PA Motor Vehicle Financial Responsibility Law (MVFRL); Auto Insurance Liability

Safe Auto Ins. Co. v. Oriental-Guillermo, 170 A.3d 1170 (Pa. Super. 2017), allocatur granted Jun. 4, 2018, appeal docket 26 MAP 2018

This case involves the enforceability of an unlisted resident driver exclusion in a Personal Auto Policy and whether that exclusion violates the terms and public policy of the Pennsylvania Motor Vehicle Financial Responsibility Law, 75 Pa. C.S. § 1701, et. seq.

Rachel Dixon was driving a vehicle belonging to her boyfriend, Rene Oriental-Guillermo, when she was involved in a two-car accident. Oriental-Guillermo was the policyholder on the vehicle and insured the vehicle through Safe Auto. The Safe Auto Policy had an Unlisted Resident Driver Exclusion, which “specifically excluded from coverage those individuals who lived with the Policyholder, but were not related to the policyholder and whom the Policyholder did not specifically list on the Policy.” Slip op. at 2. Dixon lived with Oriental-Guillermo, but was not related to him nor was she listed as a driver on his policy.

The trial court granted Safe Auto’s motion for summary judgment finding that the Unlisted Resident Driver Exclusion provision of the policy applied and Safe Auto had no duty to defend or indemnify Dixon in a personal injury lawsuit brought by the passenger in the other vehicle involved in the accident. Oriental-Guillermo appealed to Superior Court raising the issue of whether the trial court erred in finding that the provisions of the Personal Auto Policy did not violate the MVFRL and whether the provisions violated the Commonwealth’s public policy.

Superior Court noted that when interpreting an insurance contract, the court is required to give effect to provisions when the language is clear and unambiguous, unless the contract violates public policy. The language in the exclusion section of the contract stated that the insurer has no duty to defend bodily or property damages “[t]hat occur[] 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.” Slip op. at 6. The court agreed with the trial court that this language was unambiguous and Safe Auto did not have a duty to indemnify or defend Dixon.

The court also disagreed with Oriental-Guillermo’s argument that the Unlisted Resident Driver Exclusion violates the language of the MVFRL or public policy. Specifically, Oriental-Guillermo argued the Unlisted Resident Driver Exclusion contravened the MVFRL’s mandate than an owner of a motor vehicle ensure that all drivers of his vehicle are covered by insurance. The court disagreed and interpreted this mandate to put the onus on the vehicle owner, not the insurance company, to ensure anyone who drives the owner’s car is insured.

Oriental-Guillermo next argued that the public policy behind the Named Driver Exclusion of the MVFRL intended to ensure 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 Named Driver Exclusion states, “An insurer . . . may exclude any person . . . from benefits.” Slip Op. at 10. The court disagreed concluded that the public policy implications of the Named Driver Exclusion are consistence with the Unlisted Resident Driver Exclusion. In both provisions, the insured chooses whom to ensure is covered, but the insurance company is not required to provide insurance absent that choice. The insured person is in a much better position than the insurance company to identify persons who will drive his car and thus should be insured—this principle is consistent with the MVFRL to put the burden on the insured, rather than the insurance company.

Lastly, the Oriental-Guillermo argued that the Unlisted Resident Driver Exclusion is void against public policy because it undermined the “goal of maximum feasible restoration to accident victims.” Slip Op. at 11 (quoting Appellants’ Brief at 11). The court, however, concluded that the goal of maximum feasible restoration to accident victims is just one of many goals of the MVFRL. Overall, the court agreed with the trial court’s opinion that the public policy behind the MVFRL is to encourage vehicle owners to obtain insurance for themselves and people they anticipate may drive their vehicle. That burden lies squarely on the insured and the MVFRL did not anticipate shifting that burden onto insurance companies. The Superior Court affirmed the trial court’s grant of summary judgment to Safe Auto.

The Supreme Court of Pennsylvania granted allocatur on the following issues:

  1. Did the Superior Court err as a matter of law in finding that the unlisted resident driver exclusion in a Personal Auto Policy is valid and enforceable and not violative of the terms and provisions of the Pennsylvania Motor Vehicle Financial Responsibility Law, 75 Pa.C.S.A. § 1701, et. seq.?
  2. Did the Superior Court err as a matter of law in finding that the unlisted resident driver exclusion in a Personal Auto Policy is valid and enforceable and not violative of the public policy of the Commonwealth of Pennsylvania as embodied in § 1786 of the Pennsylvania Motor Vehicle Financial Responsibility Law, 75 Pa.C.S.A. § 1786, which implicitly directs that all permissive users of an insured vehicle be insured under the owner’s insurance policy?

For more information, contact Kevin McKeon or Dennis Whitaker