The Oklahoma Supreme Court has yet again narrowed the application of automobile policy exclusions with the case of Mulford v. Neal, 2011 OK 20.  In Mulford, both the mother and father (who were not living together) of a teenager had taken out policies (with the same insurance company) both of which had specifically excluded their teenage son as a driver.  Of course, naturally the kid went out and got in an accident, followed by the lawsuit and the insurance company relying on its exclusion in denying coverage.  A judgment was taken against the policy holders, followed by the inevitable garnishment of both policies. The insurer lost the garnishment, then took it to the Oklahoma Supreme Court. 

Up to this point, the Named Driver Exclusion had been one of the only surviving exclusions – most others had fallen by the wayside at least to the extent of statutory minimum limits of $25,000.  The case relied upon by the insurer here was Pierce v. Oklahoma Property & Casualty Ins. Co., 901 P.2d 819 (Okla. 1995), which had upheld the viability of the exclusion.  The Mulford Court noted both Pierce and 47 O.S. §7-324(b)(3), which provides that the owner’s policy “may include a separate endorsement between a named insured and the insurer to exclude any person or persons designated by name from coverage under the policy”.  Despite this seemingly clear and specific statute, the Supreme Court nevertheless held that public policy mandated that to the extent of minimum limits the exclusion was invalid, unless the exclusion was based upon the “poor driving record” of the person sought to be excluded. 

So what now?  Basically people will be unable to exclude teenage/unlicensed drivers from their policies and will thus pay more for their auto insurance, unless the exclusion is based upon a “poor driving record”.  Insurance rates will go up across the board, unless legislative action is taken to address the Court’s concerns (which seems unlikely, though because it would have the effect of lowering premiums may happen).  Further, the guess here is that insurers will have to get an actual copy of the allegedly poor record if they want to rely on this now quite-narrowly-construed exclusion.   (Note that Mulford is techncially not yet final but once any Motion for Rehearing is likely denied, probably soon will be).