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Public Policy

“Any” Means “All” – Public Policy Must be Set by the Legislature Not the Courts

Arkansas, by statute, makes joint and several liability only several with each party causing injury shares in judgment only up to the party’s percentage of liability. Uninsured (UM) and underinsured motorist (UIM) coverages only provide coverage if there is no insurance or if the insurance carried by the tortfeasor is inadequate to indemnify the injured party. UIM coverage applies when the tortfeasor has at least the amount of insurance required by law, but not enough to fully compensate the victim. This coverage is designed to provide compensation to the extent of the injury, subject to the policy limit.

In Corn v. Farmers Insurance Co., Inc., CV-13-42 (Ark. 11/07/2013) [enhanced version available to subscribers], Opal and L.B. Corn, pursued a claim for underinsured motorist (“UIM”) coverage against their insurer, Farmers Insurance Co., Inc. even though they collected less than the limits available to one of the parties defendant, sought UIM benefits because of the statute limiting the obligation of the tortfeasor. The circuit court granted summary judgment in favor of Farmers and the Corns appealed.


On March 3, 2008, Opal was driving on Interstate 540 in Rogers, with L.B. as her passenger, when she encountered debris in the roadway. She slowed down suddenly to avoid hitting the debris and was rear-ended by a vehicle driven by Martha Gafford. The debris was later determined to have fallen off an Eden’s Home Repair and Remodeling truck, which was driven by Kenneth Eden.

The Corns filed claims against Gafford. Gafford’s insurer, Allstate Insurance Company, offered her policy limits of $25,000 each to Opal and L.B., and Farmers consented to the settlements. The Corns then filed a UIM claim with Farmers for the remaining damages from the accident. When the expiration of the statute of limitations was imminent without resolution of the UIM claim, the Corns filed suit against Farmers and Kenneth Eden and Eden’s Home Repair and Remodeling (collectively referred to as “Eden”). The Corns settled their claims with Eden through mediation by accepting proceeds from an auto-liability policy issued by Eden’s insurance carrier. That policy provided for $1 million of liability coverage per accident. The Corns’ settlements with Eden were for less than the policy limits.

Farmers refused to offer any UIM benefits and moved for summary judgment, contending that because the Corns had failed to exhaust Eden’s liability policy, they had not triggered UIM coverage under their policy with Farmers. In support, Farmers pointed to the following language in its policy: “We will pay under this coverage only after the limits of liability under any applicable bodily injury liability bonds or policies have been exhausted by payment of judgments or settlements.”


The Corns contended that the circuit court erred in granting summary judgment in favor of Farmers because, given the modification of joint and several liability in Arkansas, insured persons are no longer required to exhaust all liability insurance policies of all tortfeasors before they are entitled to receive UIM benefits.

UIM coverage is governed by Arkansas Code Annotated section 23-89-209 [enhanced version available to subscribers]. “The coverage shall enable the insured . . . to recover from the insurer the amount of damages for bodily injuries to . . . an insured which the insured is legally entitled to recover from the owner or operator of another motor vehicle whenever the liability insurance limits of the other owner or operator are less than the amount of the damages incurred by the insured.”

The plain meaning of the language “exhausted by payments” regarding limits of other liability insurance was that all other available liability insurance had to be paid in full before the injured person is entitled to receive UIM benefits. The court rejected the argument that it was against public policy to allow an insurer to avoid paying UIM benefits in a case where the insured had settled with the tortfeasors’ carriers for less than the tortfeasors’ policy limits. Since UIM benefits are recoverable from the owner or operator of another motor vehicle only when the insurance limits of such other owner or operator are less than the amount of damages incurred by the insured. When the Corns settled with the two tortfeasors without exhausting the available insurance a reasonable inference could be drawn that they received full indemnity. Regardless, they did not exhaust the limits of the two policies as required by their UIM coverage.

In Arkansas, judicial recognition of the common-law doctrine of joint and several liability dates back to at least 1895. Under joint and several liability, where concurrent negligent acts result in a single injury, each tortfeasor is jointly and severally liable, and a plaintiff can institute an action against any or all tortfeasors, individually or jointly. Where there are joint defendants and a judgment is against them jointly, all or any one of such defendants is liable to the plaintiff for the entire judgment. In 2003, the General Assembly modified joint and several liability, making the liability of defendants in personal injury, medical injury, property damage, or wrongful-death cases several only, rather than joint. Accordingly, each defendant shall be liable only for the amount of damages allocated to that defendant in direct proportion to that defendant’s percentage of fault, and a separate several judgment shall be rendered against that defendant for that amount.

Courts must presume that the General Assembly is familiar with the state court’s interpretations of its statutes. If it disagrees with those interpretations, it can amend the statutes. Since the Legislature has not amended the statute, the court’s interpretations of the statutes remain the law. Although aware of the court’s interpretation of the public policy underlying the UIM statute, the General Assembly has not amended that statute. The court, with no direction from the legislature, had no way of knowing if failure to deal with UIM coverage was a legislative oversight or whether it was the General Assembly’s intent that the joint-and-several-liability modification statute have no effect on UIM coverage.

Public Policy is for the General Assembly to Establish, Not the Courts.

The Corns’ contention implicates many public-policy concerns. However, in Arkansas, public policy is for the General Assembly to establish, not the courts. As a result the court encouraged the General Assembly to revisit the UIM statute and the joint-and-several-liability modification statute to address the issues involved in the instant case and those that have not evolved but will likely evolve.

When read within the context of the policy, it is clear that the word “any” means “all” and not “one” as the Corns contend. “Any” modifies the plural words “bonds” and “policies, ” signifying that “any” is not used to restrict exhaustion of the limits to only one bond or policy. We conclude that the policy language is not ambiguous and that, under the terms of the policy, UIM coverage is not triggered until all policy limits have been exhausted.


In this simple UIM case the Supreme Court of Arkansas stated a rule of law that should be adopted across the country. The setting of public policy belongs to the elected representatives of the state, not the courts. At best the courts must interpret the public policy of the state set by the legislature, not create an unstated policy.

UIM insurance like that issued to the Corns clearly and unambiguously only applies after the insured exhausts the limits available to the tortfeasor. Since they agreed to settle for less than the liability limits of the tortfeasors they proved that the tortfeasors were not underinsured.

    By Barry Zalma, Attorney and Consultant

Reprinted with Permission from Zalma on Insurance, (c) 2013, Barry Zalma.

Barry Zalma, Esq., CFE, is a California attorney who limits his practice to consultation regarding insurance coverage, insurance claims handling, insurance bad faith and fraud and acting as a mediator or arbitrator on insurance disputes. Mr. Zalma serves as a consultant and expert almost equally for insurers and policyholders. He founded Zalma Insurance Consultants in 2001 and serves as its only consultant. He recently published the e-books, "Zalma on Rescission in California - 2013"; "Random Thoughts on Insurance" containing posts from this blog; "Zalma on Insurance;" "Murder and Insurance Don't Mix;" “Heads I Win, Tails You Lose — 2011,” “Zalma on Diminution in Value Damages,” “Arson for Profit” and “Zalma on California Claims Regulations,” and others that are available at Zalma Books.

Mr. Zalma can be contacted at Barry Zalma or, and you can access his free "Zalma on Insurance Fraud" newsletter at Zalma’s Insurance Fraud Letter.

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