In Allstate Insurance Company v. Penske Truck Leasing, the court considered whether a registered interstate motor carrier was required to maintain $750,000 in coverage on a truck that was operated by an individual renter for a personal purpose.
Meir Dorfman rented a truck from Penske, a registered interstate motor carrier. Penske had motor vehicle insurance with a limit of $1 million in coverage through Old Republic. The Old Republic insurance policy contained a step-down provision for leased vehicles that provided liability coverage as for lessees and renters of covered autos as insureds, but only to the extent and for the limits of liability agreed to under their contractual agreement with Penske. Dorfman opted for the limited liability coverage that Penske provided in the rental agreement in the amount of $15,000/$30,000. However, Dorfman failed to purchase supplemental liability coverage and did not have any personal coverage.
While driving the truck in New Jersey, Dorfman was involved in a motor vehicle accident that caused injuries to Carmen Quinones, the driver of the other vehicle, and two passengers in Quinones’ vehicle. Allstate, Quinones’ automobile carrier, paid PIP benefits to the three occupants of Quinones’ vehicle and the defendants settled the three lawsuits brought by the three injured individuals for a total sum of $30,000. Allstate then sought reimbursement from Old Republic for the PIP benefits it had paid.
Old Republic claimed that it did not have to reimburse Allstate since Old Republic had exhausted its policy limits. Allstate argued that since the truck was a registered interstate motor carrier Penske was required to maintain $750,000 in coverage under the Federal Motor Carrier Safety Regulations. These regulations set the minimum levels of financial responsibility as $750,000 for all for-hire motor carriers of nonhazardous property.
The court found that, since Dorfman was using the truck for personal reasons, was not working as an interstate motor carrier and was not transporting any property for pay, the Federal regulation mandating $750,000 in coverage did not apply. Accordingly, the court determined that since Old Republic had exhausted its policy limits, Allstate was not entitled to reimbursement of PIP benefits.