Named Driver Exclusion in Commercial Policies in Maryland

The Maryland Court of Appeals issued its opinion this week in Harleysville Mutual Ins. Co. v. Zelinski. This question addressed was whether a named driver exclusion endorsement was valid for a commercial truck insurance policy. The case stems from a head-on truck accident in Cecil County in 2000. A jury awarded the victims, a woman and her son, $1.7 million. Big verdict, particularly for that county.

The truck driver was the son of the owners of a septic service company. Apparently a young man, he collected 18 points on his Maryland driving record, most of which arose from a conviction for driving under the influence and a conviction for exceeding the speed limit by over 30 MPH. His parents knew of his driving record and soon, so did Harleysville Insurance.

Acting under the endorsement in the policy, Harleysville offered the company’s owners a chance to either cancel their policy or kick their son off the policy. They accepted the endorsement. The son got insurance to drive the truck in question through the Maryland Automobile Insurance Fund.

The question the case addressed is whether the endorsement that made the truck driver’s parents chose between canceling the policy or excluding their son is contrary to, and therefore impermissible, under Maryland law.

After the jury’s verdict against the truck driver, Harleysville Insurance’s attorneys sought and received a ruling from that their insurance policy’s exclusion was valid. On appeal, the Court of Special Appeals held that the circuit court erred because the legislature did not approve a named driver exclusion for commercial policies.

But our high court unanimously reversed, finding that the legislative history of the named driver exclusion contains nothing to show that it cannot apply to commercial policies.

I feel awful that these victims now can not enforce their verdict. Most likely, their attorney will only be able to collect the truck driver’s $20,000 Maryland Automobile Insurance Fund policy. But had the Court of Special Appeals’ verdict become the law, small businesses that hire drivers with poor records would have only two options: fire them or go without insurance. Because most small companies will not fire all employees with poor driving records, it would leave too many personal injury victims with no insurance at all. This would be an unacceptable outcome for many victims. While I regret the result in this tragic truck accident case, I think it may be the correct ruling.

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