PA Supreme Court Decision on “Household Vehicle” Exclusion
On January 23, 2019, the Pennsylvania Supreme Court struck down the “household vehicle” exclusion that had been present in many auto insurance policies. This exclusion was commonly used by insurance companies to deny uninsured motorist (UM) benefits and underinsured motorist (UIM) benefits to insureds who had paid for those coverages.
A common scenario would be that a person was injured by a negligent motorist who had no, or insufficient insurance and the injured person had multiple policies covering multiple vehicles. The injured party would then seek and often obtain UM or UIM benefits under the policy covering the vehicle they occupied at the time of the accident, but when they tried to “stack” the UM or UIM coverage they carried on their other vehicle policies, the insurance company would successfully deny those added benefits because the injured person was operating another “household vehicle” at the time of the accident.
The Supreme Court reasoned in Gallagher v. GEICO, that such an exclusion conflicted with Pennsylvania law because it denied coverage for which the insured had paid, and the insured had not signed the mandatory stacking waiver to prevent the stacking of the benefits under the policies of those other household vehicles. Because of this ruling, UM/UIM benefits can no longer be denied by insurance companies because of the “household exclusion”.
More recently, the Superior Court voided another popular exclusion to UIM benefits, known as the “regular use” exclusion. This exclusion in many auto insurance policies has also been used by insurance companies for many years to deny UIM benefits to insureds under certain, and slightly different circumstances. The “regular use” exclusion is often applied when the motorist/policyholder was using a vehicle not insured by the UIM carrier, that the policyholder did not own, but used regularly (like a policeman’s cruiser, for example), was injured by a negligent driver who carried too little liability insurance.
That injured motorist would then claim and usually be paid the UIM coverage of the vehicle they were driving but did not own. However, if the vehicle they were operating did not have UIM coverage, or it was too little to compensate for the injuries and damages sustained, the injured motorist would then make a claim against his own policy’s UIM coverage. The “regular use” exclusion would work to deny the benefits under the motorist’s own policy. In Rush v. Erie Insurance (2021), the Superior Court held that the “regular use” exclusion violates the clear and unambiguous language of Section 1731 of the Motor Vehicle Financial Responsibility Law and is therefore, unenforceable.
Section 1731 defines the scope of UIM coverage broadly and requires it when one suffers injuries in the maintenance or use of a motor vehicle by the fault of another underinsured motorist and has not validly rejected such coverage. Section 1731 does not concern itself with who owns the vehicle the injured motorist was using, nor how often they may use it. The Superior Court made the same ruling in Jones v. Erie Insurance (2022).
Rush is on appeal to the Pennsylvania Supreme Court. Jones is awaiting word from the Pennsylvania Supreme Court as to whether the high court will entertain that appeal. At present, the state of the law is that insurance companies are not permitted to utilize the “regular use” exclusion to deny UIM coverage.
Uninsured Motorist (UM) and Underinsured Motorist (UIM) Coverages
For more information concerning what uninsured motorist (UM) and underinsured motorist (UIM) coverages under a motor vehicle insurance policy are, please read the prior articles covering those subjects. However, briefly, these are coverages you can purchase under your own auto insurance policy to help protect you in the event you are injured by a negligent driver who is either uninsured or has too little liability insurance to cover your injuries and damages.