Western Federal District Court Rejects Household Exclusion Even Where Policies of Two Separate Carriers Involved

In the case of National General Insurance Company v. Sheldon, No. 1:19-CV-212 (W.D. Pa. Sept. 29, 2020 Bissoon, J.), the court addressed the validity of the household exclusion in a case arising out of an underinsured (UIM) motorist claim. 

The insured was injured in a car accident and settled the third party and a first level UIM claim.

He then sought UIM coverage on another household policy. The insurance company denied the claim based, in part, on the application of a Household Exclusion in the policy.

The carrier argued that the Pennsylvania Supreme Court’s decision in the case of Gallagher v. GEICO Indemnity Co., 201 A.3d 131 (Pa. 2019), was distinguishable because Gallagher involved the same insurance company on both policies at issue in that case. 

After reviewing the cases which have been decided since Gallagher, the District Court in this Sheldon case out of the Western Federal District Court of Pennsylvania found that this distinction is of no consequence. The Court held ultimately that the Household Exclusion was not valid in this case under the general analysis in the Gallagher decision in which it was held that the Household Exclusion is invalid as a de facto waiver of stacked coverage where Pennsylvania's MVFRL requires that an insured provide a written waiver of such coverage.

Anyone wishing to review this decision may click this LINK.

I send thanks to Attorney Scott Cooper of the Harrisburg, PA law office of Schmidt Kramer for bringing this case to my attention.