A Pennsylvania Superior Court Panel Applies the Household Exclusion Despite Gallagher v. GEICO

An apparent split of authority has developed within the Pennsylvania Superior Court on whether the Pennsylvania Supreme Court’s decision in Gallagher v. GEICO serves to eradicate the Household Exclusion across the board or is a decision that should be limited to its facts.

Tort Talkers may recall the recent November 18, 2020 decision by a panel of Superior Court Judges in the case of Erie Ins. Exch. v. Petrie in which that panel held that the Gallagher v. GEICO decision applies across the board and should not be limited to its facts at least in respect to 75 Pa.C.S.A. Section 1738.  The Tort Talk post on that case, which contains a link to that decision, can be viewed by clicking this LINK.

Now comes Erie Ins. Exch. v. King, No. 648 EDA 2020 (Pa. Super. January 13, 2020 Kunselman, J., King, J., Colins, J.)(Op. by King, J.), the Superior Court held that the household exclusion in an Erie Insurance Company’s policy was enforceable at least under the separate context of 75 Pa.C.S.A. 1731.

In King, the Plaintiff was operating a Peterbilt truck, in which Cora Labar (the niece of his girlfriend) was a passenger in the vehicle.

The truck was insured by a policy issued by Sentry Select and issued to “Night Train Express, Inc.” The two individuals in the truck were involved in an accident caused by an uninsured driver.

Both claimants made a claim for, and received, uninsured motorists (“UM”) benefits from the Century Select policy.

Both Plaintiffs then made a claim for UM benefits under a personal auto policy issued by Erie Insurance to King and his girlfriend.

The carrier denied coverage based upon (1) the fact that a form rejecting stacked UM coverage had been executed, and (2) under an application of the household exclusion.

In this declaratory judgment action, the trial court granted Erie judgment on the pleadings, and the Superior Court affirmed.

In this King case, the Superior Court determined that the claim did not involve stacking, as, under Generette v. Donegal Mut. Ins. Co., 957 A.2d 1180 (Pa. 2008), the Claimants were “guest passengers” in the Peterbilt truck, and therefore, the Century Select policy formed the first layer of UM coverage, and the Erie policy formed the second layer of UM coverage.

The Superior Court in King then explained that, as this case did not involve stacking, the Gallagher v. Geico case did not apply. Therefore the household exclusion was not found to be invalid, and, based upon an application of the household exclusion to the facts of this case, there was no coverage found to be due under the Erie Policy.

Update:  While the Pennsylvania Superior Court initially inexplicably issued this decision as a non-published and therefore non-precedential decision, that status was recently changed on February 5, 2021 and the decision was reissued as a published precedential decision.

Anyone wishing to review this case, may click this LINK.

I send thanks to Attorney Benjamin P. Novak of the Lancaster office of Fowler, Hirtzel, McNulty & Spaulding, LLP for bringing this case to my attention.