Opinion ID: 2616603
Heading Depth: 1
Heading Rank: 3

Heading: Statutorily Articulated Public Policy And Oklahoma's Compulsory Insurance Law

Text: Oklahoma's Financial Responsibility Act requires that owners maintain liability insurance on their automobiles. [15] By requiring owners to guarantee their financial responsibility in case of an accident, the legislature expressed a recognizable public policy that motorists carry insurance so victims of their negligence can be compensated. This clearly articulated public policy must override private agreements that restrict coverage where the contractual strictures do not square with the purpose of the Act. [16] Insurance policy clauses which operate to deny coverage to the general public are void as contrary to statutorily articulated public policy. [17] The Act's principal purpose is to protect the public using the highways from financial hardship which may result from the use of automobiles by financially irresponsible persons. [18] In Young v. Mid-Continent Casualty Co., [19] this court examined a provision in an automobile policy which withheld liability coverage from the insured vehicle if it were operated by one under the age of 25. The restriction, we concluded, was contrary to statutorily expressed public policy because it impermissibly limited the scope of an insured's liability vis-a-vis innocent victims of the operator's negligence. [20] In Equity Mutual Ins. Co. v. Spring Valley Wholesale Nursery, Inc., [21] . We likewise declared void a policy covenant which provided that the liability coverage would not apply when the vehicle was operated beyond a 200-mile radius of the owner's place of business. This restriction had the effect of rendering the vehicle uninsured vis-a-vis statutorily protected third parties. In yet another case  State Farm Auto Ins. Co. v. Greer [22]  we concluded that when the terms of an insurance contract bar all potential claimants, they are void as contrary to the public policy expressed in the compulsory insurance law. Young, Equity Mutual and Greer can be distinguished from the situation at bar. The covenants present in those policies would have excluded from coverage all potential claimants. The covenant of which the Estate complains in this case does not withhold protection from all members of the public, but rather would bar only a very small class of potential claimants: car passengers related to the insured who reside in the insured's household. Insurance policy clauses that place beyond coverage narrow classes of potential victims have been upheld as not contrary to public policy. [23] . In Looney v. Farmers Ins. Group, [24] a woman was injured when her husband wrecked the car in which she was riding. The wife sued to recover under an insurance policy covering the vehicle. The insurance company defended against the claim by contending she was excluded as a named insured and by the household exclusion clause. We held the household exclusion valid because the wife of an insured was not a member of the public which the compulsory insurance law was intended to protect. [25] Looney supports the distinction that policy clauses which withhold coverage from the general public are void, but those which exclude but a narrow class of persons do not offend public policy. Applying Oklahoma law to similar facts, the U.S. Court of Appeals for the Tenth Circuit in Farmers Ins. Co. v. McClain [26] upheld a household exclusion clause identical to the one challenged here by the Estate. [27] . A permissive user had borrowed an automobile and wrecked it, injuring his wife. The federal court held the household exclusion applied to the case and denied coverage to the plaintiff. [28] . McClain is not altogether illuminating because the court did not discuss the public policy implications of the exclusionary clause. [29] The states are divided on whether public policy articulated by compulsory insurance laws requires that the exclusion here under review be declared void as contrary to statutorily laid down public policy. [30] No single approach to public policy attacks upon household exclusion clauses can be regarded as the majority trend. The Following jurisdictions, all with compulsory liability coverage, have invalidated the household exclusion clause on public policy reasons: Delaware, [31] Idaho, [32] Michigan, [33] Montana, [34] New Jersey, [35] New Mexico, [36] North Dakota, [37] South Carolina [38] and Texas. [39] In the following jurisdictions household exclusion clauses have been held unenforceable insofar as they deny minimum statutory coverage: Arizona, [40] Kansas, [41] Kentucky, [42] Maryland, [43] Missouri, [44] Nevada, [45] New York, [46] South Dakota, [47] Utah, [48] Washington, [49] and Wyoming. [50] Household exclusion clauses withstood public policy challenges in the following jurisdictions: Alabama, [51] California, [52] Colorado, [53] Florida, [54] Georgia, [55] Illinois, [56] Indiana, [57] Iowa, [58] Massachusetts, [59] Pennsylvania, [60] and Rhode Island. [61] III