About This Policy: Transportation: Vehicular Insurance: Losses due to Intoxication

Period Covered: 1/1/1998 through 1/1/2007

This policy topic covers laws that prohibit insurance carriers from excluding coverage where claims arise from collisions resulting from driver intoxication.

• In 1950, the National Association of Insurance Commissioners (NAIC) developed a model law, entitled the Uniform Accident and Sickness Policy Provision Law. If enacted by the States, it would permit insurers to include a provision in insurance policies that reads as follows:
  • The insurer shall not be liable for any loss sustained or contracted in consequence of the insured's being intoxicated or under the influence of any narcotic unless administered on the advice of a physician.[1]

A separate category of insurance exclusion concerns motor vehicle collisions. In some States, insurance statutes and regulations permit companies that provide motor vehicle insurance to exclude losses sustained by motorists if the driver of the insured vehicle was intoxicated or under the influence of narcotics. In contrast, in other States, insurers are prohibited from using such exclusions.

Under Vehicular Insurance Exclusion, a driver of an insured vehicle who is involved in a collision while intoxicated or under the influence of alcohol, within the meaning of applicable State law, may not be covered for his or her own injuries or for property damage to the insured vehicle resulting from the collision. Variations across State provisions could conceivably exclude drivers, passengers, or third parties from coverage for personal injury and/or property damage, although presently these States exclude only personal injury benefits to the driver who operates the insured vehicle while intoxicated. Coverage variations within States are also possible because each insurance company is permitted to exclude coverage in situations of intoxication, but is not required to do so. Insurance companies may vary in the extent to which they exclude coverage in situations of intoxication.

In some jurisdictions, insurance companies are expressly prohibited from excluding coverage where claims arise from collisions resulting from driver intoxication. In those cases, drivers, passengers, and/or third parties (depending on the extent of the statutory prohibition and the specific coverage of particular policies) will be covered for property damage and/or personal injury claims even if alcohol was a factor in the collisions.

1. National Association of Insurance Commissioners, 1950. Proceedings of the National Association of Insurance Commissioners, 1950. 81st Annual Session, Québec, Canada, June 131950-2,161,950. 1950 NAIC Proc. 398.

Explanatory Notes and Limitations Specifically Applicable to Vehicular Insurance: Losses Due to Intoxication

1. It is possible that insurers obtain the same result (exclusion) through some other provisions in contracts that do not specifically address alcohol intoxication or alcoholism. For example, an insurance contract might exclude coverage for injuries caused by the insured's own negligence or reckless behavior without specifying alcohol intoxication as a form of negligence or recklessness.
2. Our research concerning Vehicular Insurance Exclusion policy does not include statutory or regulatory provisions addressing rental vehicles. In the case of rental vehicles, rental companies may offer the customer a collision damage waiver (CDW). If purchased, a CDW covers all or part of the renter's responsibility for physical damage or loss to the rental vehicle. In States such as California, Iowa, Louisiana, and Kansas, the rental company may exclude from a CDW the physical damage to, and/or the loss of, a rental vehicle arising out of the authorized driver's operation of the rental vehicle while intoxicated.
3. Our research does not collect statutory or regulatory provisions regarding alcohol-related offenses as a basis for cancelation or non-renewal of motor vehicle liability insurance.
4. Our research does not address provisions relating to exclusions or limitations to motor vehicle insurance coverage due to the age of the driver. For example, in at least one State, subject to certain exceptions, an insurer may exclude private passenger motor vehicle coverage while the insured vehicle is being driven by a person under 25 years of age. One of these exceptions is where the under-25 driver is operating the insured vehicle because another person's alcohol intoxication has rendered that other person incapable of operating the vehicle.

Explanatory Notes and Limitations Applicable to All APIS Policy Topics

1. State law may permit local jurisdictions to impose requirements in addition to those mandated by State law. Alternatively, State law may prohibit local legislation on this topic, thereby preempting local powers. For more information on the preemption doctrine, see the About Alcohol Policy page. APIS does not document policies established by local governments.
2. In addition to statutes and regulations, judicial decisions (case law) also may affect alcohol-related policies. APIS does not review case law except to determine whether judicial decisions have invalidated statutes or regulations that would otherwise affect the data presented in the comparison tables.
3. APIS reviews published administrative regulations. However, administrative decisions or directives that are not included in a State's published regulatory codes may have an impact on implementation. This possibility has not been addressed by the APIS research.
4. Statutes and regulations cited in tables on this policy topic may have been amended or repealed after the specific date or time period specified by the site user's search criteria.
5. The operation or enforcement of statutes or regulations affecting the policies addressed on APIS may have been suspended or modified by executive or administrative orders issued in response to the COVID-19 pandemic. With the exception of the COVID-19 Digest and Dataset, APIS research does not address these orders or the effects they may have on the policies covered by APIS.
6. Policy changes in APIS are presented as of the date these changes take effect as law. Users should be aware that in some situations there may be a delay between the effective date of a law and the time a corresponding policy change occurs in practice. Because APIS research is based entirely on primary legal source materials (codified statutes and regulations and, on rare occasions, published court opinions), APIS is unable to accurately determine when policy changes may appear in practice.
7. If a conflict exists between a statute and a regulation addressing the same legal issue, APIS coding relies on the statute.
8. A comprehensive understanding of the data presented in the comparison tables for this policy topic requires examination of the applicable Row Notes and Jurisdiction Notes, which can be accessed from the body of the table via links in the Jurisdiction column.

(Policies in effect on: 1/1/2007)

Our research identified no relevant Federal statutes pertaining to vehicular insurance exclusion within the scope of APIS. Case law indicates that regulation of the insurance industry is within a State's police power.

1. National Institute on Alcohol Abuse and Alcoholism (NIAAA). Alcohol and Trauma. Alcohol Alert No.3. Rockville, MD: NIAAA, 1989.
2. Subcommittee on Injury Prevention and Control of Committee on Trauma, American College of Surgeons. Statement on Insurance, Alcohol-Related Injuries, and Trauma Centers. Bulletin of the American College of Surgeons 91(9):29-30, 2006.
3. Zheng, Y.Y., Cooper, P.J., and Dean, C.B. Modeling the contribution of speeding and impaired driving to insurance claim counts and costs when contributing factors are unknown. Journal of Safety Research 38(1):25-33, 2007.

Health Care Services and Financing: Health Insurance: Losses Due to Intoxication ("UPPL")