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Case Bulletin – Pennsylvania Superior Court Upholds Enforceability of an “Unlisted Resident Driver Exclusion”

In the September 2017 decision of Safe Auto Insurance Company v. Oriental-Guillermo, et al., the Superior Court of Pennsylvania upheld a trial court’s granting of a Motion for Summary Judgment finding that an automobile insurance carrier was not obligated to provide insurance coverage to a non-relative resident when the policyholder did not list her as a driver on his automobile insurance policy and the policy itself contained an “Unlisted Resident Driver Exclusion.”  The relevant portions of the case are summarized below.

In April of 2013, Rachel Dixon (“Dixon”) was involved in a two-car motor vehicle accident, which resulted in injuries to a passenger in the other vehicle.  At the time of the accident, Dixon was driving a vehicle owned by her boyfriend Rene Oriental-Guillermo (“Guillermo”).  Guillermo insured his vehicle through Safe Auto. The Safe Auto policy had an Unlisted Resident Driver Exclusion that specifically excluded from coverage those individuals who lived with the policyholder, but were unrelated to the policyholder and whom the policyholder did not list on the policy. At the time of the accident, Dixon lived with Guillermo, but she was not related to him, and she was not listed on the policy.

The injured passenger in the other vehicle filed a personal injury lawsuit seeking damages against Dixon, Guillermo, and the driver of the other car involved in the accident. Following, Safe Auto filed a Complaint bringing a Declaratory Judgment action regarding the enforceability of the Unlisted Resident Driver Exclusion. Safe Auto eventually filed a Motion for Summary Judgment in the Declaratory Judgment Action.  This Motion for Summary Judgment requested that the court find that the Unlisted Resident Driver Exclusion apply and entitling it to judgment as a matter of law. The trial court granted Safe Auto’s Motion for Summary Judgment and the Defendants appealed the decision to the Pennsylvania Superior Court.

The Pennsylvania Superior Court first analyzed the language of the Unlisted Resident Driver Exclusion in the policy to determine if it was “unambiguous.” It followed Pennsylvania Supreme Court precedent stating that when language of an insurance contract is “clear and unambiguous” the court must give effect to that language except if it violates public policy. 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 Superior Court found that this language was unambiguous as there was no dispute about Dixon’s relation to Guillermo or that she was not listed on the policy.

Next, the Superior Court determined whether the Unlisted Resident Driver Exclusion contravened public policy.  It began by noting that courts should only refuse to enforce contracts because of public policy when a given policy is so “obviously for or against public health, safety, morals or welfare, that there is a virtual unanimity of opinion. . .” As a result, it stated that courts are generally hesitant to find that a contract contravenes public policy. It then went on to address the appellants’ arguments regarding the public policy implications of the Safe Auto policy. The appellants’ first argued that the Unlisted Resident Driver Exclusion contravened the Motor Vehicle Financial Responsibility Law’s (MVFRL) requirement that an owner of a vehicle ensure that all drivers of the vehicle are covered by insurance.  In response to this argument, the court held that the appellants had incorrectly placed this responsibility on the insurance company, rather than the owner of the vehicle, to ensure that a driver of a vehicle is covered by insurance.  The court held that the owner should only permit another person to driver his or her vehicle if that person has insurance. Further, the court held that there is no provision in the MVFRL that indicates that the legislature intended to shift the responsibility of insuring unidentified individuals who live with the insured, but are not related to the insured, from the owner of the vehicle to the insurance carriers.  As a result, the court held that Guillermo, as the policy holder, failed to meet the obligation of the MVFLR that required him to ensure that a driver of his car had insurance.

The Superior Court then addressed the appellants’ argument that the Unlisted Resident Driver Exclusion is contrary to the MVFRL by analogizing it to the “Named Driver Only Exclusion.” The “Named Driver Only Exclusion” permits a policyholder to exclude from his policy certain individuals for whom he does not want to provide coverage.  The appellants argued that the public policy behind the Named Party Exclusion provision is that the insurance company must insure every individual who uses an insured’s vehicle unless the insured specifically asks the insurance company not to provide coverage for that driver.  The court disagreed with this argument.  Instead, the court found that the Named Driver Exclusion and the Unlisted Resided Driver Exclusion are consistent with one another.  It reasoned that both policy provisions allow the insured to determine the drivers of his or her vehicle for whom the insured will purchase insurance coverage. Further, the court held that this principle is consistent with the MVFRL in which the legislature placed the burden on the insured to make sure that individuals who get behind the wheel of his or her vehicle have insurance.

Finally, the appellants argued that the Unlisted Resident Driver Exclusion is void against public policy because it undermines the goal of “maximum feasible restoration to accident victims.” However, the court held that this argument does not undermine the settled public policy goal of the MVFL, which is to encourage vehicle owners to obtain proper insurance coverage for themselves and the people who will be operating the insured vehicle. It held that the appellants’ argument is inconsistent with that policy goal because it shifts the burden from the insured to the insurer. Therefore, it upheld the trial court’s decision finding that Safe Auto was entitled to judgment as a matter of law and it was not obligated to provide insurance coverage to Dixon.