Superior Court County: King. Superior Court Cause No: 93-2-08331-9.SEA. Date filed in Superior Court: June 29, 1994. Superior Court Judge Signing: Judge Nancy Ann Holman.
Written by: Judge Walter E. Webster. Concurred by: Judge William W. Baker and Judge Mary Kay Becker.
WEBSTER, J. -- A taxicab driver ran over a pedestrian crossing a street, and the taxicab's insurer filed this declaratory judgment. The insurer, Credit General Insurance Co., seeks a judgment declaring the absence of coverage because the policy requires the pre-approval of all taxicab drivers, and it did not pre-approve the driver causing the accident.
Prior to the accident, the insurance commissioner denied Credit General permission to sell the policy because the pre-approved driver clause violated Washington law. Because Credit General sold the policy without appealing the commissioner's disapproval, it failed to exhaust its administrative remedies, and we will not consider its substantive arguments. We construe the policy without the disapproved clause, and affirm the trial court's declaration of coverage.
On November 18, 1991, Credit General submitted its taxicab liability policy to the forms regulation division of the insurance commissioner's office. The policy, through its definition of "insured," excluded coverage for drivers who were not "pre-approved" by Credit General. The definition of "insured" was part of a General Change Endorsement, which provided:
Any driver authorized as a taxicab driver, limousine driver or driver of any other public livery vehicle while operating covered "auto" with your knowledge and consent under your operating authority.* No coverage will apply to any driver newly placed in service after the policy begins until you report that driver to us and we will advise you in writing that he/she is acceptable to us and that he/she is covered under the policy. Coverage on any such driver newly placed in service will become effective as of the date and time we advise you he/she is acceptable and that they are covered by the policy and not before, subject to the reporting methods outlined and agreed to in the Notification Procedure Outline signed by the insured and the agent prior to coverage being effected under the policy.
*Only such drivers listed as of the date this policy begins, on the driver schedule in the original application signed by you, and who are not otherwise excluded from coverage as of the date this policy begins.
On November 20, 1991, a senior analyst, acting as the commissioner's representative, disapproved the policy:
6. First, your Named Driver Exclusion endorsement is not acceptable. If an excluded driver is operating an insured vehicle, the vehicle may be both uninsured and underinsured. You must provide underinsured motorist coverage when a vehicle is operated by an excluded driver. Please review First Nat'l Ins. Co. of America. v. Perala, 32 Wash. App. 527, 648 P.2d 472 and amend your form.
7. First, your General Change Endorsement excludes all coverages for drivers newly placed in service until approved by the company. This appears contrary to our Financial Responsibility law. Please explain how this form will work in the context of our Financial Responsibility Law, or withdraw this form.
The analyst also disapproved it because of the method used by Credit General to restrict the policy's scope of coverage: "this form is not a 'general change,' [it] is a significant restriction of coverage. The title should describe what the form does, or it is misleading - in violation of RCW 48.18.110(1)(d)." Credit General did not appeal the analyst's disapproval to the commissioner.*fn1 And, despite the disapproval, Credit General immediately marketed the policy.
Dessie Zewdu applied for a Credit General taxicab liability policy in June 1992, submitting a list of drivers with his application. Credit General issued the policy. Zewdu did not include Blondo on the initial ...