Reliance Insurance Companies v. Annie A. Darden & Pennsylvania National Mutual Casualty Insurance
Docket: Record No. 760391
Court: Supreme Court of Virginia; March 4, 1977; Virginia; State Supreme Court
Annie A. Darden initiated a declaratory judgment suit to determine which of two insurers—Reliance Insurance Companies or Pennsylvania National Mutual Casualty Insurance Company—was responsible for a $17,500 judgment she obtained. The trial court ruled that the 'Out-of-State Insurance Endorsement' on Reliance’s policy was ambiguous, holding Reliance liable for the full judgment amount minus $4,350 it had already paid. The case arose from a collision on August 12, 1973, involving a vehicle driven by Flint Faulkner and one owned by James E. Lawrence, resulting in the deaths of Lawrence and his passenger and injuries to Darden and Faulkner. The Lawrence vehicle was insured by Reliance with coverage limits of $10,000 per person and $20,000 per accident. Reliance paid $10,000 to Lawrence’s passenger's estate and $5,695 to Faulkner, while Darden later secured a consent judgment against Lawrence's estate. The endorsement in question stipulates that if a non-resident is required to have higher insurance coverage in another state, the limits of the policy will adjust accordingly. However, the court examined Virginia law to determine if there were requirements for higher coverage on the date of the accident, finding no such mandates, as Virginia does not require compulsory motor vehicle liability insurance and only requires an uninsured motorist fee upon vehicle registration.
Virginia law does not mandate liability insurance for operating a motor vehicle. The Motor Vehicle Safety Responsibility Act applies to both residents and non-residents but is only relevant for individuals required to prove financial responsibility after an accident. Coverage limits of $20,000 per person and $40,000 per accident are established, but these apply only to certified policies as proof of financial responsibility. Voluntarily obtained insurance is not subject to these statutes. 'Proof of financial responsibility' entails demonstrating the ability to pay damages resulting from vehicle operation. The Act imposes sanctions on individuals causing injury or damage unless they can satisfy related judgments and prove financial capability for future liabilities. The current case involved a policy voluntarily obtained by Lawrence, who was not required to show proof of financial responsibility before his first accident on August 12, 1973, thus the Act did not apply. The endorsement in Lawrence's policy, which expanded coverage under foreign state laws, was irrelevant since Virginia did not require insurance at that time. Consequently, Reliance's liability was capped at $20,000, and the trial court erred in holding it liable for additional amounts. The judgment against Reliance is reversed, with a final judgment entered for the plaintiff against Pennsylvania National for $13,150. Recent amendments increased coverage limits to $25,000 and $50,000.
