Thursday, August 2, 2012

Named Driver Only Automobile Insurance Policy Upheld by Pennsylvania Eastern District Federal Court

In an apparent case of first impression, Judge Schiller of the Eastern District Federal Court ruled in his June 4, 2012 slip opinion in the case of Infinity Ins. v. Gonzalez, 2012 WL 1994772 (E.D. Pa. June 4, 2012 Schiller, J.), that the terms of a "Named Driver Only" automobile insurance policy would be upheld.  The court therefore held that Infinity Insurance need not provide coverage in an underlying motor vehicle accident litigation as a result.

In Infinity Ins. v. Gonzalez, Infinity contended its declaratory judgment action that its policy terms were clear and unambiguous and served to preclude coverage when the insured automobile was being operated by anyone other than the named insured.

The court noted that the policy endorsement clearly identified the policy as a “Named Driver Only” policy.  The policy also stated in bold language that the policy provides coverage only for drivers listed on the policy.

The court in this case also found that the language in the policy and endorsement was clear and unambiguous in restricting coverage only to drivers who are listed in the insurance policy. The court noted that the insured only listed herself in her application for insurance, and that the insured was the only listed insured driver in the policy and endorsement. The court additionally noted that the insured was clearly aware of the restriction, because in her application for insurance, insured selected an option whereby she received a discount on her premiums in exchange for a policy that denied coverage for unlisted drivers.

Although the court had "serious reservations" about upholding an insurance policy that makes it easier for uninsured motorists to drive on Pennsylvania roads, the court also recognized that "there was no clear indication of Pennsylvania law to justify the invalidation of this insurance policy based on that public policy." Op. at p. 4.  Since no party specifically raised any public policy argument for the court to consider, Judge Schiller elected to apply the clear and unambiguous language of the policy.

Anyone desiring a copy of this Opinion in the case of Infinity Ins. v. Gonzalez may contact me at dancummins@comcast.net.

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