Opinion ID: 2623504
Heading Depth: 2
Heading Rank: 2

Heading: state farm's policy

Text: ¶ 36 Having determined that the exclusions in the Progressive policy are valid and that the Progressive policy does not extend insurance coverage for John's 1998 accident, we next address the Calhouns' alternative argument that State Farm did not satisfy the requirements of the named driver exclusion in Utah Code section 31A-22-303(7), see Utah Code Ann. § 31A-22-303(7) (Supp.1998), and that we should therefore construe the State Farm policy to fill the coverage gap created by the two policies. ¶ 37 Before addressing this argument, we first note that, contrary to State Farm's assertions, we did not explicitly reject an identical argument in Dairyland Insurance Co. v. State Farm Mutual Automobile Insurance Co., 882 P.2d 1143 (Utah 1994). Although the facts in Dairyland were similar to those in the instant case, the issue there concerned whether an excluded household member under the named driver exclusion was covered by the policy as a permissive user pursuant to Utah Code section 31A-22-303(1)(b)(i). [5] Id. at 1144. We specifically reserved the issue now raised before us; namely, whether a policy such as [Progressive's] that fails to cover the primary insured when he or she is driving substitute vehicles from the same household constitutes independent insurance sufficient to satisfy the owner's and operator's security requirement under subsection (7). Id. at 1144 n. 1. ¶ 38 The named driver exclusion on which the State Farm policy is based is set forth in Utah Code section 31A-22-303(7). See Utah Code Ann. § 31A-22-303(7) (Supp. 1998). That section provides as follows: A policy of motor vehicle liability coverage under Subsection 31A-22-302(1) may specifically exclude from coverage a person who is a resident of the named insured's household, including a person who usually makes his home in the same household but temporarily lives elsewhere, if each person excluded from coverage satisfies the owner's or operator's security requirement of Section 41-12a-301, independently of the named insured's proof of owner's or operator's security. Id. To comply with this named driver exclusion, the Calhouns argue that the excluded driver's independent insurance policy must provide that driver with full coverage for all permissive driving uses. They argue that because the Progressive policy did not do so with respect to John, the State Farm policy should be construed to cover John's accident in this case. ¶ 39 State Farm counters that the named driver exclusion provision in section 31A-22-303(7) does not require the named driver's insurance to cover every accident. Rather, it argues that, by its plain language, subsection (7) only requires excluded drivers to satisf[y] the owner's or operator's security requirement of Section 41-12a-301, independently of the named insured's proof of owner's or operator's security. Id. Because both the unidentified insurance policy and the Progressive policy satisfied section 41-12a-301, State Farm contends that the named driver exclusion in its policy is valid and properly excludes coverage for John. [6] We agree with State Farm. ¶ 40 We acknowledge that, together, the Progressive and State Farm policies allow for a gap in insurance coverage with respect to John's use of other household relatives' vehicles not named in his Progressive policy. However, the plain language of Utah's relevant automobile insurance statutes allows for such a gap. Section 31A-22-303(7) does not require that, in order to properly exclude a named driver, the excluded driver must obtain insurance covering every permissive use of a vehicle. Rather, it provides that an insurer may specifically exclude from coverage a person who is a resident of the named insured's household... if each person excluded from coverage satisfies the owner's or operator's security requirement of Section 41-12a-301, independently of the named insured's proof of owner's or operator's security. Id. (emphasis added). Because there is no dispute that John's previous independent insurance policy satisfied the owner's security requirement of section 41-12a-301, and because we have determined that Progressive's subsequent policy also satisfies the owner's security requirement of section 41-12a-301, John had, in fact, satisfied section 41-12a-301 at all relevant times. Accordingly, there is no question that State Farm properly excluded John pursuant to a valid named driver exclusion. We therefore hold that the district court was correct in deciding that, under the named driver exclusion, State Farm is not liable for John's accident in this case.