Direct Suits Against Insurance Companies and Presumption of Consent to Use Vehicle

The Supreme Court of Mississippi issued its opinion in State Farm Mutual Auto. Ins. Co. v. Eakins, et al, 996-CT-00034-SCT (decided December 10, 1998), which addresses two issues that have changed Mississippi law relating to the handling of automobile liability insurance claims.

The facts involve a motor vehicle accident in which a vehicle, insured by State Farm, owned by Chester (named insured) and driven by Jobe, struck the Plaintiffs. State Farm defended Jobe under a reservation of rights, but declined to pay the judgment awarded in favor of the Plaintiffs against Jobe, by contending that Jobe used the car without permission and as such he was not covered under the policy.

Justice McRae, writing for the Court, stated that "in the interest of judicial economy," insurance companies can be sued directly by third party plaintiffs when there is a coverage dispute, which overrules numerous previous Supreme Court opinions. This allows coverage questions to be resolved prior to trial and brought in the same lawsuit through a declaratory judgment proceeding, making the insurance company a party defendant.

Additionally, the Mississippi Supreme Court held "when ownership of a vehicle is undisputed, a presumption is created that the vehicle was being operated with the owner's consent," which presumption can only be rebutted by a sufficient showing to the contrary. Once this presumption arises, the statutory policy provisions of §63-15-43, Miss. Code Ann., as amended, shall apply.

9Note: The Eikens opinion has not been published due to the fact that a Petition for Rehearing is pending before the Court.