Mulford v. Neal

KAUGER, J.,

with whom Taylor, C.J., and Winchester, J., join, dissenting:

{1 I agree with the majority opinion that Oklahoma law mandates that every owner of a motor vehicle registered in this state shall maintain insurance. I do not agree with the majority's expansion of public policy which is in direct contravention of what is expressly stated in a statute.

2 This cause involves two statutes. The first, 47 O.S. Supp.2009 § 7-600, concerns compulsory insurance, and it protects the public by requiring insurance for damages arising out of the ownership, maintenance, operation or use of a motor vehicle. 1 One *1187 exception is that a policy owner may expressly provide for exclusion from coverage "in accordance with existing laws. 2

{3 The existing law is found at 47 O.S. Supp 2004 § 7-824, which concerns financial responsibility and proof of coverage and contents. Section 7-824 provides that a motor vehicle policy owner "may by agreement in a separate written endorsement between any named insured and the insurer exclude as insured any person or persons designated by name from coverage under the policy." 3

T4 Notwithstanding the express statutory allowed exception, the majority re-writes § 7-600 to provide that a policy owner may expressly provide for exelusion from coverage "except when such violation violates pub-lie policy." The majority then concludes that because teenagers, as a class, have a poor driving record, and parents of teenagers act irresponsibly by providing a motor vehicle to a teenager to drive without the required insurance for that driver, it would be a violation of public policy to allow the parties negotiating for an insurance contract to agree to expressly exclude a named teenager from coverage. The result being, the irresponsible parents have never paid the premium for the teenager's coverage, but the insurance company is forced to pay the statutory minimum liability coverage.

5 This rationale contravenes our previous pronouncements. For instance, in Ball v. Wilshire Ins. Co., 2009 OK 38, 15 , 221 P.3d 717 , the Court recently noted:

Ball argues that the Compulsory Liability Insurance Law completely nullifies an exclusionary clause that violates its mandate of minimum liability coverage. She argues that if a person would have been a policy-defined insured under the terms of the omnibus clause but for the exelusion, he or she becomes such by reason of the exclusion's nullification. The policy must then be treated as if the exclusion never existed and the wrongly excluded person becomes entitled to the performance of the insurer's other contractual obligations to its insured, including a defense. We disagree. (Citations omitted.)

T 6 In Tapp v. Perciful., 2005 OK 49 , 1 20, 120 P.3d 480 , the Court examined the litany of cases wherein we have stricken down exclusions for violating public policy [most of the same cases referenced by the majority in this cause], but noted that:

The very narrow exclusion that this Court has recognized is the exclusion of a specifically-named driver, which is recognized by our compulsory liability insurance law. Pierce v. Oklahoma Property & Cas. Ins. Co., 1995 OK 78 15 , 901 P.2d 819, 828 .

17 In Pierce v. Oklahoma Property & Casualty Ins. Co., 1995 OK 78 , 901 P.2d 819 the Court held that an insurer which specifi *1188 cally excludes a certain person from coverage under an insurance policy may not be held liable for the damages caused by the negligent entrustment if the excluded person does, in fact, drive the vehicle. In other words, when it comes to purchasing insurance, you get what you pay for-nothing more, nothing less. The Pierce Court said:

T20 Other courts which have considered the precise issue of whether a named driver exclusion precludes coverage for negligent entrustment have unanimously agreed that it does. Each relied on the specific language of the policy, and determined that to permit liability for negligent entrustment of a vehicle to the driver named in the exclusion would be forcing an insurer to accept a risk not bargained for and for which no additional premium had been paid. 'If the insurer of the family car were still liable under the policy if the excluded driver operates the vehicle, on a theory of negligent en-trustment by the non-excluded insured spouse, the purpose of the named driver exclusion would be defeated" (Citations omitted) (Emphasis supplied).

T8 Pierce did not hold that only reckless drivers may be specifically excluded from insurance policies. Rather, it expressly held that parties contracting for insurance may agree to specifically exclude a named person and avoid paying premiums because that person is excluded from coverage. If a parent chooses to specifically exclude a teenager from insurance coverage, so be it. If that same parent, then permits the excluded teenager to drive, then it is the parent who is exposed not only to criminal liability, but also potentially limitless liability for the damages caused by the uncovered, unauthorized teenage driver.

1 9 Neither Pierce nor any of our previous cases mean that a parent may choose; to specifically exclude a teenager from coverage; to allow the teenager to illegally drive; and expect the insurance company to be liable for the damages caused by the unlawful teenage driver without paying any insurance premiums. In fact, all of our previous cases cited by the majority opinion involve exelud-ing an entire class of drivers-drivers under the age of 25, 4 drivers outside a 200-mile radius, 5 a named insured as a passenger, 6 business automobiles, 7 or loaned automoviles. 8 It then attempts to create a similar class here-that of teenage drivers. The problem here is that this policy did not expressly exclude an "entire class of all teenage drivers." Rather, the father's policy expressly excluded two named individuals [Benjamin and Emily], as 47 O.S. Supp. § T-324 9 expressly allows, who happened to be a teenagers and which additional premiums had never been paid to cover. The mother's policy exeluded three named children [Emily, Benjamin and Aubree]. Without a doubt the parents, by excluding their children and then allowing them to drive, violated the compulsory insurance laws.

110 Nevertheless, the result under the facts of this case is that the parents have received free insurance coverage for their teenager and that the cost will be paid via increased insurance rates. The majority's holding should at least be done prospectively. This would allow insurers to examine their rates if express, non-paid for exclusions of insurance coverage are no longer effective in Oklahoma.

. Citation is to the current version of 47 O.S. Supp.2009 § 7-600 because the pertinent portions of the statute have not changed since its inception in 1982, Section 7-600 provides in pertinent part:

As used in Section 7-600 et seq. of this title:

1. 'Owner's policy' means a policy of motor vehicle liability insurance which:

a. shall designate by explicit description or by appropriate reference all vehicles with respect to which coverage is thereby to be granted,

b. shall insure the person named therein and insure any other person, except as provided in subparagraph c of this paragraph, using an insured vehicle with the express or implied permission of the named insured, against loss from the lability imposed by law for damages arising out of the ownership, maintenance, operation or use of the vehicle,

c. may provide for exclusions from coverage in accordance with existing laws, and....

. Title 47 O.S. Supp.2009 § 7-600, see note 1, supra.

. Again, references are to the current version of 47 O.S. Supp.2004 § 7-324, but the named exclusions provision first appeared in 1980, H.B. 1746, c. 235 § 5. Section 7-324 provides in pertinent part:

a) Certification. A 'motor vehicle liability policy' as the term is used in this article shall mean an 'owner's policy' or an 'operator's policy' of liability insurance, certified as provided in Section 7-321 or Section 7-322 of this title as proof of financial responsibility, and issued, except as otherwise provided in Section 7-322 of this title, by an insurance carrier duly authorized to transact business in this state, to or for the benefit of the person named therein as insured.

(b) Owner's policy. Such owner's policy of liability insurance:

1. Shall designate by explicit description or by appropriate reference all vehicles with respect to which coverage is thereby to be granted; and

2. Shall insure the person named therein and any other person except as herein provided, as insured, using any such vehicle or vehicles with the express or implied permission of such named insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of such vehicle or vehicles within the United States of America or the Dominion of Canada, subject to limits exclusive of interest and costs, with respect to each such vehicle, as follows: Twenty-five Thousand Dollars ($25,000.00) because of bodily injury to or death of one person in any one accident and, subject to said limit for one person, Fifty Thousand Dollars ($50,000.00) because of bodily injury to or death of two or more persons in any one accident, and Twenty-five Thousand Dollars ($25,000.00) because of injury to or destruction of property of others in any one accident.

3. May by agreement in a separate written endorsement between any named insured and the insurer exclude as insured any person or persons designated by name from coverage under the policy....

. Young v. Mid-Continent Casualty Co., 1987 OK 88, 11 , 743 P.2d 1084 .

. Equity Mutual Ins. Co. v. Spring Valley Wholesale Nursery, 1987 OK 121 , 747 P.2d 947 .

. Hartline v. Hartline, 2001 OK 15 , 39 P.3d 765 .

. Tapp v. Perciful, 2005 OK 49 , 120 P.3d 480 .

. Ball v. Wilshire Ins. Co., 2009 OK 38 , 221 P.3d 717 .

. Title 47 O.S. Supp.2004 § 7-324, see note 3, supra.