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Docket No. 90388-Agenda 25-May 2001.

STATE FARM MUTUAL AUTOMOBILE INSURANCE 
COMPANY, Appellant, v. RUBY SMITH et al. (Jeremy Fisher et
al., Appellees).

Opinion filed September 20, 2001.

JUSTICE McMORROW delivered the opinion of the court:

The primary issue in this appeal is whether, in an automobileliability insurance policy, an "automobile business exclusion"violates the public policy of Illinois.

BACKGROUND

On September 21, 1995, Maurice Barnes, accompanied byRuby Smith, drove his vehicle to Harrah's Casino Cruises-Joliet(Harrah's). Barnes gave his vehicle to the valet service at Harrah'sfor parking. When Barnes and Smith left Harrah's, Jeremy Fisher,a valet driver employed by Harrah's, retrieved Barnes' automobile.Smith has alleged that, as she entered the passenger door, thevehicle rolled backwards, striking her and knocking her to theground. Smith⁽¹⁾ brought an action against Barnes, Fisher, andHarrah's alleging various acts of negligence.

At the time of the accident, Barnes' vehicle was insured byState Farm Mutual Automobile Insurance Company (State Farm).On August 26, 1997, Fisher and Harrah's tendered their defenseto State Farm. State Farm refused the tender on October 15, 1997.Subsequently, State Farm filed an action for declaratory judgmentin the circuit court of Cook County, arguing that it had no duty todefend or indemnify Fisher or Harrah's based upon an automobilebusiness exclusion clause in the State Farm insurance policy. StateFarm moved for summary judgment on its action for declaratoryjudgment. Fisher and Harrah's responded to State Farm's motionfor summary judgment and filed a cross-motion for summaryjudgment, arguing that State Farm could not rely on theautomobile business exclusion. The circuit court held that theautomobile business exclusion applied, and State Farm had noduty to defend or indemnify Fisher and Harrah's. Accordingly, thecircuit court granted State Farm's motion for summary judgment.

Fisher and Harrah's appealed, arguing primarily that theautomobile business exclusion in State Farm's insurance policyviolates the public policy of Illinois, as stated in section7-317(b)(2) of the Illinois Vehicle Code (See 625 ILCS5/7-317(b)(2) (West 1998)), and as determined by this court inState Farm Mutual Automobile Insurance Co. v. UniversalUnderwriters Group, 182 Ill. 2d 240 (1998). The appellate courtconcluded that Universal Underwriters' holding that " 'a liabilityinsurance policy issued to the owner of a vehicle must cover thenamed insured and any other person using the vehicle with thenamed insured's permission' " was controlling. 315 Ill. App. 3d1159, 1165, quoting Universal Underwriters, 182 Ill. 2d at 244.Thus, the appellate court held that the automobile businessexclusion violates the public policy of Illinois and, therefore, wasunenforceable. 315 Ill. App. 3d at 1165.

We granted State Farm's petition for leave to appeal. 177 Ill.2d R. 315(a). For the reasons that follow, we affirm the judgmentof the appellate court.

ANALYSIS 

Courts will apply terms in an insurance policy as writtenunless those terms contravene public policy. Illinois FarmersInsurance Co. v. Cisco, 178 Ill. 2d 386, 392 (1997). Statutes are anexpression of public policy. Cates v. Cates, 156 Ill. 2d 76, 110(1993). Statutes in force at the time an insurance policy was issuedare controlling, and a statute's underlying purpose cannot becircumvented by a restriction or exclusion written into aninsurance policy. Cummins v. Country Mutual Insurance Co., 178Ill. 2d 474, 483 (1997). Accordingly, insurance policy provisionsthat conflict with a statute are void. Illinois Farmers Insurance,178 Ill. 2d at 392.

I. Validity of Automobile Business Exclusion

The automobile business exclusion in the State Farminsurance policy at issue in the case at bar states:

"THERE IS NO COVERAGE:

1. WHILE ANY VEHICLE INSURED UNDERTHIS SECTION IS:

***

b. BEING REPAIRED, SERVICED OR USEDBY ANY PERSON EMPLOYED OR ENGAGEDIN ANY WAY IN A CAR BUSINESS. ***

* * *

Car business-means a business or job where thepurpose is to sell, lease, repair, service, transport, storeor park land motor vehicles or trailers." (Emphases inoriginal.)

The appellate court held that this exclusion is unenforceable,because it directly conflicts with the mandatory language of theIllinois Vehicle Code, with this court's decision in UniversalUnderwriters, and with the policy of mandatory automobileliability insurance legislation. 315 Ill. App. 3d at 1165.

Section 7-601(a) of the mandatory insurance act in the IllinoisVehicle Code requires that vehicles be insured through a liabilityinsurance policy. 625 ILCS 5/7-601(a) (West 1998). Section7-317(b)(2) of the safety responsibility law in the Illinois VehicleCode states that a motor vehicle liability policy "[s]hall insure theperson named therein and any other person using or responsiblefor the use of such motor vehicle or vehicles with the express orimplied permission of the insured." 625 ILCS 5/7-317(b)(2) (West1998). In Universal Underwriters, this court concluded thatsection 7-601(a), together with section 7-317(b)(2), mandates that"a liability insurance policy issued to the owner of a vehicle mustcover the named insured and any other person using the vehiclewith the named insured's permission." Universal Underwriters,182 Ill. 2d at 244.

On the basis of section 7-317(b)(2) and this court's decisionin Universal Underwriters, Fisher and Harrah's argue that theautomobile business exclusion in State Farm's insurance policyviolates the public policy of Illinois. According to Fisher andHarrah's, the automobile business exclusion violates the Illinoispublic policy that a vehicle owner's insurance carrier cover anyperson driving the owner's vehicle with the express or impliedpermission of the owner. They argue that, when a vehicle ownergives his vehicle to a person engaged in an automobile business-abusiness whose purpose is to sell, lease, repair, service, transport,store or park land motor vehicles or trailers-the owner is givingthat person express or implied permission to use the vehicle. Theautomobile business exclusion thus violates Illinois' requirementthat a vehicle owner's liability insurance policy cover any personusing the owner's vehicle with the express or implied permissionof the owner.

We agree that the automobile business exclusion in StateFarm's insurance policy violates the public policy of Illinois asstated in the Illinois Vehicle Code. Section 7-317(b)(2) is clear. Itmandates that a motor vehicle liability policy, or a liabilityinsurance policy, cover the named insured and any other personusing the vehicle with the named insured's permission. 625 ILCS5/7-317(b)(2) (West 1998); Universal Underwriters, 182 Ill. 2d at244. When a vehicle owner gives his vehicle to a person engagedin an automobile business, the owner is also giving that person theexpress or implied permission to use the vehicle. Therefore, aprovision written into an insurance policy that excludes coveragefor persons engaged in an automobile business necessarilyexcludes coverage for persons who are using an insured's vehiclewith the insured's express or implied permission. The exclusionthus violates section 7-317(b)(2) of the Illinois Vehicle Code. Asstated, an insurance policy provision which conflicts with a statuteis void. Illinois Farmers Insurance, 178 Ill. 2d at 392.Accordingly, we hold that the automobile business exclusion inState Farm's insurance policy is void. State Farm, therefore,cannot rely on that exclusion to deny Fisher's and Harrah's tender.

State Farm asserts that we should follow the Supreme Courtof Delaware's decision in Universal Underwriters Insurance Co.v. Traveler's Insurance Co., 669 A.2d 45 (Del. 1995). InTravelers, the Supreme Court of Delaware held that an automobilebusiness exclusion did not conflict with Delaware's mandatedinsurance program. The Delaware Motor Vehicle FinancialResponsibility Law required that every insurance policy provideliability insurance for the named insured and any other personusing the insured's vehicle with the insured's express or impliedpermission. Travelers, 669 A.2d at 47-49. In reaching itsconclusion that the automobile business exclusion did not conflictwith this statute, the Supreme Court of Delaware stated that"recognition of the exclusion may advance the cause of fullrecovery through responsible insurance by removing an incentivefor auto related businesses to forgo purchasing insurance to covertheir activities. [Automobile] [b]usinesses *** should assumedirect responsibility for the conduct of their employees through thepurchase of insurance which reflects these unusual risks. Privatevehicle owners *** who turn their vehicles over to a business forservice or other uses benefitting the business owner should notbear the responsibility of protecting the public from a business useof the vehicle." Travelers, 669 A.2d at 48-49.

The Travelers court focused its discussion on policy issuesconcerning general problems that may arise if the automobilebusiness exclusion were not enforced. However, the court offeredno explanation as to why the automobile business exclusion didnot violate the terms of Delaware's mandated insurance program.Because the court offered no explanation, we find Travelersunpersuasive and decline to follow it.

The Illinois legislature has decided that the public policy ofIllinois requires that an insurance company that issues a liabilityinsurance policy or motor vehicle liability policy to an insuredmust cover the insured and any other person who has received theinsured's express or implied permission to use the vehicle. As ourappellate court noted in the case at bar, "[t]he purpose ofmandatory automobile liability insurance is not only to protect theowner against liability or some other insurance company; rather,its principal purpose is to protect the public by securing paymentof their damages." 315 Ill. App. 3d at 1163. See also InsuranceCar Rentals, Inc. v. State Farm Mutual Automobile Insurance Co.,152 Ill. App. 3d 225, 232 (1987); Continental Casualty Co. v.Travelers Insurance Co., 84 Ill. App. 2d 200, 206 (1967). Thiscourt may not establish a public policy which is contrary to thepublic policy that the Illinois legislature has determined isappropriate for the state of Illinois. See Michigan Avenue NationalBank v. County of Cook, 191 Ill. 2d 493, 522 (2000), quotingPeople v. Garner, 147 Ill. 2d 467, 475-76 (1992) ("[C]ourts maynot legislate, rewrite or extend legislation. If the statute as enactedseems to operate in certain cases unjustly or inappropriately, theappeal must be to the General Assembly, and not to the court").

We note that our holding in the case at bar is in conformitywith the holdings of a majority of those jurisdictions which haveconsidered the issue presented. See, e.g., Scott v. Salerno, 297 N.J.Super. 437, 445, 688 A.2d 614, 618 (1997) ("[i]n view of thestrong public policy of [New Jersey] to provide coverage toanyone using an automobile with the owner's permission, theexclusion from that coverage of anyone using the automobilewhile parking or storing that automobile *** is void andunenforceable"); Louisiana Farm Bureau Casualty Insurance Co.v. Darjean, 554 So. 2d 1376, 1377-78 (La. 1989) (automobilebusiness exclusion violates the Louisiana legislature's intent that"an owner's or operator's policy of liability insurance '[s]hallinsure the person named therein and any other person, as insured,using any such motor vehicle ... with the express or impliedpermission of such named insured' " (emphases omitted));Farmland Mutual Insurance Co. v. Moore Cadillac-Oldsmobile,Inc., 283 S.C. 33, 35, 320 S.E.2d 719, 720 (1984) ("Aetna'sattempt to exclude coverage to those engaged in the automobilebusiness is an impermissible attempt to re-define the term'insured' to narrow the coverage required by the statute," whichincludes in its definition of "insured" any person using the namedinsured's vehicle with the insured's express or implied consent);DeWitt v. Young, 229 Kan. 474, 479, 625 P.2d 478, 482 (1981)(automobile business exclusion violates the public policy ofKansas as found in Kansas' mandatory insurance coverage statute,which states that every motor vehicle liability insurance policymust insure any person using the named insured's vehicle with theinsured's express or implied consent); Exchange Casualty &Surety Co. v. Scott, 56 Cal. 2d 613, 622, 364 P.2d 833, 838, 15Cal. Rptr. 897, 902 (1961) (holding that an insurance policy'sprovision excluding coverage for "any person *** operating anautomobile sales agency, repair shop, service station, storagegarage or public parking place" conflicted with a California statuterequiring that a motor vehicle liability policy cover the namedinsured and any other person using the vehicle with the express orimplied permission of the insured).

In holding that the automobile business exclusion isunenforceable, we reject State Farm's argument that anamendment to section 7-601(a) "allows automobile insurers inIllinois to employ an automobile business exclusion." In January1997, the General Assembly amended section 7-601(a) and addedthe sentence: "Nothing herein shall deprive an insurer of anypolicy defense available at common law." Pub. Act 89-669,