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Non-Owned, Regularly-Used Car Exclusion Allowed in Insurance Contracts

The Pennsylvania Supreme Court has ruled that automobile insurance carriers are permitted to maintain a clause in their policies that states that the carrier has no obligation to insure a policy-holder who is driving a car that he does not own, but uses on a regular basis, in the event of an accident. Burstein v. Prudential Prop. & Cas. Ins. Co., 809 A.2d 204 (2002).

This issue has been hotly-debated in Pennsylvania. Many oppose this exclusion, arguing that to exclude coverage when a policy holder is driving a car that he does not own, but regularly uses violates public policy. The Court disagreed and held that such a clause comports with public policy. See also Prudential Property & Cas. Ins. Co. v. Gisler, 806 A.2d 854 (2002) (holding that the regularly used, non-owned car clause comported with the Motor Vehicle Financial Responsibility Law).

According to the Court, voiding this exclusion would actually frustrate public policy concerns by increasing costs of automobile insurance. The Court reasoned that in the absence of such an exclusion, insurers would be forced to underwrite unknown risks that policy-holders have not disclosed and for which policy-holders have not paid.


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