Named Driver Exclusion Upheld to Exclude Automobile Insurance Coverage

In the case of Mid-Century Insurance v. French, No. 2:19-CV-00563-JDW (E.D. Pa. Sept. 12, 2019 Wolson, J.), the court ruled that a “named driver” exclusion that specifically listed the insureds’ son as an excluded driver under the insured's automobile insurance policy served to preclude coverage for that son in a lawsuit filed against him for a motor vehicle accident while he was driving his fiancé’s automobile. 

According to the Opinion, the carrier that covered the vehicle owned by the Defendant driver’s fiancé separately provided the Defendant driver with a defense.

The carrier in this matter, Mid-Century Insurance Company had issued an automobile insurance policy to the Defendant driver’s parents. 

That carrier filed a declaratory judgment action seeking a judicial declaration that it did not need to provide additional liability coverage for any claim arising out of the accident and asserted against the Defendant driver given that the policy had a named driver exclusion listing the son as being excluded from coverage. 

The court upheld the exclusion and issued a declaration that Mid-Century Insurance Company need not provide coverage in the underlying case presented.

Anyone wishing to review a copy of this decision may click this LINK.  The Court's companion Order can be viewed HERE.

"Name Driver Only" Type of Automobile Insurance Policy Upheld as Valid (Decision Now On Appeal)

In a recent Montgomery County Court of Common Pleas decision in the case of An v. Gillmore and Victoria Fire & Cas. Co., No. 2013-Civil-06320 (C.P. Mont. Co. Sept. 2, 2014 Haas, J.), the court addressed the validity of a “named driver only” automobile insurance policy (as opposed to a "Named Driver Exclusion" provision that may be contained within an automobile insurance policy.).

The policy at issue contained a “named driver only exclusion” which excluded coverage for any person not listed as a named insured on the policy.

The Defendant driver involved in the accident was not listed on the policy. Rather, only the owner of the vehicle was the sole driver listed under the terms of the policy.

This matter was a declaratory judgment action on the issue of whether or not the carrier had to provide a defense and indemnity under the circumstances presented.

The case raised the issue of the validity of these types of "named driver only" policies under Pennsylvania's Motor Vehicle Financial Responsibility Law.

The insurance company filed a Motion for Summary Judgment on this declaratory judgment action claiming that it had no duty to defend or indemnify the Defendant driver because the policy specifically stated that the carrier “will not provide coverage when the driver of your auto is not listed on the policy.”

  The Plaintiffs countered that the “named insured” policy provision violated §1718(c) of the Pennsylvania Motor Vehicle Financial Responsibility Law and was also against public policy. (Pertaining to the validity of a “named driver exclusion”).

More specifically, the Plaintiff asserted that, under the statute, a “named driver exclusion” can only apply “if the excluded person is insured on another policy of motor vehicle liability insurance.” 75 Pa. C.S.A. §1718(c)(1), (1711)(c)(2).

Although there was no evidence in the record on whether or not the Defendant driver was indeed insured under another automobile policy, the trial court found the Plaintiff’s argument to be flawed since §1718(c) refers to named driver exclusion provision within an automobile insurance policy which serves to exclude a particular driver, as opposed to the different situation presented in this matter involving a "named driver only" insurance policy in which the entire automobile policy is premised upon a particular driver being provided coverage to the exclusion of everyone else.

The trial court found that no section in the Motor Vehicle Financial Responsibility Law precluded “named driver only” policies. As such, §1718 was found to be inapplicable.

The court additionally rejected the Plaintiff’s Complaint that the “named driver only” policy was against public policy. To the contrary, the court stated that the type of policy purchased by owner of the vehicle allowed that person to obtain insurance at a low cost, which was found to further the goal of the public policy behind the Motor Vehicle Financial Responsibility Law in attempting to curtail the increasing cost of insurance premiums.

As such, the court granted the carrier’s Motion for Summary Judgment and denied the injured party Plaintiff’s Motion for Summary Judgment on the declaratory judgment issues pertaining to coverage for the Defendant driver.

It is noted that this decision has been appealed and is currently pending before the Pennsylvania Superior Court.

Anyone wishing to secure a copy of this Opinion may contact me at dancummins@comcast.net.


Source of Image:  www.automotorblog.com


 

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.