Opinion ID: 1671266
Heading Depth: 1
Heading Rank: 4

Heading: The Named Driver Exclusion

Text: Louisiana law requires that liability insurance policies issued in this state shall insure the named insured and any other person using the motor vehicle with the insured's permission, whether express or implied, for damages resulting from the ownership, maintenance, or use of the motor vehicle. La.Rev.Stat. § 32:900(B)(2). However, an insurer and an insured may by written agreement exclude from coverage any named person who is a resident of the same household as the named insured. La.Rev.Stat. § 32:900(L). Although earlier this term we found that this provision did not permit the owner of a policy to exclude himself from coverage, Williams v. U.S. Agencies Cas. Ins. Co., 00-1693, pp. 3-4 (La.9/29/00), 769 So.2d 1217, our courts have otherwise approved the use of the named driver exclusion for other members of the policy owner's household, see, e.g., Bellard v. Johnson, 96-0909, p. 1 (La.5/30/97), 694 So.2d 225, 225 (per curiam) (exclusion of a spouse); Green v. Bailey, 29,759, p. 5 (La.App. 2 Cir. 8/20/97), 698 So.2d 715, 718 (exclusion of a son); Carter v. Patterson, 96-0111, p. 8 (La.App. 4 Cir. 5/22/96), 675 So.2d 736, 740 (exclusion of a daughter). Thus, there is no question that the named driver exclusion precluding coverage for Windy Myles's operation of the Toyota Camry under the policy was valid in 1993 when signed by Ivory Myles, Sr. The issue before us is the applicability and continuing enforceability of that exclusion in 1998 regarding Windy's operation of the Toyota Camry in light of the fact that a Lincoln Town Car was added sometime between the time the exclusion was first signed in 1993 and the time that the accident took place in 1998. The terms of an insurance contract have the effect of law between the parties. La. Civ.Code art. 1983. Here, the named driver exclusion agreed to by Myles and American Deposit specifically states that it applies to all REWRITE OR RENEWAL POLICIES. (Emphasis in original). Thus, if the policy at issue, which covers the Toyota Camry and the Lincoln Town Car, constitutes a rewrite or renewal of the policy in effect in 1993, the 1993 named driver exclusion will apply and coverage is excluded for this accident. On the other hand, if the policy at issue is something other than a rewrite or renewal of the 1993 policy, the exclusion is inapplicable. [2] The term rewrite policy is not defined in the policy itself, but this fact alone does not make the exclusion ambiguous; instead, we will give the term its generally prevailing meaning. La. Civ. Code art. 2047. Although not defined in the leading insurance law treatises, the Oxford English Dictionary defines rewrite as: To write again, [especially] in a different form. Oxford English Dictionary Vol. XIII, 847 (2nd ed. 1989). Thus, the term contemplates a revision of text that does not substantially alter the content, but simply revises the expression of it. Within the context of an insurance policy, to rewrite an insurance policy would mean to revise the terms and conditions of coverage without affecting the substantive rights of the insurer or insured and in such a manner that the rewrite policy is substantially the same as the policy it is rewriting. Thus, a rewrite occurs when an insurer changes the policy form or makes other relatively minor changes that do not significantly affect the level of coverage owed to the insured. Under this definition, a policy on a single vehicle is not rewritten by (1) adding a vehicle to that policy or (2) issuing a new policy covering two vehicles. [3] When an insured adds a vehicle to the coverage afforded by an existing policy, that action is significant on many levels. The exposure of the insurance company substantially increases from insuring one vehicle to insuring two. By increasing the coverage in such manner, a significant raise in premiums is imposed. This premium increase is not instituted at the discretion of the insurer's agent; instead, it is based upon complex formulas indicating the new premium that would sufficiently cover the higher level of risk that the insureds pose from the operation of two motor vehicles instead of one. When the vehicle is added, the insured and an agent of the insurer execute a new agreement that operates to create a new coverage over a new automobile. This significant addition is not what could be reasonably referred to as a rewrite; consequently, the policy in effect at the time of the accident in this case is not a rewrite of the 1993 policy because the Lincoln Town Car was added in the interim. Because the policy in effect at the time of the accident is not a rewrite of the 1993 policy, it is only subject to the named driver exclusion if it constitutes a renewal of the 1993 policy, the second term used in the named driver exclusion. The term renewal policy is not defined in the policy itself, but we need not look far to ascertain its meaning. According to the Insurance Code, a renewal policy is a policy replacing at the end of the policy period a policy previously issued and delivered by the same insurer, or the issuance and delivery of a certificate or notice extending the term of a policy beyond its policy period or term. La.Rev. Stat. § 22:636.1(A)(5). Thus, the concept of a renewal policy requires, among other things, a continuation of coverage without interruption. Stephenson v. Van Vleit, 96-1407, p. 12 (La.App. 3 Cir. 4/30/97), 693 So.2d 858, 865; Dempsey v. Automotive Cas. Ins., 95-2108, p. 8 (La.App. 1 Cir. 6/28/96), 680 So.2d 675, 679; Lovoi v. Ladreyt, 94-1002, p. 2 (La.App. 5 Cir. 4/12/95), 655 So.2d 387, 388. Further, by the statute's very terms, a renewal can only occur at the end of the policy period that it renews, not before. Smith, 98-1142 at 7, 734 So.2d at 927; Stephenson, 96-1407 at 12, 693 So.2d at 865; Dempsey, 5-2108 at 8, 680 So.2d at 679. Finally, as a general rule, when a policy is renewed, the same terms and conditions of the prior policy will apply to the renewal policy. 1 Eric Mills Holmes, Appleman on Insurance § 4.16, p. 463 (2nd ed. 1996); 2 Lee R. Russ & Thomas F. Segalla, Couch on Insurance § 29.35 (3rd ed. 1997); 1 Allan D. Windt, Insurance Claims & Disputes § 6.09, p. 396 (3rd ed. 1995). Here, although the record is silent as to exactly when it occurred, we do know that the level of coverage afforded to Ivory Myles, Sr. by American Deposit expanded when the Lincoln Town Car was added to the policy. This addition in coverage is not simply a continuation of the same terms and conditions of a prior policy; instead, it is a substantial increase in the policy's scope of coverage. [4] Consequently, the policy at issue which insures two vehicles is not a renewal of the 1993 policy which only insured one vehicle and which contained the named driver exclusion. [5] In further support of this position, Relators cite Donaghey v. Cumis Insurance Society, 600 So.2d 829, 831 (La.App. 3rd Cir.1992), in which the court found that the addition of a vehicle to an existing policy creates an altogether new policy requiring that new UM waiver forms be executed. [6] As the court of appeal in this case noted, the Donaghey decision does not mandate a particular result in this case; however, the jurisprudence developed under the UM statute is persuasive in this situation. American Deposit, 99-2659 at 5, 764 So.2d at 175. The Donaghey rule is based upon the premise that a waiver of UM coverage signed prior to an expansion of coverage, as in the case of adding an automobile, can no longer be valid because an individual would be rejecting coverage before the opportunity ever existed to accept it. Donaghey, 600 So.2d at 831 (quoting Guilbeau v. Shelter Mut. Ins. Co., 549 So.2d 1250, 1255 (La.App. 3rd Cir.1989)). Although that rule of law as it applies to UM waivers was legislatively overruled by La. Acts 1999, No. 732, § 1, we find the reasoning applicable in this situation. [7] When Ivory Myles, Sr. executed the named driver exclusion in 1993, he was excluding coverage in situations during which his daughter would be operating the 1991 Toyota Camry. In doing so, Myles contemplated that the exclusion would apply to the current policy as well as to any rewrites or renewals of that policy. By purchasing the Lincoln Town Car, Myles's need for insurance changed dramatically. The law required him to secure coverage for the new vehicle. He therefore bought a new policy of insurance that would cover both vehicles. The conclusion that back in 1993 Myles executed an exclusion from coverage that did not yet exist, on a vehicle he did not yet own, is not reasonable. Instead, the addition of a car in this case after the exclusion was signed in 1993 served to create a new policy requiring a new named driver exclusion if the parties desired that no coverage would attach when Windy Myles operated either the 1991 Toyota Camry or the 1994 Lincoln Town Car. Therefore, the policy in effect at the time of the accident was not a renewal of the 1993 policy. In sum, the policy in effect at the time of the accident was neither a rewrite nor renewal of the policy in effect at the time the named driver exclusion was executed in 1993. Further, no additional named driver exclusions have been signed that are applicable to the new policy covering the two vehicles in effect at the time of the accident in 1998. Therefore, Windy Myles was not excluded from coverage under the policy of insurance in effect in 1998 issued by American Deposit to Ivory Myles, Sr.