Tuesday, September 18, 2012

Denial of Additional UIM Coverage Under Business Auto Policy Upheld

In a September 10, 2012 decision in the case of DiSomma v. Mutual Benefit Insurance Company, No. 2236 M.D.A. 2011 (Pa. Super. Sept. 10, 2012 Bowes, Ott, and Strassburger, J.J.) (Memorandum by Bowes, J.) (non-precedential decision), the Pennsylvania Superior Court reviewed the enforceability of a household exclusion clause in a commercial vehicle insurance policy.

The injured Claimant sustained fatal injuries while operating his Vespa Scooter that was insured under a separate policy with Progressive Insurance.

The separate Mutual Benefit policy listed the decedent as an individual eligible for UIM coverage under a business auto policy issued to the decedent's incorporated restaurants.

The Mutual Benefit policy contained an endorsement, “Drive Other Car Coverage – Broadened Coverage For Named Individuals,” which afforded liability, UM and UIM benefits to named individuals while occupying other vehicles not covered under the commercial policy. The fatally injured Claimant was one of the named individuals on the endorsement.

The liability coverage under the commercial policy was changed to include as a “covered auto” any vehicle being used by the named individual or spouse except “Any ‘auto’ owned by that individual or by any member of his or her household.”

With respect to medical payments and UM/UIM coverage, the endorsement added as an insured any named individual and his or her family members “while ‘occupying’ or while a pedestrian when being struck by any ‘auto’ you don’t own except an auto owned by that individual or by any family member.”

The insurance company denied UIM coverage based upon the latter exclusion for vehicles owed by the individual.

The party’s representative commenced an action and alleged that the exclusion was ambiguous and capable of multiple interpretations and, therefore, unenforceable. The trial court held that the exclusion unambiguously precluded recovery on the facts presented and granted the carrier’s Motion for Judgment on the Pleadings. The injured party’s representatives appealed.

On appeal, the Superior Court affirmed. In so ruling, the Superior Court set forth the standard for determining whether or not a policy’s language is ambiguous.

Ultimately, the Superior Court accepted the carrier’s argument that the endorsement in fact enhanced the original liability and UM/UIM coverage, but the household exclusion contained therein unambiguously barred UIM benefits while the injured party was occupying his own vehicle insured under another policy with a different insurance company.

Anyone desiring a copy of this decision may click this LINK.

I send thanks to Attorney Pete Speaker of the Harrisburg office of Thomas, Thomas & Hafer for bringing this case to my attention.

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