Superior Court Rejects Unlicensed Driver Exclusion In Context of First Party Benefits Claims

In the case of Nationwide Prop. and Cas. Ins. Co. v. Castaneda, No. 1030 MDA 2022 (Pa. Super Dec. 5, 2023 Panella, P.J., Bender, P.J.E., McCaffery, J.) (Op. by Panella, P.J.), the Pennsylvania Superior Court held that automobile insurance carriers must provide mandated first party benefits and that such mandated benefits could not be the subject of the exclusions found under 75 Pa. C.S.A. §1718, including the unlicensed driver exclusion.

In this case, the injured party was operating her mother’s Nationwide insured vehicle when that vehicle was rear-ended.

Although the injured party was a permissive user of his mother’s vehicle, the injured party driver did not have a valid driver’s license at the time of the accident.

The Nationwide Insurance policy had an exclusion for first party medical benefits that applied if the injured party did not have a valid driver’s license and was neither a named insured nor a resident relative of the named insured.

In this case, because the injured party did not have a valid driver’s license, Nationwide denied the claim.

The injured party challenged the validity of the exclusion and argued that first party medical benefits were mandatory under the Pennsylvania Motor Vehicle Financial Responsibility Law.

Nationwide filed a declaratory judgment action seeking a judicial declaration that it did not have to pay the benefits under an application of the exclusion. The trial court ruled in favor of Nationwide and the injured party appealed.

On appeal, the Pennsylvania Superior Court ruled that no “unlicensed driver” exclusion was not valid in this context of first party benefits coverage which is mandated under the MVFRL.

As such, the Pennsylvania Superior Court held that the injured party was entitled to coverage for her medical expenses claims unless one of the limited exclusions allowed under §1718 applied to the claim.  The Court noted that the unlicensed driver exclusion was not listed among the limited exclusions to such coverage under §1718.   The trial court decision was therefore reversed.

Anyone wishing to review a copy of this decision may click this LINK.


I send thanks to Attorney Dale Larrimore of the Philadelphia law firm of Larrimore and Farnish, LLP for brining this case to my attention.