Federated American Insurance v. Granillo ( 1992 )

OPINION

By the Court,

Springer, J.:

Respondent Bernardo Granillo, Sr. (“Granillo”) was insured by appellant Federated American Insurance Company (“Federated”). Federated offered to insure Granillo at a lower rate if his son, respondent Bernardo Granillo, Jr. (“Bernardo”), was excluded from coverage. Specifically, Granillo was told that his policy would cost $552.00 per annum with Bernardo excluded or $1,170.00 per annum if Bernardo were covered. Although Granillo accepted the lower premium, he nonetheless allowed Bernardo to drive; subsequently, Bernardo caused an accident in which another driver was injured.

The vehicle driven by the injured driver was insured by respondent Omaha Property and Casualty Company (“Omaha”). Consequently, Omaha paid the driver $9,120.00 for her injuries. Omaha later requested reimbursement from Federated for Bernardo’s accident contending that, under NRS 485.3091(1),¹ individual exclusions are valid only for claims exceeding the statutory minimum of $15,000.00. Federated, however, refused to reimburse Omaha.

Federated then filed a complaint for a declaratory judgment, requesting that the district court find that the exclusion in Granil-lo’s policy was valid. Subsequently, both Omaha and Federated filed motions for summary judgment. Following a hearing, the district court determined that NRS 485.3091(1) prohibits individual exclusions for less than the statutory minimum amount and granted Omaha’s motion for summary judgment. On appeal, Federated contends that the district court erred when it granted Omaha’s motion for summary judgment. We disagree.

NRS 485.3091(1) states that a motor vehicle insurance policy must provide the statutory minimum coverage for both the owner of the policy and any other person who uses the vehicle with the owner’s permission. We have previously held that this provision invalidates certain exclusions for claims less than the statutory minimum amount. For instance, in Baker v. Criterion Ins. Co., 107 Nev. 25, 805 P.2d 599 (1991) we noted that, under NRS 485.3091(1), a household exclusion clause is valid only for claims in excess of the $15,000/$30,000 minimum liability insurance required by statute. See also, Estate of Neal v. Farmers Ins. Exchange, 93 Nev. 348, 566 P.2d 81 (1977) (concluding that a household exclusion clause for less than the statutory minimum amount is void). We now hold that under NRS 485.3091(1), an insurance company must provide minimum coverage to all persons who drive an insured’s car with the insured’s permission regardless of whether the permissive driver has been explicitly excluded from coverage.

We base this decision on our previously stated policy of providing persons who are injured in motor vehicle accidents with at least minimum compensation for their injuries. In Hartz v. Mitchell, 107 Nev. 893, 896, 822 P.2d 667, 669 (1991), we acknowledged that “Nevada has a strong public policy interest in assuring that individuals who are injured in motor vehicle accidents have a source of indemnification. Our financial responsibility law reflects Nevada’s interest in providing at least minimum levels of financial protection to accident victims.” Based on this interest in protecting accident victims, we do not think that an insurance company should be able to circumvent the requirements of Nevada’s financial responsibility law by excluding coverage to permissive drivers. These laws were enacted to benefit the public as well as the insured; permitting such individual exclusions would frustrate that purpose.

Thus, we conclude that the district court did not err when it determined that Federated must reimburse Omaha for Bernardo’s accident even though Bernardo was specifically excluded from Granillo’s policy; we therefore affirm the district court order.

Mowbray, C. J., Rose and Young, JJ., concur.

1 In pertinent part, NRS 485.3091(1) of the Motor Vehicle Responsibility Act (NRS ch. 485) states:

1. An owner’s policy of liability insurance must;

(b) Insure the person named therein and any other person, as insured, using any such motor vehicle with the express or implied permission of the named insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of such motor vehicle ... as follows:

(1) Because of bodily injury to or death of one person in any accident, $15,000 ....

(2) Subject to the limit for one person, because of bodily injury to or death of two or more persons in any one accident, $30,000; and

(3) Because of injury to or destruction of property of others in any one accident.