August 26, 2019

The Pennsylvania Supreme Court has ruled unanimously that unregistered driver exclusions in auto insurance policies do not violate public policy or the Pennsylvania Motor Vehicle Financial Responsibility Law (PMVFR). The case is Safe Auto Insurance v. Oriental-Guillermo, 7 Cal. 5th 781 (2019).

In April 2013, Rachel Dixon was driving a car owned by her live-in boyfriend Rene Oriental-Guillermo and was involved in a two-car accident. A passenger in the other vehicle sued, but Safe Auto pursued a declaratory judgment action in order to determine whether it had to pay out on the policy or if the policies unregistered driver exclusion applied in this situation. Safe Auto subsequently filed a motion for summary judgment arguing that because Dixon was unrelated to Oriental-Guillermo and was also not listed as a household member on the policy, Safe Auto had no duty to defend or indemnify her. The trial court granted that motion.

The Superior Court of Pennsylvania discarded all concerns with the language of the exclusion and agreed with the lower court's finding that it "excludes from coverage non-relatives of the policyholder who drive the policyholders car, live in the policyholders household, and who the policyholder does not list as an additional driver" The court found that the language was clear and unambiguous and did not violate public policy or the PMVFR.

Oriental-Guillermo did not deny that he was aware of the exclusion, and he allowed his vehicle to be operated by Dixon who, under the express terms of the unregistered driver exclusions (UDRE) was not covered under the policy. Oriental-Guillermo had the option of adding his girlfriend to the policy but failed to do so.

Editors Note: In this case the Superior Court upheld the Unlisted Resident Driver Exclusion. In order to be an included driver, the driver must be related to the insured and live with the insured, or be listed specifically on the policy. In the case at hand, the driver lived with the insured and is not related to the insured and was also not listed on the policy. The court also noted that the Unlisted Resident Driver Exclusion is consistent with the Named Driver Exclusion, as both require the insured to determine the drivers of their own car for whom the insured will purchase insurance.

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