Opinion ID: 2581315
Heading Depth: 1
Heading Rank: 5

Heading: the compulsory insurance law

Text: ¶ 14 The provisions of 47 O.S. Supp. 1993 § 601(C)(1) prohibit the operation of any motor vehicle in this state unless it is insured or secured for the payment of loss resulting from the liability imposed by law for bodily injury, death and property damage sustained by any person arising out of the ownership, maintenance, operation or use of the vehicle. (emphasis added) [20] ¶ 15 As originally enacted the compulsory insurance law did not make any reference to exclusionary provisions. [21] That state underwent a change when in 1982 the law was amended to authorize the inclusion, in a policy's omnibus clause, [22] of exclusions in accordance with existing law. [23] At the same time the legislature added another provision that implicitly sanctions the exclusion of a named individual as an insured driver. [24] Without deciding whether by its 1982 amendments the legislature intended merely to authorize exclusions from the omnibus clause and of named individuals as insured drivers and no others, it is fair to say that the compulsory insurance law does not plainly and unambiguously sanction or prohibit other types of exclusions. The statute's references to exclusions do not explicitly address the validity of an exclusion based on the kinship of the harmed individual to an otherwise insured tortfeasor whose utilization of the insured vehicle at the time of the accident is one that stands covered by the policy. ¶ 16 Even in the absence of a violation of a law's express provision, an exclusion may nonetheless be invalid for nonconformity to the policy of the law. The principal purpose of law-mandated liability insurance is the protection of the public from the financial hardship which may result from the use of automobiles by financially irresponsible persons. [25] To effectuate this policy, any vehicle operating on the roads of this state must be secured against liability to innocent victims in the event harm occurs from its negligent operation. [26] This clearly articulated public policy overrides contrary private agreements that restrict coverage where the contractual strictures do not comport with the purpose of the Act. [27] ¶ 17 Extant jurisprudence consistently holds that insurance policy clauses which operate to deny coverage to the general public are void as contrary to statutorily articulated public policy. [28] Hence, clauses which would exclude from coverage all potential claimants have been uniformly invalidated. [29] Yet the same jurisprudence also teaches that the legislative intent in enacting compulsory liability insurance was not to eliminate all possible bargaining regarding liability exclusions which may be contained in the required liability insurance policies. [30] ¶ 18 Family exclusions potentially affect a sizable portion of Oklahoma's population. Almost everyone may plausibly be placed within the excluded class under some relative's policy. Unrestricted application of family exclusions means that seriously injured accident victims will be left with no secured source of compensation for their injuries. ¶ 19 Our sister states generally have either completely validated or completely invalidated named insured and household exclusionary clauses. [31] We view this approach as undesirable because it needlessly limits the contractual flexibility of both parties. It is possible to fashion a standard which retains an appropriate element of bargained-for coverage (or exclusion) of family members without sanctioning the exclusion of an overly broad class of persons exposed to potential harm. ¶ 20 The solution lies in the interaction of liability insurance and uninsured motorist coverage, the two components of an increasingly integrated system of automobile insurance. [32] We hold that the household and named insured/insured exclusions are invalid only when they operate to deny all coverage to an injured resident family member. It is the insurer's responsibility to assess whether its policy's exclusionary provision will have this effect. Compliance with this pronouncement imposes on the insurer the duty to provide in its policy for at least the minimum mandated coverage. This may be in the form of either liability or uninsured motorist coverage. In short, when an applicant rejects uninsured motorist coverage [33] in a policy which excludes resident family members from liability coverage, the insurer must inform itself by appropriate inquiry whether those who would fall into that policy's excluded class are covered by their own uninsured motorist coverage or by some other indemnity. Those persons who do not own a car will rarely, if ever, have purchased their own uninsured motorist coverage, but one's car ownership alone is no guarantee that there is the requisite coverage. Absent some explicit provision in the policy which affords them the minimum protection, wrongly excluded persons  persons not secured by uninsured motorist coverage  will be deemed insured to the very limit of the insured's liability protection. [34] ¶ 21 In order to afford insurers ample notice and opportunity to recast liability exclusions or afford UM offers to those who may be impermissibly excluded, the full impact of the new rule which places limits upon the enforceability of exclusions from coverage shall be applied only to those claims which arise after twelve months from the date mandate is issued in this cause. As for this lawsuit and for all litigable claims that have or will have arisen before the date of mandate herein, as well as for those which shall arise during the twelve-month period immediately following the mandate's issuance, improperly excluded spouses and resident family members shall be deemed covered solely to the extent of the statutorily-mandated minimum amount  $10,000 for each person and $20,000 for each accident. [35]