Opinion ID: 1255131
Heading Depth: 1
Heading Rank: 1

Heading: the validity of the named driver exclusion

Text: Oklahoma has enacted a statutory scheme requiring automobile liability insurance in all instances except those exempted by statute. Title 47 O.S. 1991 § 7-601(B) states as follows: On and after January 1, 1983, every owner of a motor vehicle registered in this state, other than a licensed used motor vehicle dealer, shall, at all times, maintain in force with respect to such vehicle security for the payment of loss resulting from the liability imposed by law for bodily injury, death and property damage sustained by any person arising out of the ownership, maintenance, operation or use of the vehicle. Every person, while operating or using a motor vehicle registered in this state which is not owned by such person, shall maintain in force security for the payment of loss resulting from the liability imposed by law for bodily injury, death or property damage sustained by any person arising out of the operation or use of the vehicle, unless such security has been provided by the owner in accordance with this section which does not exclude said person from coverage. [1] The manifest purpose of the legislature, expressed in the text of the statute, is to provide compensation for injury or loss to members of the public with claims that are actionable. Equity Mutual Ins. Co. v. Spring Valley Wholesale Nursery, Inc., 747 P.2d 947, 951 (Okla. 1987). In construing this law, we have held three different exclusions invalid and against the public policy established by Section 7-601 because of their broad and sweeping nature. In Young v. Mid-Continent Cas. Co., 743 P.2d 1084 (Okla. 1987), we invalidated a clause which excluded liability coverage for any person under the age of twenty-five. Later, in Equity Mutual we determined that an exclusion which confined liability coverage to a two-hundred mile radius was invalid, at least to the extent of the minimum statutorily-required liability insurance. Equity Mutual, 747 P.2d at 953. In Nation v. State Farm Ins. Co., 880 P.2d 877 (Okla. 1994), we invalidated, to the extent of the minimum coverage required by statute, an exclusion which omitted from coverage all resident members of a household. Pierce urges that the present exclusion is no different that those previously invalidated in Young, Equity Mutual and Nation by this Court, as it works to harm an innocent victim who was injured on an Oklahoma road. Oklahoma Property urges that the specificity of the exclusion, i.e., excluding only a named individual, distinguishes it from the other invalid broad exclusions. Oklahoma Property claims that this type of specific exclusion was contemplated by the legislature, and that the statute was amended to permit such exclusions. First, we note that Section 6-701(B) was amended in 1982 to permit certain exclusions. The last sentence of Section 7-601 contemplates that specific individuals can be excluded from coverage. Furthermore, Section 7-600(1)(c) states that the liability insurance policy may provide for exclusions from coverage in accordance with existing laws.... Other states have addressed this same issue under their statutory schemes. Those with statutes similar to Oklahoma have upheld the named driver exclusions, at least insofar as above minimum statutory coverage. [2] These courts have reasoned that named driver exclusions ensure continued coverage of an automobile where the driving record of a household member warrants non-issuance or cancellation. State Farm Mut. Auto. Ins. Co. v. Washington, 641 A.2d 449, 452 (Del. 1994). In Dairyland Ins. Co. v. State Farm Mut. Auto. Ins. Co., 882 P.2d 1143 (Utah 1994), the Utah Supreme Court upheld the exclusion, stating that legislature had recognized that in many instances such an exclusion is the only way the insured can afford coverage and the insurer can afford to provide coverage. The Utah statute provided that a policy could specifically exclude a person from coverage under certain conditions. The self-evident rationale of the exclusion portion of the statute is to enable households that include a family member who has a poor driving record to obtain insurance at a reasonable cost by excluding the poor driver. Id. at 1146. The Court refused to interpret the exclusion to provide coverage because to do so would frustrate the purpose of the statute. When first enacted our statutory scheme did not provide for any exclusions from liability coverage. See 47 O.S.Supp. 1976 § 7-600 et seq: and 47 O.S. 1981 § 7-600 et seq: see also Equity Mutual, 747 P.2d at 950, n. 4 and 952. However, when amended in 1983 the statutes provided for certain permissible exclusions. Section 7-600(1)(c) now permits exclusions from coverage in accordance with existing laws. The last sentence of Section 7-601(B) contemplates situations in which the owner of the vehicle obtains insurance which specifically excludes a named individual. In the present case Teresa Horse was informed that her liability coverage did not include coverage for Gerald Horse, because his driver's license had been revoked. At the time of the accident Gerald was driving in violation of state law. Her premium was in part based on this exclusion. Teresa agreed to the exclusion. Neither party denies that coverage for Gerald could have been obtained for a higher premium more commensurate with the higher risk. We hold that a named driver exclusion which is based on the poor driving record of the excluded individual is consistent with our compulsory liability insurance laws. Our legislature realized that premiums might be too costly in some circumstances, and chose to allow the contracting parties to exclude specifically named individuals. By doing so the legislature allowed for families to obtain insurance that might not otherwise have been affordable. We believe that our public policy of requiring liability insurance is not offended by this limitation. [3]