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

George E. Pataki
Governor

Gregory V. Serio
Superintendent

The Office of General Counsel issued the following opinion on September 23, 2003, representing the position of the New York State Insurance Department.

RE: Named Driver Exclusion in Commercial Auto Liability Policy

Question Presented:

Does New York law or regulation permit an insurer to attach an endorsement to a commercial automobile liability insurance policy that provides that the insurer will not be liable for any accidents or losses occurring while a covered automobile of the employer is driven with the employer’s consent by a specifically named employee who is licensed to drive but has a poor driving record?

Conclusion:

No. Such an endorsement would violate the provisions of N.Y. Comp. Codes R. and Regs. tit. 11,
§ 60-1.1 (1996) (Reg. 35-A).

Facts:

None were presented.

Analysis:

N.Y. Comp. Codes R. and Regs. tit. 11, § 60-1.1 (1996) (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) (1996) (Reg. 35-A). As the insurer apparently seeks to exclude a specifically named individual from coverage, and § 60-1.1(c)(3) does not expressly permit specifically named individuals to be excluded as "insureds" from an automobile liability policy, such an endorsement would violate § 60-1.1(c)(3).

N.Y. Ins. Law § 3103(a) (McKinney 2000) states as follows:

(a) Except as otherwise specifically provided in this chapter, any policy of insurance or contract of annuity delivered or issued for delivery in this state in violation of any of the provisions of this chapter shall be valid and binding upon the insurer issuing the same, but in all respects in which its provisions are in violation of the requirements or prohibitions of this chapter it shall be enforceable as if it conformed with such requirements or prohibitions.

It is the Department’s opinion that, pursuant to N.Y. Ins. Law § 3103(a) (McKinney 2000), the commercial automobile liability policy would be valid and binding upon the insurer, notwithstanding the fact that the alleged endorsement may violate N.Y. Comp. Codes R. and Regs. tit. 11, § 60-1.1(c)(3) (1996) (Reg.
35-A). Accordingly, such a policy would be enforceable under N.Y. Ins. Law § 3103(a) (McKinney 2000) as if the endorsement was not attached to it, even while a covered automobile is driven by the person named to be excluded by the endorsement, as long as such person drives the automobile with the permission of the named insured or the named insured’s spouse.

For further information you may contact Associate Attorney Jeffrey A. Stonehill at the New York City Office.