Unlisted Resident Driver Exclusion Can Preclude Car Insurance Coverage
You and your boyfriend live together and one day he asks you to take his car and drive to the supermarket to get some groceries. You get the distracted while driving, run a red light and cause an accident that injures someone. Are you covered by your boyfriend’s car insurance if the injured person sues you?
Maybe not, if the car insurance policy has an Unlisted Resident Driver Exclusion (“URDE”).
In August 2019, the Supreme Court of Pennsylvania decided the case of Safe Auto Insurance Company v. Oriental-Guillermo, 214 A.3d 1257 (Pa. 2019) which found that a URDE was valid and enforceable and excluded car insurance coverage for a live-in girlfriend driving her boyfriend’s car.
This decision can be applicable to other roommate situations and can result in accident victims being uncompensated or negligent drivers facing personal liability for car accidents that are not covered by insurance.
Facts of the Case
Rachel Dixon was driving a car owned by her boyfriend Renee Oriental-Guillermo when she was involved in an accident with another vehicle in which Priscilla Jimenez was injured.
Dixon lived with her with her boyfriend, Oriental-Guillermo and his car was insured by Safe Auto. The Safe Auto car insurance policy contained an Unlisted Resident Driver Exclusion (“URDE”) which stated that the Policy excluded liability coverage “that occurs while your covered auto is being operated by a resident of your household or by a regular user of your covered auto, unless that person is listed as an additional driver.”
It was undisputed that Dixon lived with Oriental-Guillermo and was not listed as an additional driver on the car insurance policy.
When Jimenez sued Dixon, she turned the claim into Safe Auto under the insurance policy that covered her boyfriend’s car. However, Safe Auto denied coverage citing the URDE, arguing that the car insurance policy clearly stated that coverage would not apply to a resident using the vehicle who was not a listed as an additional insured.
The Supreme Court Decision
Since the Safe Auto car insurance policy provision was unambiguous and clearly excluded coverage, Dixon’s lawyer had to argue that the URDE was unfair and unenforceable because it was against Public Policy. Dixon’s lawyers reasoned that the law seeks to limit the number of uninsured drivers in Pennsylvania and attempts to provide maximum feasible restoration to accident victims and that allowing the URDE to be enforced would deny Jimenez, as well as other accident victims, fair compensation for car accident injuries.
Safe Auto countered by arguing that Pennsylvania law also seeks to contain car insurance costs and providing broader coverage than that which is provided for in a car insurance policy increases, rather than decreases, insurance costs.
Ultimately, the Supreme Court noted that Oriental-Guillermo did not dispute that he was aware of the URDE and yet he allowed his girlfriend to drive his car, when he could have added her as an additional driver to the policy. Adding her as an additional driver would have resulted in additional premiums, but also would have allowed Safe Auto to understand the full risk that it was insuring.
In the end the Supreme Court said that “insurers are not compelled to underwrite unknown and uncompensated risks” and it held that the URDE was not against Public Policy. Instead, the URDE was enforceable and Dixon was not covered for the car accident.
Implications of the Decision
The implication for Jimenez was likely that she would be uncompensated for her injuries because Dixon was uninsured.
However, there are much broader implications of the Safe Auto Insurance Company v. Renee Oriental-Guillermo decision. Not only would the Unlisted Resident Driver Exclusion apply in a relationship situation, but it could also apply in any roommate situation. So, if you are living with friends at or after college and you borrow and wreck a friend’s car, his/her car insurance policy might not cover you for the damages and injuries.
Nevertheless, be aware that you may be covered by the liability coverage of other car insurance policies, like for your own car or perhaps for a relative you live with or another policy on which you are a named driver. However, if you are not covered under any car insurance policy and find yourself victim to a URDE ,your personal assets could be at risk.
So, before you drive anyone else’s car, be sure that you have car insurance protecting you!
