Court: Court of Appeals of Maryland; July 20, 1992; Maryland; State Supreme Court
The case addresses the applicability of the named driver exclusion under the Maryland Insurance Code concerning a claim for uninsured motorist benefits. Ruthard F. Sykes, Jr., the plaintiff, a bus driver for the Mass Transit Administration, filed a complaint against Alfred H. Hall and Nationwide Insurance Company after Hall, an uninsured motorist, collided with Sykes' bus. Sykes asserted that he was not at fault and suffered significant injuries and expenses due to the accident. He claimed coverage under his wife’s Nationwide insurance policy, as a household member, but Nationwide denied the claim, citing that Sykes was an excluded driver under Art. 48A. 240C-1, which disallows coverage for excluded drivers.
Nationwide's summary judgment motion acknowledged the accident and the uninsured status of Hall but maintained that Sykes, as an excluded driver, was not entitled to benefits. Sykes contested the exclusion's applicability but did not dispute his status as an excluded driver. The circuit court granted Nationwide's motion for summary judgment, reinforcing that the exclusion under Art. 48A. 240C-1 precluded Sykes from any coverage, including uninsured motorist benefits, for injuries sustained while driving any vehicle. The circuit court's ruling emphasized adherence to the legislative intent behind the exclusion provision.
The December 12, 1989, ruling by the circuit court in favor of Nationwide was not a final judgment under Maryland Rules 2-601 and 2-602(a) due to the ongoing claim against the uninsured motorist, Hall. A final judgment was later entered on June 27, 1990, allowing the plaintiff to appeal to the Court of Special Appeals, which was preceded by a writ of certiorari from the higher court. At the time of the accident, the plaintiff was an insured under Nationwide's policy covering two vehicles, which listed his wife as the insured. The insurance policy defined "YOU" and "YOUR" as the policyholder and their spouse living in the same household, thus including the plaintiff for uninsured motorist coverage. The policy also stated that relatives living in the household are covered for bodily injuries. As the plaintiff lived with his wife, Darlene Sykes, he qualified as an insured under this policy. The Maryland Insurance Code supports that family members living with the named insured are typically covered. The circuit court interpreted the named driver exclusion under Art. 48A. 240C-1 as excluding an individual from all coverage when driving any vehicle. Nationwide contended that the exclusion was broader, asserting that an excluded individual is not considered an insured under any circumstances. However, this interpretation conflicts with the statutory language and legislative intent of Art. 48A. 240C-1, which addresses insurers' rights to adjust policies based on the claims history or driving records of household residents.
Insurers are required to offer an exclusion of coverage instead of canceling or nonrenewing an automobile liability insurance policy when an individual's driving record or claim experience justifies such actions. Specifically, the insurer may issue a policy that excludes coverage if the motor vehicle is operated by someone whose record warrants refusal of coverage. The exclusion applies to the excluded driver, the vehicle owner, family members of the excluded driver or owner, and others, except for certain mandated coverages. Premiums for policies with named driver exclusions must not reflect the claims experience of the excluded drivers. Importantly, coverage is only excluded for the named excluded driver when they are operating the insured vehicle. In the case of Sykes, since he was not operating the covered vehicles, uninsured motorist coverage for him was not excluded. Previous cases, Neale v. Wright and Nationwide Mutual Ins. Co. v. Miller, support this interpretation by establishing that insurers are not liable when the excluded driver is operating the insured vehicle. Furthermore, the permissible exclusions of uninsured motorist coverage are specifically defined, and exclusions under the circumstances of this case are not permitted, as the named driver exclusion aims to maintain insurance coverage for a family vehicle by excluding certain drivers based on their records.
The purpose of the named driver exclusion in the insurance policy is to mitigate risks associated with the negligence of a specifically named driver while operating the insured vehicle. However, the current case does not involve risks from the plaintiff's negligent driving; rather, it pertains to his non-negligent presence in another vehicle. In this context, the plaintiff's situation is likened to that of an innocent pedestrian struck by an uninsured motorist. If it is later determined that the plaintiff contributed to the accident through negligence, he would be barred from recovering damages from both the uninsured motorist and under his uninsured motorist coverage with Nationwide. Despite this potential outcome, it would be inconsistent with the intent of the applicable statute to deny uninsured motorist coverage under the circumstances presented. Consequently, the circuit court's finding that the plaintiff was excluded from this coverage was incorrect, leading to a reversal of its judgment and a remand for further proceedings. The insurance policy in question lists two 1981 Ford vehicles and names the plaintiff's wife as the insured, but it does not clarify vehicle ownership, which is deemed irrelevant to the case's primary issue. Notably, the named driver exclusion in this instance falls under subsection (a), and while the plaintiff was initially not excluded from the policy, Nationwide later proposed his exclusion to avoid nonrenewal.
