Under Georgia law, an automobile insurance policy may exclude certain individuals from coverage. For example, if you purchase insurance coverage for your vehicle, you may want to exclude your child from coverage if he has a poor driving record; such an exclusion can improve your own insurance rate. The courts will generally honor an exclusion if it is clear and unambiguous.
A recent decision by a federal judge in Macon helps explain this subject. The underlying case arose from a fatal December 2006 automobile accident. One person--the driver deemed solely responsible for the accident--died while another man suffered serious injuries. In 2008, the surviving injury victim filed a negligence suit in Dooley County Superior Court against the estate of the deceased driver. The victim also sued the driver's parents, who owned the car, for negligent entrustment, that is negligently providing their son with access to their automobile.
The parents held an insurance policy on their automobile from Progressive Max Insurance Company. About a month before the accident, the father signed a "Name Driver Exclusion Election" listing his son as an excluded driver. The language of the exclusion stated, "No coverage is provided for any claim arising from an accident or loss involving a motorized vehicle being operated by an excluded driver." This included any claims made against the parents or their son for "vicarious liability" arising from the son's operation of the vehicle. Vicarious liability refers to the responsibility of a superior for the acts of his agent. This commonly arises in cases where a company is liable for negligent acts committed by an employee.
No Ambiguity In Progressive's Exclusion
Progressive declined to cover any damages arising from the accident, citing the Named Driver Exclusion Election. The victim subsequently reached an $850,000 settlement with the parents whereby they assigned him the right to sue Progressive for failing to provide coverage. (The victim originally claimed punitive damages as well, but withdrew that claim as punitive damages cannot be assigned under Georgia law.) The victim then sued Progressive in Bibb County Superior Court. Since Progressive is an out-of-state company based in Ohio, it had the lawsuit removed to federal court in Macon. Federal courts have jurisdiction when there's a "diversity" of citizenship among the parties; however, the insurance agreement itself is still governed under Georgia law.
On June 6, 2013, U.S. District Judge Marc T. Treadwell granted Progressive's motion for summary judgment. The victim argued that the driver's exclusion only applied to lawsuits for "vicarious liability," not, as he alleged here, negligent entrustment on the part of the parents. At best, the victim claimed Progressive's policy was ambiguous on this point. Judge Treadwell disagreed. He said that under Georgia law, negligent entrustment was arguably a subset of vicarious liability. And in any case, the Progressive policy's use of the term "vicarious liability" was inclusive and not exclusive.
Ultimately, the judge found no ambiguity in the wording of the exclusion. And by the victim's own admission, a properly drafted exclusion would preempt his negligent entrustment claim. Accordingly, Judge Treadwell dismissed the case.