OGC Op. No. 08-07-23
The Office of General Counsel issued the following opinion on July 28, 2008, representing the position of the New York State Insurance Department.
RE: Commercial Auto Liability Exclusion
May an owner or officer of a business be excluded from coverage on a commercial liability automobile insurance policy if that person is not going to drive the insured vehicle?
No. Section 60-1.1 of the New York Comp. Codes R. and Regs. (“NYCRR”) Tit. 11, Part 60 (Regulation 35-A) sets forth minimum required provisions in an automobile liability insurance policy, and does not allow for an exclusion of an owner or officer of a business that has coverage under a commercial automobile liability insurance policy.
It is reported that a business wants to request that an insurer exclude specific persons, namely, the owner and/or officer of the business who will not be driving the insured vehicle, from a commercial automobile liability insurance policy. The inquirer asks whether the insurer must, as a matter of law, honor the request.
11 NYCRR § 60-1.1 is relevant to the inquiry. That regulation sets forth required provisions in a motor vehicle liability insurance policy, and reads in pertinent part as follows:
An “owners 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:
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(c) A provision insuring as “insured”:
(1) the named insured and, if an individual, his or her spouse of 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 a motor vehicle. The insurance shall apply separately to each insured against whom the claim is made or suit is brought, provided the inclusion of more than one insured shall not operate to increase the limits of the insurer’s liability.
Thus, a liability insurance policy, commercial or otherwise, governed by Regulation 35-A may not exclude as an “insured” any person or organization (other than those persons or organizations for which 11 NYCRR § 60-1.1 (c)(3) creates a specific exclusion). See Office of General Counsel (“O.G.C.”) Opinion No. 02-04-20 (April 15, 2002). Therefore, an owner or officer of an insured business may not be excluded from the policy.
For further information you may contact Associate Counsel Alexander Tisch at the New York City Office.