New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal opinion on May 15, 2001, representing the position of the New York State Insurance Department.

RE:  Named Driver Exclusion in Commercial Automobile Liability Insurance Policy

Question Presented

Does N.Y. Comp. Codes R. and Regs. tit. 11, Subpart 60-1 (Reg. 35-A), permit a commercial automobile liability insurance policy, which is used to satisfy the financial security requirements of the New York Vehicle & Traffic Law (VTL), to contain a "named driver exclusion"?

Conclusion

N.Y. Comp. Codes R. and Regs. tit. 11, §§ 60-1.1(c)(3) (Reg. 35-A) permits a commercial automobile liability insurance policy to exclude a person or organization as "insured" only where the person or organization is not the named insured or his or her spouse, and where, in certain specified instances, the person or organization is engaged in operating an automobile sales agency, repair shop, service station, storage garage or public parking place, is an employee, or is engaged in loading or unloading the vehicle.

Facts

No facts are presented. It is the Department’s understanding that by a "named driver exclusion" Attorney A means a provision in a commercial automobile liability insurance policy that excludes as "insured" a specifically named person or organization. Attorney A states that a review of N.Y. Comp. Codes R. and Regs. tit. 11, § 60-1.1 (Reg. 35-A) "would support the ban of a named driver exclusion" with respect to a commercial automobile liability insurance policy, but it is also Attorney A’s contention that the question of whether such an exclusion is permissible is not specifically addressed by the regulation. The policy would be used to satisfy the financial security requirements of the VTL ("owner’s policy of liability insurance").

Analysis

N.Y. Comp. Codes R. and Regs. tit. 11, § 60-1.1 (Reg. 35-A) states in pertinent part as follows:

An "owner’s policy of liability insurance", as defined in section 311 of the Vehicle and Traffic Law, shall contain in substance the following minimum provisions or provisions which are equally or more favorable to the insured and judgment creditors, so far as such provisions relate to judgment creditors:

(c) A provision insuring as "insured" (1) the named insured and, if an individual, his or her spouse if a resident of the same household with respect to the motor vehicle or vehicles; (2) any other person using the motor vehicle with the permission of the named insured or such spouse provided his or her actual operation or (if he or she is not operating) his or her other actual use thereof is within the scope of such permission; and (3) any other person or organization but only with respect to his, her or its liability because of acts or omissions of an insured within paragraph (1) or (2) of this subdivision. As respects any person or organization other than the named insured or such spouse the policy need not apply (i) to any person or organization, or to any agent or employee thereof, employed or otherwise engaged in operating an automobile sales agency, repair shop, service station, storage garage or public parking place, with respect to any accident arising out of the maintenance or use of a motor vehicle in connection therewith; (ii) to any employee with respect to injury, sickness, disease or death of a fellow employee injured in the course of his or her employment in an accident arising out of the maintenance or use of the motor vehicle in the business of their common employer; or (iii) to any person or organization, or to any agent or employee thereof, with respect to bodily injury, sickness, disease or death, or injury to or destruction of property arising out of the loading or unloading of the motor vehicle.

No owner’s policy of liability insurance, commercial or otherwise, may exclude as "insured" any person or organization other than those persons or organizations expressly permitted to be excluded under N.Y. Comp. Codes R. and Regs. tit. 11, § 60-1.1(c)(3). Accordingly, a person or organization may be excluded as "insured" in such a policy only where the person or organization is not the named insured or his or her spouse and where, in certain specified instances, the person or organization is engaged in operating an automobile sales agency, repair shop, service station, storage garage or public parking place, is an employee, or is engaged in loading or unloading the vehicle. However, Regulation 35-A does not apply to excess policies that are not used to satisfy the VTL financial security requirements. A named driver exclusion would be permissible in such a policy.

Please take note that any permissible exclusion of coverage only applies to the coverage for the third party. Pursuant to N.Y. Ins. Law § 3420(e) (McKinney 2001), every motor vehicle liability policy, whether it is used to satisfy the VTL financial security requirements or not, must provide coverage to the named insured "…against liability for death or injury sustained, or loss or damage occasioned within the coverage of the policy or contract, as a result of negligence in the operation or use of such vehicle…by any person operating or using the same with the permission, express or implied, of the named insured."

For further information you may contact Senior Attorney Ethan G. Wolfe at the New York City Office.