Nationwide is on your side—unless you’ve signed an insurance form excluding your unlicensed wife from being covered under an auto policy and she ends up causing a crash while taking her DMV driving test.

That happened to James Thao and his wife, Pa Vang, who’d never had a driver’s license when Thao signed a form excluding Vang from his auto policy with Nationwide. The named driver exclusion provision stated that Vang’s “driver’s license has been surrendered to the State Highway Department,” which wasn’t accurate.

Later, Vang decided that she’d like to get behind the wheel. She took her driving test in Thao’s insured vehicle—unbeknownst to Nationwide—and got into a wreck when she failed to yield the right of way to another vehicle, while the DMV examiner was sitting in her passenger seat.

Few life experiences are as mortifying as flunking your driver’s license test. And Nationwide rubbed salt in the wound when it denied Vang’s claim for coverage, citing the exclusion provision that Thao signed.

U.S. District Court Judge Marvin Quattlebaum Jr. of Greenville ruled in Nationwide’s favor on June 13, when he granted the insurer’s motion for judgment on the pleadings. Quattlebaum held that the law is clear: The “named driver exclusion is enforceable so long as the named insured makes the declaration,” he said.

Under state law, “the named insured (not the agent or carrier) need only declare that the excluded person turned his or her license in or has other insurance,” he wrote. “Thus, the South Carolina General Assembly determined that the enforceability of the exclusion was based on the content of the declaration rather than the truth of the content of the declaration.”

Thao and his attorney, Charles Edwards of Spartanburg, had argued that the exclusion was invalid because the insurance agent knew that Vang never had a license and shouldn’t have required Thao to sign the erroneous form. Thao also contended that state law doesn’t allow insurers to exclude would-be drivers who’ve never had a license.

“The defendant [Nationwide] argues that the only requirement for the exclusion to stand is for the insured to sign the agreement, regardless of truth,” Edwards wrote in response to Nationwide’s motion to dismiss.

Nationwide and its attorneys, Wesley Sawyer and J.R. Murphy of Murphy and Grantland in Columbia, asserted that Thao had proven the insurer’s case by admitting that he signed the named driver exclusion, which they said was all that was needed to enforce the exclusion.

They argued that when the state legislature amended the named driver exclusion statute in 2005, lawmakers removed language that would have supported Thao’s argument. But under the new version of the law, an exclusion “becomes effective when the named insured declares the excluded person’s license has been turned in to the DMV.”

“Because James Thao made just that declaration in the Named Driver Exclusion, the exclusion must be enforced,” Sawyer and Murphy argued in response to Thao’s motion for summary judgment.

They noted that while Thao was blaming the insurance agent, he too knew that Vang never had a license when he signed the named driver exclusion. “In fact,” Sawyer and Murphy wrote, “this is presumably why he elected to exclude her from coverage.”

“What Nationwide did not know—and James Thao did know—was that Pa Vang later decided she wanted to obtain a license and she planned to take a driver’s examination,” they added. “If James Thao wanted to insure his wife when she decided to apply for a license, he should have contacted Nationwide.”   

Murphy and Edwards declined to discuss the case, citing the possibility of an appeal of Quattlebaum’s ruling.

The 10-page decision is Thao v. Nationwide Affinity Insurance Co. of America (Lawyers Weekly No. 002-122-18). An opinion digest is available at

Follow Phillip Bantz on Twitter @SCLWBantz


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