By statute, automobile liability insurance companies are barred from excluding coverage for personal injuries caused to a named insured under Connecticut law. See, Conn. Gen. Stat. (Rev. to 2009) § 38a-335(d). However, the Connecticut statute contains an exception which permits insurers to used named insured exclusions if they are set forth in a separate endorsement to the policy.
In Dairyland Ins. Co. v. Mitchell, 320 Conn. 205, 128 A.3d 931 (2016), the issue came up as to whether a clearly written named insured exclusion would be enforceable if it was set forth in the main body of the insurance policy as opposed to being attached in a separate endorsement as indicated by § 38a-335(d). The Connecticut Supreme Court said no.
The Mitchell case involved a wrongful death action where the insured was riding as a passenger in his own insured vehicle which was being driven by a permissive user. When the Estate sued the driver, Dairyland denied coverage on the basis of the policy’s named insured exclusion. The named insured exclusion in the Dairyland policy was set forth within the main body of the policy and was not attached by way of an amendatory endorsement. Dairyland argued that the exclusion was clear and unambiguous and that it would be illogical to conclude that the exclusion, which was specifically authorized by the statute was invalid simply because it was part of the original terms of the policy rather than being set forth in an amendatory endorsement. The Connecticut Supreme Court disagreed.
The Connecticut Supreme Court noted that when insurance companies seek to limit their liability based on a statute, the limitation sought should only be permitted to the extent that the statute expressly authorized the limitation. The policy and that statute must be in substantial congruence. This requirement pertained to matters of both substance and form. The Court found that exceptions to statutes are without effect and could be ignored where there was a violation of the statute in respect to the form required by the statute. Thus, if a policy provision violated a statute requiring a specific format, the exception which was not in compliance with the statute would render the policy meaningless and the policy would be read as if the exception were not there.
The Connecticut Supreme Court concluded that the reason § 38a-335(d) required an endorsement to effectuate a named insured exclusion was so that the lay consumer of insurance would be able to see the exclusion in a conspicuous fashion. Because Dairyland had not strictly complied with the formatting required by the statute, the named insured exclusion, irrespective of its clarity, was unenforceable and void.
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