Monday, May 3, 2010

Pennsylvania Superior Court Holds That Excess/Umbrella Policies Are To Be Included in Calculating Credit Due In UIM Cases

In a monumental Opinion handed down on April 30, 2010, the Pennsylvania Superior Court ruled in D'Adamo v. Erie Insurance Exchange, 2010 PA.Super. 77 (Pa.Super. 2010 Gantman, J.), that both a tortfeasor's automobile insurance liability coverage as well as his separate personal umbrella policy should be considered in determining the credit due to an underinsured motorist benefits (UIM) carrier in a UIM claim.

In D'Adamo, a consolidated case involving two injured husband and wife couples who were in the same vehicle at the time of the accident, the UIM Arbitration panel determined that each of the couples was entitled to a gross award of $850,000.00 per couple.

At issue before the court was the denial by Judge Robert A. Mazzoni of the Lackawanna County Court of Common Pleas of the injured parties' motion to vacate/modify the arbitration award to disallow the credit in the amount of the umbrella policy limits. The injured parties attempted to argue that the offset or credit due to the UIM carrier should not include the tortfeasor's coverage from non-automobile insurance policies such as the umbrella policy owned by the tortfeasor.

According to the Opinion, the applicable Erie policy had an exhaustion clause that provided, in pertinent part: as follows:
"When the accident involves underinsured motor vehicles, we will not pay until all other forms of insurance under all bodily injury liability bonds and insurance policies and self-insurance plans applicable at the time of the accident have been exhausted by payment of their limits or have been resolved by settlement or by final resolution of the court."

The Pennsylvania Superior Court rejected the arguments by the injured parties that (1) the Erie insurance exhaustion clause was ambiguous when compared to the mandates of Pennsylvania's Motor Vehicle Financial Responsibility Law, and (2) the argument that including umbrella policies as part of the exhaustion clause would violate the public policy of Pennsylvania in this context.

In D'Adamo, each couple had already received the $250,000.00 limits under the tortfeasor's automobile policy and $500,000.00 in limits from the tortfeasor's personal umbrella policy, i.e. a total of $750,000.00 in available limits for the tortfeasor.

The Superior Court therefore ruled that, pursuant to the exhaustion clause, the arbitration panel was correct in applying a $750,000.00 credit to the $850,000.00 gross award. As such, the trial court's denial of the motion to vacate/modify the arbitration award was affirmed.


Anyone desiring a copy of the decision may contact me at dancummins@comcast.net. Thanks to Attorney Tom McDonnell of the Pittsburgh law firm of Summers, McDonnell, Hudock, Guthrie & Skeel, P.C. for bringing this case to my attention.

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