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Uninsured Motorist Arbitration Statute not Applicable to Outside State Policies

A Tennessee Court of Appeals recently ruled late last month about whether the arbitration provisions found in the state’s uninsured motorist statutes apply to insurance policies issued and delivered outside of the state. The court ruled that auto insurance policies that were not issued or delivered in the state could not be considered Tennessee contracts and therefore were not controlled by Tennessee law.

Facts of the Case

In the case of Nelson v. Nelson, Donald Nelson sought damages for the personal injuries that he sustained while in an auto accident with Gerald Nelson when the two were in Chattanooga, Tennessee. At the time of the accident, Donald was a resident of Texas and Gerald was a resident of Georgia. In addition, Donald’s auto policy was issued and delivered to him with GEICO Insurance in Texas.

Donald filed a motion in Tennessee court seeking to compel GEICO and Republic Insurance Agency, his employer’s insurance, to submit to arbitration for his personal injury damages under the arbitration provisions provided in Tennessee’s uninsured motorist statutes when Gerald’s coverage tendered the limits of its policy. Both insurance companies argued that the state’s arbitration provision did not apply because the insurance policies at issue were delivered in Texas.

Ruling of the Court

The Tennessee Court of Appeals found that the uninsured motorist laws for this state apply only to policies that were issued and delivered in this state. According to Tenn. Code Ann. § 56-7-1201, “Every automobile liability insurance policy delivered, issued for delivery or renewed in this state, covering liability arising out of the ownership, maintenance, or use of any motor vehicle designed for use primarily on public roads and registered or principally garaged in this state, shall include uninsured motorist coverage.”

Furthermore, Tenn. Code Ann. § 56-7-1206 states that “the insured or the insured’s personal representative may accept the offer, execute a full release of the party or parties on whose behalf the offer is made and preserve the right to seek additional compensation from the insured’s uninsured motorist insurance carrier upon agreement of the insured or the insured’s personal representative to submit the insured’s uninsured motorist claim to binding arbitration of all issues of tort liability and damages.”

Therefore, the insurance policies that were issued and delivered in another state cannot be considered Tennessee contracts, even if the accident took place within the confines of the state. In addition, the court found that the state follows the lex loci contractus doctrine in insurance coverage disputes, which means that the substantive law of the state where the insurance policy was issued and delivered will control any court proceedings.

Call a Tennessee Accident Attorney

If you have questions about how this ruling may affect your claims or have other questions about an accident involving an uninsured motorist in the Nashville area, let the experienced accident attorneys at Calhoun Law, PLC help. Call or contact the office today for a free and private consultation of your case.

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