Summary
In Republic-Franklin Ins. Co. v. Progressive Cas. Ins. Co. (1976), 45 Ohio St.2d 93 [74 O.O.2d 202], this court held that a financial responsibility bond is not liability insurance under Ohio's financial responsibility laws.
Summary of this case from Grange Mut. v. Refiners Transport TerminalOpinion
No. 75-386
Decided February 11, 1976.
Insurance — Financial responsibility bond — Not liability insurance — R.C. 4509.45.
CERTIFIED by the Court of Appeals for Licking County.
This is an action for declaratory relief commenced by Republic-Franklin Insurance Company against the Progressive Casualty Insurance Company and others in the Court of Common Pleas. The case was presented to the court on the basis of an agreed statement of facts, a supplemental agreed statement of facts, and on the contents of the family automobile policy of Republic-Franklin, the appellee herein, and the financial responsibility bond of Progressive, the appellant herein.
On July 5, 1973, there was a collision involving the automobiles of Clair B. Rubeck and George V. Huffman. Clair Rubeck died as a result of the collision. The suit for the alleged wrongful death of Clair Rubeck is presently pending before the Court of Common Pleas of Licking County.
At the time of the accident, George Huffman had a family automobile insurance policy with Republic-Franklin with limits of liability of $15,000/$30,000, and a financial responsibility bond with Progressive, the limits of liability being $12,500/$25,000. The Republic-Franklin insurance policy contains the following "pro-rata" provision:
"* * * If the insured has other insurance against a loss covered by Part III of this policy, the company shall not be liable under this policy for a greater proportion of such loss than the applicable limit of liability of this policy bears to the total applicable limit of liability of all valid and collectible insurance against such loss * * *."
On the other hand, the Progressive financial responsibility bond application contains an "excess" protection provision:
"If there exists, at the time of accident, any insurance taken out by the principal or any insurance taken out by or effected on behalf of any one other than the principal and under the terms of which the principal is entitled to protection and coverage, then the coverage provided by the bond shall be excess protection over and above the amount of such insurance."
The trial court, in effect, found that Progressive and Republic-Franklin must provide pro-rata coverage with respect to the Rubeck claim.
The Court of Appeals affirmed, finding that the financial responsibility bond is insurance.
The cause is now before this court pursuant to a certification of conflict between the Court of Appeals' decision and an unreported decision of the Second Appellate District.
Mr. Thomas R. Bopeley, for appellee.
Messrs. Ross, Davis Baran and Mr. Edward C. Baran, for appellant.
The main issue presented in this cause is whether the Progressive financial responsibility bond is insurance. If it is not insurance, the pro-rata provision of the Republic-Franklin policy does not apply and the financial responsibility bond is excess coverage.
Although a financial responsibility bond authorized by R.C. 4509.45 is in some respects similar to liability insurance, it is significantly different from insurance. One who must post proof of financial responsibility as a prerequisite to the privilege of driving may do so by following any one of several distinct methods provided for in R.C. 4509.45. That statute provides, in part:
"Proof of financial responsibility when required under Section 4507.41, 4509.32, 4509.33, 4509.34, 4509.38, 4509.40, 4509.42, or 4509.44 of the Revised Code may be given by filing any of the following:
"(A) A certificate of insurance as provided in Section 4509.46 or 4509.47 of the Revised Code:
"(B) A bond as provided in Section 4509.59 of the Revised Code * * *."
Throughout R.C. Chapter 4509 the dissimilarity of a financial responsibility bond and liability insurance is apparent.
A liability insurance policy is written for the protection of the insured. However, a financial responsibility bond does not protect the principal by insuring him against liability. A financial responsibility bond is written for the protection of the motoring public, who may be injured by the principal. If the surety is compelled to make payment for damages caused by the principal, it has the right to seek reimbursement from the principal. The Progressive financial responsibility bond, in the present case, expressly provides for reimbursement by the principal. This fundamental difference between insurance and a financial responsibility bond compels this court to find that a financial responsibility bond is not insurance, as that term is used in the Republic-Franklin pro-rata provisions. See, also, Kerr v. Personal Service Ins. Co. (1975), 44 Ohio App.2d 1, 335 N.E.2d 741.
For the foregoing reasons, the judgment of the Court of Appeals is reversed.
Judgment reversed.
O'NEILL, C.J., HERBERT, CORRIGAN, STERN, CELEBREZZE, W. BROWN and P. BROWN, JJ., concur.