UIM Household Exclusion Says What It Means and Means What It Says

In Clarke v. MMG Ins. Co., No. 2937 EDA 2013, --- A.3d --- (Pa. Super. Sept. 4, 2014)(Panella, Lazarus, and Jenkins, JJ)(Op. by Jenkins, J.)(Panella, Dissenting), the Pennsylvania Superior Court overturned a trial court's reliance upon a Household Exclusion in a UIM case.

The injured insured was operating his motorcycle insured by American Modern Select insurance company when he was allegedly seriously injured by another vehicle. 

The Plaintiff settled the third party claim and the claim for underinsured motorist (UIM) coverage on the motorcycle and then sought underinsured motorist coverage on a policy with MMG which insured the Plaintiff's other personal automobiles.

MMG denied the UIM claim on the basis of the household exclusion.  The trial court found in favor of the insurance company and the insured appealed.

The Superior Court reversed. 

The insurance policy at issue had differing language when one compared the UIM household exclusion in the policy to the household exclusion noted under the UM part of the policy.

The MMG policy language was read as only excluding UIM coverage when the insured is operating a “vehicle that is not insured for this coverage.”

However, additional language in the separate uninsured (UM) endorsement provided that coverage was excluded when an insured was operating a vehicle “not insured for this coverage under this policy." [Emphasis added here].

While the trial court read both provisions as a whole and excluded coverage, the Superior Court differed and opined that the provisions were separate and distinct and had different meanings and applications.  The Superior Court rejected the notion that the additional language in the separate UM exclusion was mere surplusage.

Accordingly, the Superior Court ruled that under the specific language of the UIM endorsement the Plaintiff was entitled to UIM coverage because he was operating a vehicle that was indeed insured for UIM coverage (albeit under another policy).  Under the unambiguous policy language at issue, the Superior Court found that it did not matter if the vehicle was covered under the same policy. 

The Majority Opinion in Clarke can be viewed HERE. The Dissenting Opinion can be viewed HERE.

A tip of the hat to Attorney Scott Cooper of the Harrisburg, PA Schmidt Kramer law firm for advising me of this case.