Opinion ID: 1959437
Heading Depth: 1
Heading Rank: 7

Heading: Public Policy Permits Driver Exclusions

Text: Kivlin's second argument on appeal is that the Nationwide Voiding Endorsement is invalid as a matter of law because it conflicts with the public policy behind 21 Del. C. § 6106. According to Kivlin, that section is meant to extend protection to the public by making the owner of a motor vehicle financially responsible for the negligence of the minor. Nationwide does not dispute that the public policy reflected in Section 6106 is to hold owners of vehicles financially accountable for the negligent acts of a minor driver who is permitted to operate the owner's vehicle. [10] According to Nationwide, however, although Section 6106 makes motor vehicle owners financially responsible for the negligence of a minor, it does not reflect a legislative mandate that an insurer provide coverage for the imputed negligence of the owner. The policies reflected in 21 Del. C. § 6106 and 18 Del. C. § 3909(c) involve competing interests of the public, motor vehicle owners, and insureds that are reconcilable when these sections are read in pari materia. The paramount consideration in Section 6106 is the General Assembly's intention to impose financial responsibility upon an adult owner of a motor vehicle who permits it to be used by a minor. [11] Owners of motor vehicles may purchase insurance coverage to protect themselves against the financial responsibility that Section 6106 imposes. The paramount consideration recognized by the General Assembly in Section 3909(c) is an insurance carrier's right to cancel or not renew coverage for some drivers, including minors, under certain circumstances. The insurer's right of cancellation, however, was made subject to certain other public policy considerations. Delaware law permits insurance companies to issue named driver exclusions, when cancellation is warranted because of the driving record of a household member, to ensure continued coverage of a family automobile. [12] The intent of the statute is to allow for continued coverage of vehicles at a reasonable cost to the remaining insureds under the policy, while at the same time the insurer no longer bears the risks arising from the excluded persons' poor driving record. [13] That two-fold legislative purpose was recognized by this Court in Washington. [14] When a notice of cancellation is received, the insured policy owner can either obtain coverage from a different insurer or continue the original coverage subject to a designated driver exclusion. If the insured owner chooses the latter option, the excluded person can either surrender his/her driver's license or obtain separate insurance coverage. If an adult owner of a motor vehicle permits an otherwise insured vehicle to be operated by a minor who is designated as an excluded driver, and that minor has no separate insurance coverage, the personal assets of that adult owner are at risk. Kivlin asserts that if the foregoing analysis is correct, the gap in insurance coverage makes the Nationwide Voiding Endorsement invalid because of another public policy that has been recognized by this Court in cases involving various customary exclusionary clauses. In Delaware, general policy exclusions which are usual and customary in the automobile insurance industry are valid only above the minimum financial responsibility limits mandated by 21 Del. C. §§ 2118 and 2902. [15] In Harris, however, the specific holding of this Court was that policy exclusions affecting the statutory minimum are invalid in the absence of an express statutory authorization. [16] Conversely, when an exclusion in an automobile insurance policy is expressly authorized by statute, the exclusion is valid. The Nationwide Voiding Endorsement is expressly authorized by 18 Del. C. § 3909(c). Since there is express statutory authority for the Nationwide Voting Endorsement, its provisions must be given force and effect.