Essential Changes in New National Standard Auto Liability Policy

Essential Changes in New National Standard Auto Liability Policy

Albert, Milton A

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THE NEW National Standard Automobile Liability policy is now in use. It is therefore appropriate at this time to review something of what has been accomplished in the new policy.

One important change has come out of the decision of the case of U. S. F. & G. v. Gunther (Ohio, 281 U. S. 34.) In the Gunther case, a young man under eighteen years of age was involved in an accident while driving his father’s car in the city of Lakewood, Ohio. That city had an ordinance which prohibited persons under eighteen years of age from driving a motor vehicle. The policy in question contained the then common provision avoiding coverage when the car was driven by one under the age “fixed by law.” The insurance company contended that a municipal ordinance was a law within the meaning of the policy. This contention was upheld by the Supreme Court.

In the new Standard Policy, only violation of state, federal or provincial age statutes will forfeit coverage. The word “Provincial” was probably added to the words “State” and “Federal” to make the policy suitable when driving through provinces of Canada.

The exclusion just referred to, which controls, with respect to coverage, the age of the driver, has been the subject of litigation with business concerns as well as with the owners of pleasure cars. The courts have not been altogether in harmony on their interpretation of the exclusion contained in the old policy. Two very recent cases illustrate this.

One case was decided by the District Court of the United States in Maine. The case is Bradley v. the Commercial Mutual Casualty Company, 6 Federal Supp. page 926. In that case the owner of a motor freight line had a young man driving for him. This driver collided with Bradley, who sustained severe injuries and secured a substantial judgment against Foss, the owner of the freight line. Foss was unable to pay and Bradley sued the company. The company contended that it was not liable, since Foss’ driver was a paid chauffeur and under the law of Maine was required to be eighteen years of age. Foss conceded in his reply that his driver was unlicensed by the Maine authorities to act as a chauffeur, yet he argued that anyone could operate a car in Maine if he was fifteen years old with the. single exception of paid chauffeurs and that the policy provision referred only to this general age requirement of fifteen years. The District Court in deciding the case felt that it was plain that the policy did not cover the loss. The court said:

“To state the question is almost to answer it. The driver was operating the truck when it was illegal for him to do so on account of his age. It was being operated by a person contrary to law as to age. If the driver in this case had been driving his own or the family car the insurance company could not avoid liability, because, although the driver was operating contrary to law, having no license, his age was not a bar to his obtaining one. The operator of the truck here, driving for hire as a chauffeur, was operating contrary to law, not only because he had no license, but because he was under the required age.”

While this point seemed entirely clear to the Federal Court in Maine it seemed to be equally clear to the Supreme Court of Illinois, except that, in the Illinois ease, the court was convinced that the policy did cover such a loss. See the case of Mid-West Dairy v. Ohio Casualty Company, 190 N. E. 702. In Illinois as in Maine, the general age statute allows you to drive if you are fifteen years of age. Chauffeurs, however, are required to be at least eighteen. The facts in the Mid-West Dairy case are on all fours with those in the Maine case. The Illinois court, …

By MILTON A. ALBERT

Attorney New Amsterdam Casualty Company, in “Insurance Decisions”

Copyright Rough Notes Co., Inc. Feb 2005

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