                   IN THE COURT OF APPEALS OF TENNESSEE
                               AT NASHVILLE

     ANGELA P. BURRESS, ET AL. v. RAYMOND M. SANDERS, ET AL.

                 Direct Appeal from the Circuit Court for Sequatchie County
                          No. 6441    Thomas W. Graham, Judge



                    No. M1999-00210-COA-R3-CV - Decided April 4, 2000


This appeal involves a dispute between two insurance companies over the limits of the underinsured
motorist coverage in a non-resident insurance company’s policy. Even though it had certified its
policy to the Tennessee Department of Safety as required by Tennessee’s financial responsibility
statutes, a non-resident insurance company asserted that the limits of its underinsured motorist
coverage should not be increased pursuant to Tenn. Code Ann. § 55-12-121(2) (1998) because the
language in its policy regarding compliance with state financial responsibility laws did not apply to
the underlying automobile accident in this case. Both insurance companies sought a summary
judgment from the Circuit Court for Sequatchie County, and the trial court granted a summary
judgment holding that the limits of the non-resident insurance company’s underinsured motorist
coverage had, by operation of law, been increased to the limits for similar coverage required by
Tennessee law. On this appeal, the non-resident insurance company asserts that the summary
judgment is based on an erroneous interpretation of its insurance policy. We have determined that
the trial court construed the insurance policy correctly and, therefore, affirm the summary judgment.

    Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed and
                                       Remanded.

KOCH , J., delivered the opinion of the court, in which TODD , P.J., M.S., and CANTRELL, J., joined.

Alan M. Sowell, Nashville, Tennessee, for the appellant, Dairyland Insurance Company.

Edwin Z. Kelly, Jr., Jasper, Tennessee, for the appellee, State Farm Mutual Automobile Insurance
Company.

                                            OPINION

       This case stems from a May 16, 1993 automobile collision on State Highway 28 in
Sequatchie County, Tennessee involving a vehicle driven by Angelia Burress, a resident of
Whitwell, Tennessee, and a vehicle driven by Raymond Sanders, a resident of Ringgold, Georgia.
Ms. Burress was seriously injured, and her vehicle was likewise seriously damaged.
        When the collision occurred, Mr. Sanders was insured by Dairyland Insurance Company
(“Dairyland”), a property and casualty insurer domiciled in Wisconsin. In compliance with Georgia
law, his policy included coverage for liability up to $15,000 per person for bodily injury arising out
of an automobile accident.1 Ms. Burress was insured by State Farm Mutual Automobile Insurance
Company (“State Farm”). Her State Farm policy contained uninsured/underinsured motorist
coverage limited to $50,000 per person for bodily injury arising out of an automobile accident.

       After the collision with Ms. Burress, Mr. Sanders filed an owner/operator report with the
Financial Responsibility Section of the Tennessee Department of Safety stating that he had been
involved in a collision in Sequatchie County.2 The report also stated that he had liability coverage
with Dairyland and identified Mr. Sanders’s policy as evidence of his financial responsibility. Later,
in accordance with Tenn. Code Ann. § 55-12-121, Dairyland certified its policy to the Department
of Safety as proof of Mr. Sanders’s financial responsibility.

        In May 1994 Ms. Burress filed a $125,000 negligence action against Mr. Sanders in the
Circuit Court for Sequatchie County. She formally notified State Farm of her suit because she was
seeking considerably more damages than Mr. Sanders's policy limits. State Farm entered the case
as a defendant in accordance with Tenn. Code Ann. § 56-7-1206(a) (1994). After obtaining leave
of court, State Farm filed a third-party complaint against Dairyland, alleging that Mr. Sanders’s
policy provided that the limits of his underinsured motorist coverage should be increased from
$15,000 to $25,000 (the minimum coverage required by Tennessee’s financial responsibility
statutes3) because Mr. Sanders had used the Dairyland policy as future proof of financial
responsibility). State Farm requested the trial court to declare that, insofar as the lawsuit between
Ms. Burress and Mr. Sanders was concerned, the limit of Dairyland’s underinsured motorist
coverage was $25,000. Dairyland disagreed with State Farm’s interpretation of Mr. Sanders’s
policy.

       Both insurance companies eventually moved for a summary judgment on the question of
whether Dairyland was obligated to provide additional personal injury liability coverage up to
$25,000 per person. On September 27, 1996, the trial court granted State Farm's summary judgment
motion after concluding that the language of Mr. Sanders’s policy and Tennessee's financial
responsibility statutes required Dairyland to increase its policy liability limits from $15,000 per
person to $25,000 per person. Dairyland appealed, believing that the trial court misread its policy.

                                                  I.


       1
       This limit corresponds to the minimum amount of insurance required in Georgia to
demonstrate a motorist’s financial responsibility. See Ga. Code Ann. § 33-34-3(a)(1), -4 (1996); Ga.
Code Ann. § 40-9-2(5)(A), -37(a) (1997).
       2
         Tenn. Code Ann. § 55-12-104(a) (1998) requires operators of motor vehicles involved in
serious accidents in Tennessee to report the accident to the Commissioner of Safety within twenty
days after the accident.
       3
           See Tenn. Code Ann. § 55-12-102(7) & (12)(C)(ii) (1998).

                                                 -2-
                                    THE STANDARD OF REVIEW

        Both parties agree that there are no genuine disputes of material fact and that the resolution
of the case turns solely on the correct construction of Mr. Sanders’s Dairyland policy in light of
Tennessee’s financial responsibility statutes. Accordingly, a summary judgment is an appropriate
method for deciding this case. See generally Standard Fire Ins. Co. v. Chester-O'Donley & Assocs.,
Inc., 972 S.W.2d 1, 6 (Tenn. Ct. App. 1998) (discussing the utility of resolving insurance coverage
issues by summary judgment).

        Summary judgments enjoy no presumption of correctness on appeal. See Alcazar v. Hayes,
982 S.W.2d 845, 848 (Tenn. 1998); City of Tullahoma v. Bedford County, 938 S.W.2d 408, 412
(Tenn. 1997). Accordingly, reviewing courts must make a fresh determination concerning whether
the requirements of Tenn. R. Civ. P. 56 have been satisfied. See Hunter v. Brown, 955 S.W.2d 49,
50-51 (Tenn. 1997); Mason v. Seaton, 942 S.W.2d 470, 472 (Tenn. 1997). Summary judgments are
appropriate only when there are no genuine factual disputes with regard to the claim or defense
embodied in the motion and when the moving party is entitled to a judgment as a matter of law. See
Tenn. R. Civ. P. 56.04; Bain v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997); Carvell v. Bottoms, 900
S.W.2d 23, 26 (Tenn. 1995).

       Courts reviewing summary judgments must view the evidence in the light most favorable to
the nonmoving party and must also draw all reasonable inferences in the nonmoving party’s favor.
See Robinson v. Omer, 952 S.W.2d 423, 426 (Tenn. 1997); Mike v. Po Group, Inc., 937 S.W.2d 790,
792 (Tenn. 1996). Thus, a summary judgment should be granted only when the undisputed facts
reasonably support one conclusion -- that the moving party is entitled to a judgment as a matter of
law. See McCall v. Wilder, 913 S.W.2d 150, 153 (Tenn. 1995); Carvell v. Bottoms, 900 S.W.2d at
26.

                                            II.
                      TENNESSEE ’S FINANCIAL RESPONSIBILITY STATUTES

         We turn first to Tennessee’s financial responsibility statutes. Tennessee is not a “compulsory
insurance” state because our General Assembly has stopped short of requiring all vehicle owners to
obtain insurance. See McManus v. State Farm Mut. Auto. Ins. Co., 225 Tenn. 106, 109, 463 S.W.2d
702, 703 (1971). Like a majority of states, Tennessee has adopted financial responsibility statutes
requiring motorists involved in serious accidents to prove their ability to pay up to a specified
amount of damages or face the loss of their driving privileges. These statutes are intended to provide
a more effective means of enforcing payment of automobile-caused damage claims, see Legislation,
The Tennessee Motor Vehicle Financial Responsibility Act, 21 Tenn. L. Rev. 341, 342 (1950), and
to take insolvent, financially irresponsible drivers off the roads of this state. See Erwin v. State Farm
Mut. Auto. Ins. Co., 232 F. Supp. 530, 538 (E.D. Tenn. 1964).

       To resolve the legal issues this appeal raises, we must answer three questions regarding
Tennessee’s financial responsibility statutes. First, when must a motorist prove his or her financial
responsibility? Second, how may a motorist prove his or her financial responsibility? Third, what

                                                  -3-
kind of liability insurance, as a substantive matter, will provide sufficient proof of financial
responsibility?

                                       A.
               WHEN MUST A MOTORIST PROVE FINANCIAL RESPONSIBILITY?

        An accident-free motorist “is at liberty to own and operate a motor vehicle without any
insurance coverage or with as little insurance coverage as desired.” McManus v. State Farm Mut.
Auto. Ins. Co., 225 Tenn. at 109, 463 S.W.2d at 703. Requiring proof of financial responsibility
comes into play only after a motorist has been involved in an accident resulting in death, personal
injury, or property damage in excess of four hundred dollars. See Tenn. Code Ann. § 55-12-104(a).
These motorists must report the accident to the Commissioner of Safety.

        If the Commissioner later determines that there exists a reasonable possibility that the
motorist who reported the accident will be ordered to pay damages, Tenn. Code Ann. § 55-12-105(a)
(1998) empowers the Commissioner to revoke the license and registration of resident motorists or
to revoke the driving privileges of non-resident motorists. To avoid revocation, a motorist must
prove financial responsibility. See Tenn. Code Ann. § 55-12-105(a). Most commonly, this
provision requires the motorist to demonstrate that he or she has the present financial ability to
satisfy any judgment arising out of the car accident. This is sometimes referred to as the “present
ability” requirement. See The Tennessee Motor Vehicle Financial Responsibility Act, 21 Tenn. L.
Rev. at 343-44.

        There is a second, related circumstance in which a motorist will be required to demonstrate
financial responsibility. A motorist whose driving privileges have been revoked under Tenn. Code
Ann. § 55-12-105(a) may reinstate his or her license, registration, and driving privileges only by
meeting the requirements of Tenn. Code Ann. § 55-12-108(a) (1998) and by presenting proof of
financial responsibility. See Tenn. Code Ann. §§ 55-12-108(a), -118(c). By requiring proof of
financial responsibility before restoring a motorist’s driving privileges, the statute requires the
motorist to demonstrate that henceforth he or she will be able to satisfy any damage claims arising
out of owning and operating an automobile. See 1 Alan I. Widiss, Uninsured and Underinsured
Motorist Insurance § 1.3 (Rev. 2nd ed. 1999); see generally House v. O'Grady, 299 N.E.2d 706,
707-08 (Ohio C.P. 1973). This requirement is sometimes referred to as the “future ability”
requirement. See The Tennessee Motor Vehicle Financial Responsibility Act, 21 Tenn. L. Rev. at
344-45.

        The record in this case indicates that the Commissioner had not revoked Mr. Sanders’s
driving privileges in Tennessee. Accordingly, this case involves Mr. Sanders’s obligation to prove
financial responsibility to forestall having his driving privileges revoked because of the May 1993
accident in Sequatchie County.

                                                B.
                 HOW MAY A MOTORIST PROVE FINANCIAL RESPONSIBILITY?


                                               -4-
        Tennessee’s financial responsibility statues provide four ways for a motorist to demonstrate
his or her financial responsibility. A motorist may file notarized releases executed by all persons
who filed a claim stemming from the accident. See Tenn. Code Ann. § 55-12-105(b)(4). Short of
obtaining releases, a motorist may demonstrate financial responsibility three other ways. First, the
motorist may file with the Commissioner written proof that he or she has insurance coverage. See
Tenn. Code Ann. § 55-12-105(b)(1). Second, the motorist may execute and file a bond with the
Commissioner. See Tenn. Code Ann. § 55-12-105(b)(3). Third, the motorist may file a cash deposit
with the Commissioner. See Tenn. Code Ann. § 55-12-105(b)(2).

        Motorists seeking to demonstrate financial responsibility by proving that they are insured
may submit a written certificate of insurance.4 See Tenn. Code Ann. §§ 55-12-119 through -121,
and -137 (1998). Filing an insurance policy is sometimes referred to as “certifying” the policy.5 See,
e.g., Tenn. Code Ann. §§ 55-12-102(7), -123 (1998). For states that have adopted financial
responsibility statutes, certifying an insurance policy satisfies the requirement that the motorist
demonstrate financial responsibility. See, e.g., Wisdom v. Stonewall Ins. Co., 487 N.E.2d 1289,
1291-92 (Ill. App. Ct. 1986); Dairyland Ins. Co. v. Finch, 513 N.E.2d 1324, 1326 (Ohio 1987)
overruled on different grounds by State Farm Auto. Ins. Co. v. Alexander, 583 N.E.2d 309, 312
(Ohio 1992).

                                          C.
                WHAT KIND OF LIABILITY INSURANCE PROVIDES EVIDENCE OF
                              FINANCIAL RESPONSIBILITY?

        For written proof of automobile liability insurance to satisfy the requirement of showing
financial responsibility, the tendered policy must be issued by an insurance company or surety
company licensed to do business in this state and must provide security not less than the amounts
specified in Tenn. Code Ann. § 55-12-102. See Tenn. Code Ann. § 55-12-107(a) (1998). Tenn.
Code Ann. § 55-12-102(12)(C)(ii) requires, as one option for any period after December 31, 1989,
“[a] split-limit policy with a limit of not less than twenty-five thousand dollars ($25,000) for bodily
injury to or death of one (1) person, not less than fifty thousand dollars ($50,000) for bodily injury
to or death of two (2) or more persons in any one (1) accident, and not less than ten thousand dollars
($10,000) for damage to property in any one (1) accident.”




       4
         As a practical matter, the Division of Financial Responsibility usually handles this in a more
informal way. Once it receives the post-accident owner/operator report showing a motorist as
insured, the Division confirms the coverage in writing by contacting the listed insurer by letter.
       5
        As used in this context, “certify” means essentially to vouch for in writing. See Black's Law
Dictionary 228 (6th ed. 1990). Insurance policies used to provide proof of financial responsibility
ordinarily must be certified by the insurer. See Cincinnati Ins. Co. v. Kramer, 632 N.E.2d 1333,
1335 (Ohio Ct. App. 1993).

                                                 -5-
         A nonresident motorist may certify and rely on a policy issued outside of Tennessee so long
as the insurer is licensed to do business in Tennessee and meets two other requirements. Tenn. Code
Ann. § 55-12-121 states that the Commissioner shall accept the certificate of insurance if the insurer
complies with the following conditions:

               (1)     The insurance carrier shall execute a power of attorney
                       authorizing the Commissioner to accept service on its behalf
                       of notice or process in any action arising out of a motor
                       vehicle accident in this state; and


               (2)     The insurance carrier shall agree in writing that such policies
                       shall be deemed to conform with the laws of this state relating
                       to the terms of motor vehicle liability policies issued therein.

        In this case, Mr. Sanders certified his Dairyland automobile liability insurance policy after
the accident to avoid having to make a cash deposit or having to file a bond with the Commissioner
to prove his financial responsibility arising out of his May 1993 accident with Ms. Burress.6 The
personal injury liability limits of the Dairyland policy, on their face, are below the minimum liability
limits required by Tenn. Code Ann. § 55-12-102(12)(C)(ii). For us to determine whether Dairyland's
clause on financial responsibility operates with Tennessee's financial responsibility laws to
automatically increase the policy limits to the minimum required in this state, we must now turn to
the Dairyland policy.

                                             III.
                                DAIRYLAND’S INSURANCE POLICY

        Both parties correctly point out that we must construe Dairyland's policy according to
Georgia law because it was issued in Georgia to a Georgia resident. See Kustoff v. Stuyvesant Ins.
Co., 160 Tenn. 208, 212-13, 22 S.W.2d 356, 358 (1929); Hutchison v. Tennessee Farmers Mut. Ins.
Co., 652 S.W.2d 904, 905 (Tenn. Ct. App. 1983). Dairyland’s policy is a “plain English” policy as
required by Ga. Code Ann. § 33-3-25 (1992). However, written English, no matter how ostensibly
“plain,” requires some figuring out by the reader. Words, after all, are only symbols that point to


       6
         For this reason Dairyland's reliance on both McManus v. State Farm Mut. Auto. Ins. Co. and
Mississippi Farm Bureau Mut. Ins. Co. v. Jones, No. 02A01-9607-CV-00151, 1997 WL 710926
(Tenn. Ct. App. Nov. 14, 1997) perm. app. denied (Tenn. May 26, 1998) is misplaced. In neither
of those cases had the insurance company certified its policy to the Commissioner of Safety. See
McManus v. State Farm Mut. Auto. Ins. Co., 222 Tenn. At 111, 463 S.W.2d at 704; Mississippi
Farm Bureau Mut. Ins. Co. v. Jones, 1997 WL 710926, at *1. In this case, Dairyland certified its
policy. We take note that Dairyland understands that certification of its policy has legal significance
in triggering the application of state financial responsibility laws. See Dairyland Ins. Co. v. Morse,
771 F. Supp. 297, 298 (E.D. Mo. 1991).

                                                  -6-
other objects and concepts besides themselves. See generally Samuel I. Hayakawa, Language in
Thought and Action 20-28 (4th ed. 1978). For readers attempting to discover the meaning of words
syntactically strung together into phrases and sentences, “[e]verything hangs on context and
purpose.” Bryan A. Garner, The Elements of Legal Style 7 (1991).

        Georgia's legal principles governing the interpretation and construction of insurance contracts
are not dissimilar from Tennessee's. Under Georgia law, insurance contracts are to be construed
according to the entirety of their terms. See Ga. Code Ann. § 33-24-16 (1996); B.L. Ivey Constr. Co.
v. Pilot Fire & Cas. Co., 295 F. Supp. 840, 848 (N.D. Ga. 1968) (applying Georgia law). Courts
must give meaning to every contractual term rather than construe any term so as to render it
meaningless. See North Augusta Assocs. Ltd. Partnership v. 1815 Exchange, Inc., 469 S.E.2d 759,
762 (Ga. Ct. App. 1996).

        In discerning the import of words in an insurance policy, the courts should give the words
used their ordinary meanings. See Kytle v. Georgia Farm Bureau Mut. Ins. Co., 195 S.E.2d 787, 789
(Ga. Ct. App. 1973). If there is any material ambiguity, i.e., “an uncertainty of meaning or
expression,” Wood v. Phoenix Ins. Co., 34 S.E.2d 688, 692 (Ga. 1945), in a policy term, then the
policy is to be construed in favor of the insured to provide maximum coverage. See Ryan v. State
Farm Mut. Auto. Ins. Co., 413 S.E.2d 705, 707 (Ga. 1992).

        Most importantly, when construing the terms of an insurance policy, the test is not what a
sophisticated insurance company may have intended a term to legally signify, but rather what a
reasonable person would understand the words to mean. See Major v. Allstate Ins. Co., 429 S.E.2d
172, 173 (Ga. Ct. App. 1993). In Georgia, insurance contracts are to be read in accordance with the
reasonable expectations of the insured where at all possible. See Richards v. Hanover Ins. Co., 299
S.E.2d 561, 563 (Ga. 1983); Home Ins. Co. v. Sunrise Carpet Indus., Inc., 493 S.E.2d 641, 644 (Ga.
Ct. App. 1997).

        Dairyland’s argument rests on the provision in its policy regarding compliance with other
states’ financial responsibility laws. The provision states:

                                 Financial Responsibility Laws
               When this policy is certified as future proof of financial
               responsibility, this policy shall comply with the law up to the
               minimum limits required to the extent required and not in excess of
               the minimum limits.

Dairyland interprets this provision to apply only when its policyholder has had his or her driving
privileges revoked and must demonstrate future financial responsibility in order to have his or her
driving privileges reinstated. In effect, Dairyland is seeking to make the words “future proof of
financial responsibility” a legal term of art. We reject Dairyland's proposed construction because
it is antithetical to the declared public policy on insurance in Georgia and because it is not in



                                                 -7-
harmony with one of the avowed objects of Dairyland's own policy — that it be readily
understandable to the consumer.7

       “Future” is a commonly understood everyday word. When used as an adjective, it connotes
something that is to be, or will be, hereafter. It relates to a time to come or to an event that is yet to
happen. See VI The Oxford English Dictionary 295 (2d ed. 1989). Considered in that sense, the
word “future” is entirely consistent with the common understanding of the purpose of insurance in
general – a hedge against unarrived, yet impalpably looming potential misfortune. As far as this
record shows, Mr. Sanders had no need to demonstrate his financial responsibility when he first
obtained his Dairyland policy. Accordingly, it would have been entirely reasonable for him to have
understood the clause relating to financial responsibility laws as providing him with legally adequate
coverage if he was ever in the future required to certify his policy to demonstrate his financial
responsibility.8

       Georgia’s principles of contract construction, like Tennessee’s, permit the courts to consider
the conduct of contracting parties when called upon to construe the meaning of an ambiguous
contract provision. See Transkey, Inc. v. Adkinson, 484 S.E.2d 30, 32 (Ga. Ct. App. 1997). Mr.
Sanders’s conduct following the 1993 accident with Ms. Burress is entirely consistent with an
understanding that the insurance policy would provide him with adequate coverage if he should ever
have to use it to demonstrate his financial responsibility. Mr. Sanders himself informed the
Commissioner that he had liability coverage and relied on his insurance coverage to gain an
exemption from the requirement that he either post a bond and or make a cash deposit.

                                            IV.
                        THE EFFECT OF TENN. CODE ANN . § 55-12-121(2)




        7
        The preface to Dairyland’s insurance policy states that “[a]t Dairyland, we're always looking
for new and better ways to serve your insurance needs” and that “[y]our insurance protection is
important to you. That's why it's important for you to be able to read and understand your policy.
Now you can.”
        8
         State Farm points out another commonsense way to understand “future” in the context of
this case. As State Farm notes, liability does not immediately attach to a tortfeasor upon the
occurrence of an accident, but occurs at some future date when a judgment is rendered against the
tortfeasor, or when he or she accepts responsibility for the accident. By showing proof of liability
insurance coverage, a vehicle owner/operator and the insurer are giving assurance to the
Commissioner that coverage is available up to the minimum limits required by Tennessee's financial
responsibility laws in the event of a future judgment relative to the accident. See also State Capital
Ins. Co. v. Nationwide Mut. Ins. Co., 350 S.E.2d 66, 68-69 (N.C. 1986) (applying an automobile
insurance policy with a financial responsibility laws provision worded almost identically with
Dairyland's in this case).

                                                   -8-
        Tenn. Code Ann. § 55-12-121 permits non-resident motorists to demonstrate their financial
responsibility by providing the Commissioner with a written certificate of insurance issued by an
insurance company licensed to transact business in the state where the vehicle is registered. When
an insurer issues such a certificate, Tenn. Code Ann. § 55-12-121(2) requires the insurer to agree that
its policy will “conform with the laws of this state relating to the terms of motor vehicle liability
policies issued therein.” In order to conform to the laws of this state, a policy must afford at least
$25,000 in coverage for bodily injury. See Tenn. Code Ann. § 55-12-102(12)(C)(ii).

         Dairyland certified Mr. Sanders’s policy to the Commissioner. The legal effect of its action
is to increase the limits of the policy’s underinsured motorist coverage from $15,000 to $25,000.
This result does not necessarily increase Dairyland’s risk of loss. Dairyland, anticipating the
circumstances presented in this case, included a provision in its policy providing that it is entitled
to reimbursement from Mr. Sanders if it is required to provide increased monetary coverage to
comply with other states’ financial responsibility laws.9 While the question of reimbursement is not
currently before us, Dairyland’s inclusion of this provision in its policy indicates that it was aware
of the risk and that it chose to deal with it with this reimbursement provision.

                                                  V.

        We affirm the summary judgment concluding that the language of Dairyland's policy and
Tennessee’s financial responsibility statutes require Dairyland to increase its personal injury policy
limits in this case to $25,000 per person. Accordingly, we remand the case to the trial court for
further proceedings and tax the costs of this appeal to Dairyland Insurance Company and its surety
for which execution, if necessary, may issue.




       9
       Dairyland’s policy states: “You [the insured] must reimburse us if we have to make a
payment that we would not have to make if this policy were not certified as proof.”

                                                 -9-
