A Pennsylvania court just issued a young driver a mulligan when it sided with the Department of Insurance in a dispute with
State Farm.
State Farm Mutual Automobile Insurance Company cancelled an insured’s policy when it learned in 2014 that she had had her license suspended for 90 days following an underage drinking conviction, even though the conviction was not driving related.
The young driver challenged the cancellation and Insurance Commissioner Theresa D. Miller ruled in her favor, telling State Farm that state law prohibits insurance companies from canceling a policy because of a license suspension related to an underage drinking conviction.
Then it was State Farm’s turn to appeal, and it did.
A state court ruled in the Department’s and the driver’s favor. State Farm also argued in court that the driver had lied in her application when she said her license had not been suspended within the prior 36 months. The judge ruled that omission or misrepresentation did not matter because State Farm had not mentioned it as a cause for canceling the policy until the appeal.
The judge noted that insurers in Pennsylvania not only can’t cancel policies due to underage drinking convictions, but also cannot raise rates, refuse to renew or take any other punitive actions against the insured.
“Pennsylvania law prohibits the cancellation of auto insurance due to license suspensions stemming from underage drinking violations. The court ruling affirms the law,” said department spokesperson Ron Ruman.
