Justices Mull Legality of Unlisted Resident Driver Exclusions
An attorney contending that insurance policies excluding coverage for unlisted resident drivers should not be enforced asked the Pennsylvania Supreme Court on Thursday to stem what he characterized as the "disturbing trend" of insurance companies "slowly eroding coverage to the detriment of the people of Pennsylvania."
December 06, 2018 at 01:44 PM
3 minute read
An attorney contending that insurance policies excluding coverage for unlisted resident drivers should not be enforced asked the Pennsylvania Supreme Court on Thursday to stem what he characterized as the “disturbing trend” of insurance companies “slowly eroding coverage to the detriment of the people of Pennsylvania.”
But several justices questioned whether such sweeping policy arguments would better be brought to the legislature.
Attorney Jim Haggerty of Haggerty, Goldberg, Schleifer & Kupersmith told the justices during the final day of the court's Harrisburg argument session that his client's Safe Auto Insurance Co. policy, which disclaimed coverage for a woman who got into an accident while driving her live-in boyfriend's car, was unenforceable under the state's Motor Vehicle Financial Responsibility Law. According to Haggerty, the policy is part of a larger practice of continually limiting available coverage.
“Now it's only covering people specifically named,” he said.
Justice David Wecht spoke up early in the argument session, asking Haggerty what about the policy went against the law as written.
“Assuming it's disturbing as hell, why is that not an argument to make to the legislature?” Wecht asked. “You're interested in the spirit of the law, but what about the text of the law?”
Justice Max Baer offered a similar question.
“The case before us is not a case where they're only insuring those who paid,” Baer said. “This policy has exclusions. … This is one of the exclusions.”
Haggerty said insurance policies are intended to cover vehicles broadly, but policies like the one at issue made it so insureds would need to make sure everyone not named in their polices have their own coverage before allowing them to borrow their car. He gave the example of having his son over to watch football, and his son needing to use his car.
“If I have this policy, I'd have to say, 'Before you take my car, let me see your insurance cards and prove to me that you're up to date,'” he said.
The case, Safe Auto Insurance v. Oriental-Guillermo, stemmed from a two-car accident in April 2013, when Rachel Dixon was driving a car owned by her boyfriend Rene Oriental-Guillermo. A passenger in the other vehicle sued, but Safe Auto pursued a declaratory judgment action to determine whether it had to pay out on the policy.
A split three-judge panel of the court previously ruled that the policy was in line with the MVFRL because that statute places the burden on making sure a driver is insured on the vehicle-owner, and not the insurance companies.
John Brown of Ryan, Brown, Berger & Gibbons, who argued on behalf of Safe Auto, denied any “scheme to restrict coverage,” but said that was not the crux of the case. The case, he said, came down to whether the exclusion was reasonable.
“The answer is resoundingly yes,” he said.
Brown added that there are some policies that only provide coverage for those who are named in the policy, and those policies have been upheld by the courts.
Brown further contended that Dixon was not an occasional user, but a frequent user of the vehicle, and so Oriental-Guillermo should have told the carrier so the situation could be assessed by an underwriter.
“The law doesn't require insurance companies to ferret out every discernible person who might get behind the wheel,” Brown said.
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