Jordan v. Atlantic Casualty Insurance

Terry Crabtree, Judge. This appeal arises from a summary-judgment order entered by the Pulaski County Circuit Court in favor of appellee, Atlantic Casualty Insurance Company. On December 21, 1997, appellants, Jonathan Jordan and Victor Jordan, were involved in a motor vehicle accident with a 1988 Ford Aerostar driven by Dennis Smith. Mr. Smith had a liability insurance policy with appellee. Mr. Smith’s insurance policy excluded him from coverage. The insurance policy covered Mr. Smith’s sister, Melvinia Seals, as a listed driver. Mr. Smith signed “A Named Driver Exclusion Agreement” which provided that no coverage was given by the insurance policy if the vehicle was operated by Mr. Smith at the time of an accident. Appellee filed suit for declaratory judgment in P.ulaski County Circuit Court asking the court to declare whether there was coverage under the policy. The trial court found that the named-driver exclusion was valid and ruled that there was no coverage on behalf of Mr. Smith. The court further ruled that appellee had no duty to defend the suit filed against Smith in Desha County by the appellants Jonathan Jordan and Victor Jordan. We find no error, and thus affirm. Arkansas Code Annotated Section 27-22-104, requires that any person who operates a motor vehicle obtain an insurance policy providing liability coverage on the vehicle in a minimum amount of $25,000 per person and $50,000 per accident for bodily injury. Dennis Smith obtained a liability insurance policy on his vehicle and excluded himself from coverage if he was operating the vehicle. Appellants argue that this named-driver exclusion should be held to be void as against public policy as a violation of Ark. Code Ann. § 27-22-104. We find no such violation of public policy. Appellants frame their argument as an issue of first impression. However, we find that the Arkansas Supreme Court has found named-driver exclusions to be valid. Smith v. Shelter Mut. Ins. Co., 327 Ark. 208, 937 S.W.2d 180 (1997); Shelter Gen. Ins. Co. v. Williams, 315 Ark. 409, 867 S.W.2d 457 (1993). In fact, this court has held that named-driver exclusions are valid. Colonia Underwriters Ins. Co. v. Worthen Nat’l Bank, 53 Ark. App. 106, 919 S.W.2d 515 (1996). It is true that the cases cited have not dealt with the issue of named-driver exclusions where the named insured excluded himself from liability coverage. However, we find no significant differences from the cases decided by the supreme court and the present case. An insurer may contract with its insured upon whatever terms the parties may agree upon which are not contrary to statute or public policy. Shelter Gen. Ins. Co., supra. When reviewing insurance policies, “where the terms of the policies are clear and unambiguous, the policy language controls; absent statutory strictures to the contrary, exclusionary clauses are generally enforced according to their terms.” Smith, supra. In Smith, appellant advanced the argument that a named-driver exclusion was void as violating public policy under Arkansas’ compulsory motor-vehicle liability insurance law, Ark. Code Ann. § 27-22-101 et. seq. (Repl. 1994). Smith, supra. The court in Smith rejected appellants argument and in doing so relied on the legislative intent of the provisions expressed in § 27-22-101 (a): “This chapter is not intended in any way to alter or affect the validity of any policy provisions, exclusions, exceptions, or limitations contained in a motor vehicle insurance policy required by this chapter.” The legislature has specifically provided that the compulsory insurance law was not intended to affect the validity of policy exclusions. Smith, supra. Applying Ark. Code Ann. § 27-22-101 (a) and Smith to this case, we find that the named-driver exclusion excluding Mr. Dennis Smith from coverage is valid. Affirmed. Jennings, J., agrees. ROAP, J., concurs.