Authorized Driver Clause

AUTHORIZED DRIVER CLAUSE
The authorized driver clause is a standard clause appearing in motor vehicle insurances,
which requires that the driver of the vehicle must be:
a. The insured;
b. Any person driving on the insured’s order or with his permission, provided that the
person driving is permitted in accordance with the licensing or other laws or
regulations to drive the motor vehicle and is not disqualified from driving such motor
vehicle by order of a court of law or by reason of any enactment or regulation in their
behalf.
Authorized Driver Clause
Any person in the order of the insured provided authorized by our driver’s license law.
Rules:
a. If the driver is the insured, he is authorized driver;
b. If the license is not expired, otherwise he is not an authorized driver through consented
by the insured.
c. Temporary license;
d. Tourist – within 90 days from arrival, otherwise not authorized;
e. Perfectly copied driver’s license – it is presumed to be genuine.
(1991) Sheryl insured her newly acquired car, a Nissan Maxima against any loss or damage for
P50th and against 3rd party liability for P20th with the XYZ Ins Co. Under the policy, the car must
be driven only by an authorized driver who is either: 1) the insured, or 2) any person driving on the
insured’s order or with his permission: provided that the person driving is permitted in accordance
with the licensing or other laws or regulations to drive the motor vehicle and is not disqualified
from driving such motor vehicle by order of a court.
During the effectivity of the policy, the car, then driven by Sheryl herself, who had no driver’s
license, met an accident and was extensively damaged. The estimated cost of repair was P40th.
Sheryl immediately notified XYZ, but the latter refused to pay on the policy alleging that Sheryl
violated the terms thereof when she drove it without a driver’s license. Is the insurer correct?
Answer: The insurer was not correct in denying the claim since the proviso “that the person driving
is permitted in accordance with the licensing, etc.” qualified only a person driving the vehicle other
than the insured at the time of the accident (Palermo v Pyramid Ins Co GR 36480 31 May 88)
(2003) Rick de la Cruz insured his passenger jeepney with Asiatic Insurers, Inc. The policy
provided that the authorized driver of the vehicle should have a valid and existing driver’s
license. The passenger jeepney of Rick de la Cruz which was at the time driven by Jay
Cruz, figured in an accident resulting in the death of a passenger. At the time of the
accident, Jay Cruz was licensed to drive but it was confiscated by an LTO agent who issued
him a Traffic Violation Report (TVR) just minutes before the accident. Could Asiatic
Insurers, Inc., be made liable under its policy? Why?
Answer: Asiatic Insurers, Inc., should be made liable under the policy. The fact that the
driver was merely holding a TVR does not violate the condition that the driver should have
a valid and existing driver’s license. Besides, such a condition should be disregarded
because what is involved is a passenger jeepney, and what is involved here is not own
damage insurance but third party liability where the injured party is a third party not privy
to the contract of insurance
HL insured his brand new car with P Ins Co for comprehensive coverage wherein the insurance
company undertook to indemnify him against loss or damage to the car a) by accidental collision ... b)
by fire, external explosion, burglary, or theft, and c) malicious act.
After a month, the car was carnapped while parked in the parking space in front of the Intercontinental
Hotel in Makati. HL’s wife who was driving said car before it was carnapped reported immediately the
incident to various government agencies in compliance with the insurance requirements.
Because the car could not be recovered, HL filed a claim for the loss of the car with the insurance
company but it was denied on the ground that his wife who was driving the car when it was carnapped
was in the possession of an expired driver’s license, a violation of the “authorized driver” clause of the
insurance company.
May the insurance company be held liable to indemnify HL for the loss of the insured vehicle? Explain
Answer: Yes. The car was lost due to theft. What applies in this case is the “theft” clause, and not the
“authorized driver” clause. It is immaterial that HL’s wife was driving the car with an expired driver’s
license at the time it was carnapped.

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AUTHORIZED DRIVER CLAUSE

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