations that requires commercial truckers to be covered under a “motor vehicle liability policy” or a “liability insurance policy,” and, consequently, no requirement that insurance policies issued to commercial truckers must contain an omnibus clause. Simply put, the critical term at issue, defined in section 7 — 317, is not “used in this Act” with respect to the Commercial Transportation Law.

This conclusion accords with common sense. As the majority opinion notes, the Commercial Transportation Law gives final approval of insurance policies to the Illinois Commerce Commission. 236 Ill. 2d at 126. Section 7 — 601(b)(2), which, as noted above, exempts vehicles required to file proof of insurance with the Commission, is a further indication that the legislature intended the Commission to be the sole regulator of commercial trucking insurance requirements.

This case is readily distinguishable from Universal Underwriters. As the majority notes, at issue in that case was a garage insurance policy issued to a car dealership. A person test-driving one of the dealership’s vehicles collided with another vehicle, injuring its driver. Universal Underwriters, 182 Ill. 2d at 241. In defending the case, the dealership and its insurer, Universal Underwriters, made an argument similar to what Zurich raises here. The insurance company argued that the policy covering the dealership’s vehicles did not need to be covered by a policy that included an omnibus clause because it fell under section 7 — 601(b)(6). That provision exempted other “ ‘vehicles complying with laws which require them to be insured in amounts meeting or exceeding the minimum amounts required under [this Section].’ ” Universal Underwriters, 182 Ill. 2d at 245, quoting 625 ILCS 5/7 — 601(b)(6) (West 2006).

The dealership claimed that section 7 — 601(b)(6) applied because, as a dealership, it was subject to regulation under article I of chapter 5 of the Vehicle Code. 625 ILCS 5/5 — 101(b)(6) (West 1996). That provision requires dealerships to have minimum insurance coverage greater than the minimum coverage required by section 7 — 601.

We disagreed with the insurance company, holding that the policy was indeed required to have an omnibus clause. Under section 5 — 101(b)(6), dealerships are required in general to carry a “liability insurance policy” that includes such minimum coverage. Thus, although the dealership was not required to have an omnibus clause in its policies under section 7 — 601, because section 5 — 101(b)(6) nonetheless required it to have a “liability insurance policy,” that policy must necessarily fit section 7 — 317’s definition of “liability insurance policy” and include an omnibus clause. As the majority notes, we stated in Universal Underwriters that regardless of whether the exemption in section 7 — 601(b)(6) applied, the policy was required to have an omnibus clause.

As discussed above, the Commercial Transportation Law imposes no such requirements on vehicles required to file proof of insurance with the Commission. Thus, unlike in Universal Underwriters, in this case the question whether an exemption applies is relevant to determining the result. The vehicle insured by Zurich, having qualified for the exemption listed in section 7 — 601(b)(2), is not required by any other statute to be covered by a “motor vehicle liability” and therefore need not be covered by an insurance policy which includes an omnibus clause. For that reason, the reciprocal clause contained in Zurich’s policy, which contains an exception to its permissive user provisions, does not violate the public policy of Illinois.

In summary, I do not find it necessary to reexamine whether the word “Act” in section 7 — 317 applies to the entire Vehicle Code, as we did in Universal Underwriters. However, although I disagree with the majority’s analysis, I concur in the judgment that the lack of an omnibus clause in Zurich’s insurance policy does not violate the public policy of Illinois.

JUSTICE KARMEIER joins in this special concurrence.

Although this is not the exact phrase used in section 7 — 317, “liability insurance policy” and “motor vehicle liability policy” appear to have been used interchangeably, and we have interpreted the terms as synonymous. Universal Underwriters, 182 Ill. 2d at 244 (using the phrase “liability insurance policy” after referencing the definition of “motor vehicle liability policy”). The phrase “liability insurance policy” is also used within the Safety and Family Financial Responsibility Law’s provision mandating insurance coverage.