Fender bender insurance dispute crashes into Court of Appeals

In a dispute between two insurers over who pays the $328.45 for the repairs after a car accident, the Indiana Court of Appeals ordered both to sit down and talk.

The trouble began when Maria Rivera had an accident in the courtesy car given to her by Terry Lee Honda while her own auto was being repaired. Empire Fire and Marine Insurance, which insured the vehicles at the car dealership, paid for the damage to the courtesy car then sought repayment from Progressive, Rivera’s insurer.

Progressive refused, asserting Empire was responsible for insuring the courtesy car. Subsequently, Progressive filed an amended complaint asking the Hendricks Superior Court to find the courtesy car agreement between Rivera and Terry Lee Honda was a loan and not a rental or lease. Empire pointed to the arbitration agreement and argued the matter was subject to arbitration.

The trial court concluded the courtesy car agreement constituted a rental agreement as defined by Indiana Code section 24-4-9-5 and ordered any remaining dispute to arbitration.

On appeal, Progressive argued the determination of whether the courtesy car was a loan, a rental, or a lease was outside the scope of the arbitration agreement.

The Court of Appeals agreed in Progressive Southeastern Insurance Co. v. Empire Fire and Marine Insurance Co., 32A05-1706-PL-1235. The panel ruled the trial court’s finding that the courtesy car agreement was rental agreement before ordering any remaining issues to arbitration effectively denied part of Empire’s argument that the entire dispute should be arbitrated.

“Most of the parties’ arguments on summary judgment and now on appeal involve the question of whether the Courtesy Car Agreement, and its underlying transaction, was a rental under Indiana Code section 24-4-9-5, a loan under Indiana Code section 27-8-9-7, or a lease under Indiana Code section 28-8-9-9,” Judge Margret Robb wrote for the court. “Because the Arbitration Agreement controls the dispute presented, that question must remain for an arbitrator.”

The appellate court reversed the trial court’s finding the courtesy car agreement was a rental agreement. But it affirmed the order of partial arbitration, and remanded the trial court to enter an order compelling the entire dispute to arbitration.