Farmers Insurance Exchange v. Call
In Farmers Insurance Exchange v. Call, 712 P.2d 231 (Utah 1985), the Court examined the validity of a policy provision that excluded coverage for bodily injury to members of the insured's household.
The Court held that the exclusion contravened the statutory requirement mandating minimum benefits that must be provided to all persons sustaining personal injuries in automobile accidents.
In so holding, the Court noted that many jurisdictions "interpret their mandatory insurance statutes to require liability insurance subject only to specific statutory exclusions and construe the legislative policy to require minimum coverage to victims of automobile accidents." Id. at 234.
The Court concluded that it "would be anomalous if the rights of innocent accident victims, for whose protection the Utah No-Fault Act was adopted, could be defeated by private agreements." Id. at 235.
The Court held that a household exclusion clause in an automobile insurance policy is contrary to statutory requirements and public policy.
The Court stated that:
"we are not persuaded that the collusion rationale . . . remains an adequate justification for the household exclusion clause. In Malan, this Court determined that the Utah Guest Statute is unconstitutional and found the collusion rationale to be insufficient to deny coverage to innocent guest passengers injured in automobile accidents. In addition, the risk of collusion in intrafamily litigation has never been accepted by this Court as grounds for endorsing the parent-child immunity doctrine, which has likewise never been established by the legislature. (Id. at 235.)
In Call, the Court adopted the following rationale from the Kansas Supreme Court:
"The possibility of collusion exists to a certain extent in any case. Everyday we depend on juries and trial judges to sift evidence in order to determine the facts and arrive at proper verdicts. Experience has shown that the courts are quite adequate for this task. In litigation between parent and child, judges and juries would naturally be mindful of the relationship and would be even more on the alert for improper conduct." Id.