Wednesday, July 28, 2010

Pennsylvania Supreme Court Agrees to Take Another Look at the Household Exclusion in the Stacking Context

The latest talk of the town is the Order handed down by the Pennsylvania Supreme Court on July 27, 2010 in the case of GEICO v. Ayers, 442 WAL 2008 (Pa. July 27, 2010) granting a Petition for Allowance of Appeal, limited to the following issue:

"Does the application of a household vehicle exclusion violate Section 1738 of the Motor Vehicle Financial Responsibility Law ("MVFRL"), where the same insurance company insures all vehicles owned by an insured, and where the exclusion denies inter-policy stacking to the insured who has paid for stacking and has not executed a stacking waiver."

Here's a link to the Supreme Court's Order:

By way of background, GEICO insured two motorcycles and two pickup trucks on separate policies. Mr. Ayers elected stacking and was involved in an accident while on the motorcycle.

He was denied UIM benefits under the household policy insuring the pickup trucks based upon the household exclusion.

He argued at the trial court level that the exclusion was invalid since GEICO insured all the vehicles and made him put the motorcycles on a separate policy. The trial court agreed with Mr. Ayers and invalidated the exclusion.

The Superior Court reversed in a memorandum decision. In February of 2009, Supreme Court announced that it would withhold its ruling on the petition for allowance of appeal pending its decision in the Erie v. Baker case.

For more background on the case, here's a link to the Pennsylvania Superior Court's decision on the issue in which that Court held that the household vehicle exclusion did indeed preclude stacking in such a scenario. GEICO v. Ayers, 955 A.2d 1025 (Pa.Super. 2008, Colville, J.):

UPDATE:  The Ayers decision was affirmed by an evenly divided Pennsylvania Supreme Court by Order only.

As noted, the Pennsylvania Supreme Court previously addressed a similar issue in the case of Erie Ins. Exchange v. Baker, 972 A.2d 507 (Pa. 2009). Those Opinions can be viewed at these links:

Opinion announcing Decision of Court (Justice Greenspan):

Concurring Opinion (Justice Saylor):

Dissenting Opinion (Justice Baer):

I send thanks to Attorney James Albert of the West Pittston, Pennsylvania law office of Cefalo & Associates for bringing this case to my attention as well as Attorney James M. Beck of the Philadelphia Office of Dechert LLP.

I also send thanks to Attorney Joseph Hudock, of the Pittsburgh law firm of Summers, McDonnell, Hudock, Guthrie & Skeel, and GEICO's defense counsel, for the additional background info on this case.

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