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Case Bulletin – Safe Auto Ins. v. Oriental – Guillermo (214 A.3d 1257 (Pa. 2019)

In the August, 2019 decision of Safe Auto Insurance Company v. Oriental-Guillermo, the Supreme Court of Pennsylvania found that an unlisted resident driver exclusion (URDE) in an automobile insurance policy was enforceable against the policyholder’s live-in girlfriend. Therefore, the court found that the automobile insurance carrier was not obligated to provide insurance coverage to the insured’s girlfriend, and it affirmed the Superior Court’s order upholding the trial court’s grant of Summary Judgment in favor of the automobile insurance carrier.

In April of 2013, Rachel Dixon (“Dixon”) was involved in a car accident while driving a car owned by her boyfriend, Rene Oriental-Guillermo (“Guillermo”). Guillermo had insurance for his vehicle through Safe Auto Insurance. Guillermo’s insurance policy contained a URDE provision, which excluded from coverage any individuals who lived with, but were not related to, the policyholder, and whom the policyholder did not specifically list as an additional driver. At the time of the accident, Dixon lived with Guillermo, but she was not listed as an additional driver on his policy.

The injured passenger in the other vehicle filed a personal injury lawsuit against Dixon, Guillermo, and the driver of the other car involved in the accident. Safe Auto filed a complaint, seeking declaratory judgment regarding the enforceability of the URDE provision as it pertained to Dixon. The trial court granted summary judgment in favor of Safe Auto, finding that the URDE provision was unambiguous, valid, and enforceable. The court found that Safe Auto had no duty to defend or indemnify Dixon in the personal injury lawsuit, as she was not listed as an additional driver under the policy.

The defendants appealed to the Superior Court, arguing that the URDE was not valid, and in violation of the Pennsylvania Motor Vehicle Responsibility Law (MVFRL) and public policy. In September 2017, the Superior Court upheld the trial court’s grant of Summary Judgment in favor of Safe Auto, finding that the URDE provision was valid and enforceable. The appellants appealed this decision to the Pennsylvania Supreme Court.

On appeal, the Pennsylvania Supreme Court first analyzed whether the URDE in the insurance policy violated the terms and provisions of the MVFRL. The language of the applicable policy provision stated:


  1. That occurs while your covered auto is being operated by a resident of your household or by a regular user of your covered auto, unless that person is listed as an additional driver on the Declarations page [. . .]

The appellants argued that the policy violated the MVFRL because the MVFRL does not require a vehicle owner to identify all permissive users of his vehicle when obtaining insurance coverage. Further, they argued that the MVFRL implicitly provides that all permissive drivers are insured under the owner’s policy. The Supreme Court disagreed with this argument, finding that interpreting the MVFRL to require that an insurer provide coverage for an unlimited number of permissive users contravened the principle that insureds are not entitled to receive gratis coverage. Additionally, the court found that such an interpretation would result in an increase in the cost of insurance, as it would force insurers to insure unknown risks. The Supreme Court found that while the MVFRL does not require an owner to identify all permissive users of the vehicle, it also does not require an insurer to provide coverage beyond that stated in the policy. Therefore, the Supreme Court concluded that the URDE provision in the insurance policy did not violate the MVFRL.

Next, the Supreme Court addressed whether the URDE provision was contrary to the public policy of the MVFRL. The appellants argued the provision was contrary to public policy because it undermined Pennsylvania’s objective of limiting the number of uninsured motorists on Pennsylvania’s roadways. The court noted that a party seeking to avoid an unambiguous provision in an insurance contract bears a heavy burden. While the court recognized that limiting the number of uninsured motorists was a public policy behind the MVFRL, it noted that another public policy was cost containment. Ultimately, the court found that the policyholder had the option of adding his girlfriend, Dixon, to the policy, but he chose not to, resulting in reduced premiums. Because insurance carriers are not bound to undertake unknown and uncompensated risks, the court found the URDE exclusion was not contrary to public policy. Therefore, it affirmed the order of the Superior Court, granting Summary Judgment in favor of Safe Auto.