The Tennessee Court of Appeals addressed the issue of whether the arbitration provisions contained within Tennessee’s Uninsured Motorist (“UM”) statute apply to policies issued and delivered outside of Tennessee. In the case of Nelson v. Nelson, 409 S.W.3d 629 (Tenn. Ct. App. 2013), the plaintiff was injured in a motor vehicle accident which occurred in Tennessee. The plaintiff was a resident of Texas and the defendant was a resident of Georgia. The plaintiff was insured through a personal automotive insurance policy of Government Employees Insurance Company (“GEICO”) issued and delivered to him in Texas. At the time of the accident, the plaintiff was on a business trip and his employer was insured under a business automotive policy, issued and delivered in Texas by Republic Underwriters Insurance Agency (“Republic”).

The Tennessee Court of Appeals addressed the issue of whether the arbitration provisions contained within Tennessee’s Uninsured Motorist (“UM”) statute apply to policies issued and delivered outside of Tennessee. In the case of Nelson v. Nelson, 409 S.W.3d 629 (Tenn. Ct. App. 2013), the plaintiff was injured in a motor vehicle accident which occurred in Tennessee. The plaintiff was a resident of Texas and the defendant was a resident of Georgia. The plaintiff was insured through a personal automotive insurance policy of Government Employees Insurance Company (“GEICO”) issued and delivered to him in Texas. At the time of the accident, the plaintiff was on a business trip and his employer was insured under a business automotive policy, issued and delivered in Texas by Republic Underwriters Insurance Agency (“Republic”).

The plaintiff filed a motion seeking to compel GEICO and Republic to submit to arbitration in accordance with the arbitration provisions contained within Tennessee’s UM statute, Tenn. Code Ann. § 56-7-1206, because the liability carrier of the defendant had tendered the limits ofits policy to the plaintiff. In response, GEICO and Republic argued that the arbitration provision did not apply, as the subject UM coverages were contained in policies that were issued and delivered in Texas, and that the plain language of the UM statute applied to policies issued in Tennessee. The trial court ordered a separate hearing on this issue and held that the arbitration provisions were applicable to the UM policies of both GEICO and Republic.

On appeal, the Tennessee Court of Appeals held that automobile insurance policies which are not issued nor delivered in Tennessee were not Tennessee contracts and, thus, were not controlled by Tennessee law. Rather, the court explained that Tennessee follows the lex loci contractus doctrine in insurance coverage disputes, such that the substantive law of the state where the insurance policy is issued and delivered will control. 

In this case, the plaintiff was a resident of Texas, and the insurance policies in question were issued and delivered in Texas. “Based on both the plain wording of the statute, and the case law set forth above, it is clear to the Court that the arbitration provisions of the Tennessee UM statutes do not apply in this case.

The plaintiff argued on appeal that Tennessee law should apply because the underlying actions sounded in tort. The plaintiff further argued that Tennessee’s UM statute at issue is procedural rather than substantive and, therefore, should be applied as the law of the forum state. The appellate court found both arguments to be without merit. Accordingly, the Tennessee Court of Appeals reversed the decision of the trial court. The plaintiff’s request for permission to appeal to the Tennessee Supreme Court was denied.