Harlan v. Valley Insurance

RIGGS, J.,

dissenting.

The majority and defendant read the relevant provisions of the Financial Responsibility Law (FRL) as allowing defendant insurer to exclude FRL coverage for a person whom the policy covers for reasons other than her status as a permissive user because she is not also a permissive user. I do *135not agree with that reading of the statute, and I therefore respectfully dissent.

At the time the policy was purchased, ORS 743.776 required motor vehicle hability insurance policies to contain an agreement or endorsement providing insurance “in accordance with the coverage described under ORS 806.070, 806.080 and 806.270,” along with other financial responsibility provisions of state law.1 ORS 806.080(1) provided that, to meet the statutory financial responsibility requirements, a policy must insure ‘ ‘the named insured and all other persons insured under the terms of the policy” against loss for liability or damages arising out of specified activities involving vehicles.2 ORS 806.270(3)(a) provided that a certificate used to comply with future financial responsibility requirements must show that the person making the filing is, as relevant here:

“Insured by a policy meeting the requirements under ORS 806.080 that ¿so covers all other persons who, with the consent of the insured, use the vehicles owned by the person making the filing.”

Defendant argues that ORS 806.080 does not require coverage for persons other than the named insureds unless they are “insured under the terms of the policy”; because the policy here excludes coverage for persons who drive without permission, defendant reasons, Erika Jorgensen was not insured under its terms and the accident is not within its coverage or subject to the FRL. Defendant ¿so relies heavily on ORS 806.270, which refers specifically to coverage of persons who drive with the insured’s consent, and on cases involving permissive users. Defendant reads the two statutes and the cases to embody the rule that “[permission has ¿ways been a prerequisite to coverage of anyone beyond the named insureds.” The thrust of the argument appears to be that ORS 806.080 allows an insurer to exclude FRL coverage *136for anyone but a named insured who uses a vehicle without permission, and ORS 806.270 makes permissive use a condition of coverage for persons other than named insureds.

Plaintiffs read the statutes and the cases differently. As they understand ORS 806.080, Erika, as a family member, is covered under the terms of the policy for purposes of the FRL, and the consent exclusion does not affect that status. Plaintiffs suggest that, under defendant’s logic, even a named insured would be excluded from coverage by this policy if a second named insured owned the car and refused consent for the first to operate it. Strictly speaking, that suggestion does not accurately characterize defendant’s argument, which distinguishes between “named insureds” and “all other persons.” Defendant points out that Erika’s parents were joint owners of the car, and a joint owner does not need the other’s consent to use it.

However, defendant’s response misses the point. The concern of plaintiffs’ suggestion is not with the specific circumstances of Erika’s family, but with the effect that defendant’s understanding of the statute would have, i.e., to allow persons who are specifically included in a policy’s coverage provisions for reasons other than their status as permissive users to be denied FRL coverage on the basis of an exclusion relating to permissive use. I agree with plaintiffs that that is not what ORS 806.080 says.

Defendant acknowledges that a named insured cannot be required to obtain consent in order to enjoy FRL coverage. I do not discern where in the statute defendant finds that named insureds and persons covered as family members are distinguishable for that purpose. Obviously, a person covered under a policy’s terms as a permissive user can (and must) be subject to a consent requirement, but that is so because, without permission, the person would not come within the definition of the coverage. It is not necessary, however, for someone to have consent to use a vehicle in order to come within the definition of a covered “family member.”

The premise of defendant’s argument is necessarily that named insureds are categorically different from all other insureds for purposes of the coverage required by ORS 806.080 specifically and the FRL generally. I find no basis for *137that distinction in the language of the statute. I interpret the phrase “the named insured and all other persons insured under the terms of the policy” in ORS 806.080 to apply in the same manner to the named insureds and the other persons, not to create a distinction between them for purposes of FRL coverage; both are categories of “persons insured under the terms of the policy.” That can include permissive users, when they are described in the policy. See State Farm Fire and Casualty Co. v. Jones, 306 Or 415, 421, 759 P2d 271 (1988); see also n 2, supra. However, it also includes persons who are covered for reasons other than their status as permissive users, such as the “family member” involved here. The statute does not contemplate that a person covered by the policy’s terms as something other than a permissive user may be excluded from FRL coverage for using the vehicle without permission.

Defendant also relies on ORS 806.270(3)(a) for the proposition that the FRL does not require users other than named insureds to be covered unless they have the insured’s permission. That is not a correct understanding. ORS 806.270(3)(a) refers to a

“policy meeting the requirements under ORS 806.080 that also covers all other persons who, with the consent of the insured, use the vehicle.” (Emphasis supplied.)

ORS 806.270(3)(a) incorporates the requirements of ORS 806.080 and also requires permissive user coverage.3 The statute does not mean that only permissive users can be covered; it means that they are among those who must be covered.

The case law is also not beneficial to defendant’s position. In Viking Ins. Co. v. Petersen, supra, n 2, for example, the court held that the FRL was violated by an exclusion of coverage for persons under the age of 25, as applied to a driver who was included in the coverage provisions of the policy as a permissive user. See also Hartford Acc. *138and Indem. v. Kaiser, 242 Or 123, 407 P2d 899 (1969), where the court reached the same conclusion concerning an endorsement that specifically excluded coverage for a named person who was an “omnibus insured” under the policy’s financial responsibility endorsement.

Defendant appears to view those and similar cases as bolstering its position that the statutes require coverage only for named insureds and permissive users. In my view, the language in those cases on which defendant relies is attributable to the simple fact that the cases happened to involve permissive users. However, the reasoning in the cases is broader: the proposition they espouse is that the FRL does not allow coverage to be defeated by exclusions and limitations that purport to nullify what ORS 806.080 and other applicable statutes require. See State Farm Fire and Casualty Co. v. Jones, supra, 306 Or at 421. Defendant’s position differs from that of the insurers Petersen and Kaiser, in that the latter attempted to exclude permissive users from FRL coverage, while defendant seeks to exclude virtually everyone else. Both positions are equally contrary to the law.

I conclude that Erika was covered by the policy at the time of the accident, at least to the limits required by the FRL.4 The trial court erred by granting summary judgment for defendant, and the’majority is incorrect in affirming the judgment.

Haselton, J., joins in this dissenting opinion.

ORS 743.776 was later renumbered as ORS 742.450 and amended by Oregon Laws 1991, chapter 768, section 3. The quoted requirement remains substantially the same.

ORS 806.080 was later amended by Oregon Laws 1991, chapter 768, section 8, in apparent response to Viking Ins. Co. v. Petersen, 308 Or 616, 784 P2d 437 (1989), and Viking Ins. Co. v. Perotti, 308 Or 623, 784 P2d 1081 (1989), to add language that expressly requires FRL coverage for permissive users.

I do not imply that ORS 806.080 did not apply to permissive users covered by the terms of a policy before the 1991 amendment, see n 2, supra, as well as after. Indeed, State Farm Fire and Casualty Co. v. Jones, supra, 306 Or at 421, expressly held that it did have that application. My point is that it does not apply only to named insureds and permissive users, when others are also described in the coverage terms of automobile polices.

The parties do not dispute whether the policy itself provides coverage beyond what the statutes require under these circumstances, and I do not address that question.