LuAnn and Bradley Mylin began living together in August 1992. Both owned vehicles, but each was insured by a different insurance company.
When the couple married, LuAnn told her State Farm agent that her husband would not be added to her policy because he had his own insurance. Bradley was not listed as a driver on LuAnn’s policy, although the policy covered any permissive driver of her insured car.
In October 1993, State Farm told LuAnn that it would not be renewing her policy because of Bradley’s driving record.
Between February 1991 and January 1992, strikes against Bradley’s driving record included a violation for driving under the influence, an accident and leaving the scene of an accident, the Commonwealth Court opinion said. His license had also been suspended.
LuAnn appealed the insurer’s decision not to renew her insurance policy to the Insurance Department, which determined that State Farm properly used Bradley’s driving record as a lawful reason not to renew LuAnn’s policy under Act 78.
But after a formal hearing, the insurance commissioner issued an order and adjudication reversing the determination of the Insurance Department. The commissioner concluded that an insurer may not refuse to renew a wife’s automobile insurance policy due to the license suspension of her husband who is not the named insured driver on the policy when the husband and wife have separate policies.
Westerfer Rule
In issuing her order, the commissioner relied on the Commonwealth Court’s decision in Westerfer v. Insurance Commissioner, 637 A.3d 746 (Pa. Cmwlth. 1994).
In Westerfer, State Farm notified Kathleen Gustin that her automobile-insurance policy would not be renewed because of the license suspension of her husband, Mark Westerfer. Gustin was the only named insured on the policy. The Insurance Department and the commissioner upheld State Farm’s decision.
The Commonwealth Court reversed, concluding Section 3 did not sanction State Farm’s nonrenewal, “because Gustin and not her spouse, Westerfer, was the named insured on the subject policy with no violations against her driving record.”
“The insurer acted on the erroneous rationale that the insured entity is the entire family unit and that, therefore, her spouse’s license suspension is good reason not to renew her automobile policy regardless of her own excellent driving record,” the Westerfer court said.
The Westerfer court went on to note that State Farm had the option of specifically excluding Gustin’s spouse from coverage on her policy, which exclusion “should sufficiently protect its interest while, at the same time, reflecting the act’s overriding principle to protect policyholders from improper nonrenewals or cancellations by insurers.”
The facts in Mylin’s case “are identical” to those in Westerfer, the Commonwealth Court said. “Thus, the doctrine of stare decisis applies.”
In Mylin’s case, the court concluded that the sole reason given by State Farm for not renewing her policy was the driving record of her husband.
“Thus, the reason not to renew the policy was based on her marital status, a reason expressly prohibited by Section 3(a),” the court wrote.
