An Arkansas appeals court has ruled that insurers can lawfully deny coverage to unlicensed drivers under clear policy exclusions.
The decision, handed down on March 18, 2026, by the Arkansas Court of Appeals, marks the first time an Arkansas appellate court has directly addressed whether an unlicensed-driver exclusion in an auto liability policy violates the state’s public policy. The court said it does not.
The case arose from a December 2022 car accident. Trexis Insurance had issued a personal auto policy to Arturo Martinez-Araujo, whose policy included a clause excluding liability coverage when a vehicle is operated by someone without a valid driver’s license, unless that person was listed on the policy before the accident. Martinez-Araujo gave Julian Trejo permission to drive his car. Trejo did not have a license. He then got into an accident with Marco Soto-Abarca…