No Coverage for Insured Where Excluded Motorist Was Driving

By Don R. Sampen, published, Chicago Daily Law Bulletin, April 2, 2024

The 1st District Appellate Court recently upheld a named driver exclusion in an automobile policy to bar uninsured coverage for the named insured.

The case is Safeway Insurance Co. v. Al-Rifaei, 2024 IL App (1st) 231391 (March 27). The named insured, Jafar Al-Rifaei, was represented by Mitchell, Hoffman & Wolf LLC of Chicago. Freeman Mathis & Gary LLC of Chicago represented the insurer, Safeway.

In 2019, Al-Rifaei was a passenger in his own vehicle driven by his daughter when that vehicle collided with another. Al-Rifaei was injured in the collision and brought a lawsuit against both his daughter and the driver of the other vehicle.

At the time of the accident, Al-Rifaei carried an insurance policy with Safeway naming himself and his wife as insureds. The policy, however, explicitly excluded his daughters, including the daughter driving the car at the time of the accident. The policy stated that if an excluded driver was operator of a vehicle involved in an accident, the policy would provide no coverage of any kind to anyone with respect to the accident.

Al-Rifaei’s attorney subsequently sent a letter to Safeway demanding that it defend the daughter in the lawsuit or else Al-Rifaei would seek uninsured benefits under the policy. Safeway then filed the instant declaratory action seeking a determination that it owed no coverage. Upon cross-motions for summary judgment, the trial court held in favor of Safeway, and Al-Rifaei filed this appeal.

Analysis

In an opinion by Justice Rena Van Tine, the 1st District affirmed. She initially observed that, while the Illinois Vehicle Code requires all motor vehicles to be covered by liability insurance, 625 ILCS 5/7-601(a), named driver exclusions are nonetheless generally permitted. They are enforceable, moreover, even if the excluded driver’s name appears on the insurance card.

Despite the enforceability of such provisions, Al-Rifaei argued he was entitled to uninsured coverage under the Safeway policy based on Thounsavath v. State Farm Mutual Automobile Insurance Co., 2018 IL 122558. In that case, the named insured was a passenger in a vehicle that was owned and operated by the driver that was excluded from coverage under the named insured’s policy.

The driver, however, had his own coverage for the vehicle he was driving, although the limits of the policy were not sufficient to cover the passenger’s injuries and damages. It was under those circumstances that the passenger sought and was permitted to obtain underinsured motorist coverage under the passenger’s policy.

Van Tine thus distinguished Thounsavath on the ground that the passenger and named insured on the policy that excluded the driver had no control over the amount of liability coverage the excluded driver purchased for his own vehicle. In the instant case, by contrast, Al-Rifaei had control over the amount of coverage he purchased for his vehicle.

He also had control over whom to exclude from coverage under the Safeway policy. And despite the fact he chose to exclude his daughter, he permitted her to drive the vehicle. Under these circumstances, Van Tine said public policy did not compel a finding of coverage, because all the relevant coverage decisions were made solely by Al-Rifaei.

Van Tine emphasized that once a named insured excludes a driver from his insurance policy, the named insured is then obligated to ensure that the excluded driver does not operate the insured vehicle. In this instance, Al-Rifaei failed to make sure his daughter did not drive his vehicle, and accordingly, it would be against public policy to require Safeway to provide uninsured motorist coverage.

The 1st District therefore affirmed in favor of Safeway.

Key Point

Automobile policy provisions that exclude named drivers from coverage are enforceable and may result in no uninsured or other coverage being provided to insureds under the policy in accidents where the excluded driver was permitted to drive.