NAMED DRIVER EXCLUSIONS IN PENNSYLVANIA AUTOMOBILE INSURANCE POLICIES: DRAFTING CONSIDERATIONS FOR INSURERS

By Gregory R. Riley, Esq. and James N. Zeris, Esq.

 

The incorporation of named driver exclusions into automobile insurance policies is nothing new in Pennsylvania. The use of a named driver exclusion in a policy is an accepted practice and is authorized by statute in the Commonwealth. However, careful analysis by insurers of the language of the named driver exclusion statute is necessary to avoid potential legal complications.

 

75 Pa.C.S.A. § 1718, entitled Exclusion from Benefits, codifies what is known as Pennsylvania’s “Named Driver Exclusion.” The named driver exclusion, 75 Pa.C.S.A. § 1718(c), states in its entirety:

 

(C) Named driver exclusion.–An insurer or the first named insured may exclude any person or his personal representative from benefits under a policy enumerated in section 1711 or 1712 when any of the following apply:

 

(1) The person is excluded from coverage while operating a motor vehicle in accordance with the act of June 5, 1968.

(2) The first named insured has requested that the person be excluded from coverage while operating a motor vehicle. This paragraph shall only apply if the excluded person is insured on another policy of motor vehicle liability insurance. 

 

Pennsylvania’s named driver exclusion allows either the insurer or the first named insured to exclude any person from benefits under a particular policy of insurance when subparagraphs one and two of § 1718 (C) apply. The named driver exclusion can be found in one of three places: (i) the policy itself, (ii) a valid endorsement to the policy, or (iii) a valid rider to the policy (Note that an exclusion can sometimes appear in an application for insurance.) Under Pennsylvania law, valid riders and endorsements that are issued subsequent to the policy are deemed to become part of the insurance policy/contract. 

 

When applying well-settled canons of statutory construction to 75 Pa.C.S.A. § 1718, it is clear that the insurer or the first named insured can affirmatively exclude individuals from coverage under their policy. 75 Pa.C.S.A. § 1718 confers on insurers and insureds alike an affirmative grant of authority. If careful drafting is not undertaken, however, the effect might be to name exclusive drivers, something that is clearly not contemplated by the plain-meaning of 75 Pa.C.S.A. § 1718 or the cases that have interpreted it.

 

It is important to note that the named driver exclusion language found in 75 Pa.C.S.A. § 1718 is stated in the positive, not the negative. In other words, the named driver exclusion allows the insurer or the first named insured to affirmatively list in the policy, endorsement, or rider a name or multiple names of persons who are not allowed to recover benefits under the insurance contract. 

 

Bearing the above in mind, insurance companies must be careful to state the desired exclusion in the positive, as opposed to the negative. If the language in a particular application, endorsement, rider, and/or policy is written in the negative, it would essentially say that, in order to receive benefits under the policy, the driver would have to be approved by the insurance company and affirmatively named in the policy, rider, or endorsement. The effect of this language would be that no driver in the world could receive benefits under a particular policy who had not been approved by the insurance company. Based upon the Pennsylvania jurisprudence relating to 75 Pa.C.S.A. § 1718, it seems that the courts of this Commonwealth would find this language violative of both the plain meaning of the statute and public policy.