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The Pennsylvania Supreme Court has unanimously ruled that unregistered driver exclusions in insurance policies do not violate the Pennsylvania Motor Vehicle Financial Responsibility Law or public policy.

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 live-in 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 or if it was protected by the policy’s unregistered driver exclusion (URDE).

Previously, a split three-judge Superior Court panel ruled that the policy was in line with the MVFRL because that statute places the burden on the vehicle owner, not insurance companies, to confirm that a driver is insured.

“In the instant case, the policy contains a clear and unambiguous URDE, which excludes coverage for injury or property damage that occurred while policyholder’s vehicle was operated by a resident of his household or by a regular user of his covered vehicle, unless that person is listed as an additional driver on the declarations page,” Justice Debra Todd wrote in the majority opinion.

“Although policyholder did not dispute he was aware of this exclusion, he permitted his vehicle to be operated by his live-in girlfriend, who, under the express terms of the URDE, was not covered by the policy,” Todd added. “Policyholder had the option of adding his girlfriend to the policy, but chose not to do so. Undoubtedly, this choice resulted in reduced insurance premiums, and, as we previously have stated, an insured is not entitled to receive gratis coverage. Moreover, in the absence of provisions in the MVFRL to the contrary, insurers are not compelled to underwrite unknown and uncompensated risks. Thus, we decline to hold that the URDE in this case is contrary to public policy.”

While he agreed with the majority’s result, Justice David Wecht wrote separately in a concurring opinion to comment on the broader issue of the role legislative intent should play in determining whether a contract violates public policy.

“While I agree with the majority that Safe Auto’s unlisted resident driver exclusion is valid and enforceable,” Wecht said, “I would take this opportunity to clarify that divination of legislative intent alone cannot establish a dominant expression of public policy of the sort that is required under the substantive contract law principle that agreements which violate well-established public policy are unenforceable. Courts cannot invalidate contractual provisions based upon vague and nebulous public policy concerns, not even if the General Assembly most likely shared (though failed to codify) those same concerns.”

Safe Auto is represented by John Brown of Ryan, Brown, Berger & Gibbons. Dixon is represented by Jim Haggerty of Haggerty, Goldberg, Schleifer & Kupersmith. Neither responded to requests for comment.

(Copies of the 24-page opinion in Safe Auto Insurance v. Oriental-Guillermo, PICS No. 19-1008, are available at http://at.law.com/PICS.)