Impact of an insurance agreement that denies coverage where a vehicle is operated "without permission"

In Farm Bureau v. Duncan, et al., the insurer claimed it was not required to defend a lawsuit brought against several parties on behalf of an injured motorist.  The Plaintiff injury victim was hurt when Mr. Duncan crossed the centerline, causing an accident.  Duncan had the permission  of the man who rented the car to operate it, however, Farm Bureau claimed that the renter was prohibited from granting such permission, and therefore the vehicle was being operated illegally and violated Farm Bureau's coverage which excluded coverage when the vehicle was operated "without permission to do so".

It was undisputed that Duncan was driving because the renter, Cochrane, was too ill to drive.  It was also undisputed that the owner of the vehicle, National Car Rental, was unaware of Duncan's operation of the vehicle and had not approved it.  Analyzing these facts, the Court of Appeals concluded that Duncan's "permission" must be analyzed fron the insured's viewpoint.  Neither Duncan nor his insurer, Farm Bureau, was a party to the rental agreement which prohibited operation by anyone other than Cochrane.  Further, in accordance with the strict policy language, it appeared to Duncan that he had permission to drive the car.  Therefore, the Court held that Farm Bureau must honor its coverage commitment.