Allstate Insurance Company v. Wyoming Insurance Department

Supreme Court of Wyoming · 1983 · Corporations

672 P.2d 810 (1983)

Updated August 22, 2026

CorporationsInsuranceCompulsory automobile liability insuranceHousehold exclusionfamily exclusioncompulsory insurancefinancial responsibility lawuninsured motorist act

Facts

The Wyoming Insurance Department withdrew, for compulsory-insurance compliance purposes, approval of automobile liability policy forms containing household-exclusion clauses. Those clauses excluded coverage for losses to any insured or any spouse, relative, or family member of an insured residing in the same household, and the stipulated scope extended beyond spouse and parent-child categories. The hearing officer concluded that the exclusions were not authorized by statute and violated Wyoming's compulsory insurance scheme when the compulsory insurance statute, financial responsibility law, and uninsured motor vehicles act were read together. The insurers argued that the statutes' references to coverage against "loss from the liability imposed by law" effectively allowed the exclusions.

Issue

Does the "loss from the liability imposed by law" language in Wyoming's financial responsibility law and uninsured motor vehicles act create an exception to the minimum coverage mandated by the compulsory insurance statute, so that household-exclusion clauses may validly limit compulsory automobile liability coverage?

Rule

Wyoming's compulsory insurance statute, read together with the financial responsibility law and uninsured motor vehicles act, establishes an overriding public policy that all motor vehicle owners operating or permitting operation of vehicles in Wyoming must be covered by automobile liability insurance at least to the statutory minimum limits. Only exceptions expressly stated in the applicable statutes may limit that required coverage; exclusions not authorized by statute, including household-exclusion clauses, are void to the extent they reduce or eliminate the statutory minimum coverage.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Casper, a fictional insurer called High Plains Mutual issues an auto liability policy marketed as satisfying Wyoming's compulsory insurance requirement. The policy excludes bodily injury claims brought by any relative of the driver who lives in the same household. After the insured negligently injures his adult sister, who lives with him, the insurer denies coverage for a claim worth less than the statutory minimum limits.

Is the household-relative exclusion enforceable as to that claim?

Explanation. The majority held that Wyoming's compulsory insurance statute expresses overriding public policy requiring liability coverage at least to the statutory minimum for all vehicle owners operating or permitting operation of vehicles in Wyoming. Only statutory exceptions expressly listed may limit that required coverage. A household exclusion not authorized by statute is therefore void to the extent it reduces or eliminates the minimum required coverage.