Opinion ID: 2227977
Heading Depth: 1
Heading Rank: 3

Heading: Validity of Family Member ExclusionPrior Case law

Text: We first recognized the validity of a family member exclusion in an automobile insurance liability policy in 1973. See Rodman, 208 N.W.2d at 909. In Rodman, we declined to extend the principle of reasonable expectations to cases in which an ordinary lay person would not misunderstand the extent of his coverage from a reading of the policy unless there were other circumstances attributable to the insurer which would cause such expectations. Id. at 908. The issue was raised again in 1983 when it was argued the family member exclusion violated Iowa public policy. Walker, 340 N.W.2d at 600-01. In Walker we rejected the claim that chapter 321A (Motor Vehicle Financial Responsibility) evidenced a broad public policy to protect persons injured in motor vehicle accidents from financially irresponsible motorists. Id. at 601. We also rejected the argument that our recent decisions abrogating interspousal and parental immunity and finding the guest statute unconstitutional marked a general judicial pronouncement that courts should protect individuals and the public from the financial burdens imposed by automobile accidents. See id. at 602. In Walker we also rejected the invitation to follow the lead of other states which had invalidated family member exclusions. Id. We distinguished those cases because they arose in states which had mandatory automobile insurance laws. Id. We also distinguished cases arising in states in which there was a judicially recognized public policy of assuring protection to the innocent victims of automobile accidents and no insurance policy without the clause was available. Id. at 602-03. In 1993, we addressed the issue of whether a family member exclusion in a homeowners liability policy was invalid. Principal Cas. Ins. Co., 500 N.W.2d at 68-69. We held neither public policy nor the constitutional guarantee of equal protection invalidated the family exclusion. Id. at 69-70. In 1998 we cited with approval two of our prior decisions upholding a family member exclusion. See United Fire & Cas. Co. v. Victoria, 576 N.W.2d 118, 121 (Iowa 1998) (citing Walker and Principal Cas. Ins. Co.). We reaffirmed this position most recently in Krause v. Krause, 589 N.W.2d 721, 724 (Iowa 1999), where we noted the futility of challenging a family exclusion clause. We point out that [the appellee] does not challenge the validity of the family member exclusion in the policy. Indeed, such a challenge would fail because we have upheld the validity of family member exclusions in the past. Krause, 589 N.W.2d at 724 (citing Victoria, Principal Cas. Ins. Co., and Walker ). In asking us to reverse this long line of prior decisions, the defendants argue the reasonable expectations of insurance consumers are frustrated by the family member exclusion. They contend the family member exclusion has no basis in fact (actuarially or otherwise), is an unconstitutional restriction on the ability of parties to freely contract, violates the public policy of Iowa, and is contrary to the public policy of encouraging family units.