It's Alive, It's Alive!! -- The Pennsylvania Superior Court Upholds the Household Exclusion as Enforceable (Currently Listed as "Non-Precedential")

Yesterday, the Pennsylvania Superior Court held in Erie Ins. Exch. v. Colebank, No. 1244 WDA 2021 (Pa. Super. April 20, 2022 Bender, P.J.E., Lazarus, J., McCaffery, J.)(Op. by McCaffery, J.), a decision which the Court listed as a Non-Precedential decision, that a household exclusion was enforceable in a situation where a claimant was injured while driving a vehicle on which all UIM coverage had been rejected.

In the Colebank case, the claimant was injured while driving a vehicle insured by State Farm. Notably, the claimant had rejected all UIM coverage on the State Farm policy.

After an accident with an allegedly underinsured driver, the claimant made a claim for stacked UIM coverage under his parents’ separate Erie Insurance policy.

Coverage was denied by Erie Insurance on the basis of the household exclusion contained within the Erie Insurance policy.  Erie asserted that the Gallagher v. GEICO case was not controlling because the claimant had knowingly rejected UIM coverage under his own State Farm policy and, therefore, the issue of stacking was not in play.

The claimant argued that the claimant’s rejection of stacking under the State Farm motorcycle policy was irrelevant as to the issue of whether he was entitled to stacked coverage under the Erie policy.  The claimant asserted that he was still entitled to stacked coverage under the terms of the Erie policy possessed by his parents as he was a resident relative.  The claimant also argued that the household exclusion was contrary to the mandates of the MVFRL and was, therefore, void and unenforceable.

The court disagreed. The Pennsylvania Superior Court ruled that enforcing the household exclusion in the parents’ policy was consistent with the legislative intent of MVFRL and with Gallagher because such enforcement will have the effect of holding the claimant to his voluntary choice of coverage or a lack thereof. 

Moreover, the Pennsylvania Superior Court ruled that, because the claimant had rejected UIM coverage on his motorcycle policy, “Gallagher is not applicable and did not invalidate the household exclusion.”  Rather, the Court found that, where the injured party did not purchase stacked coverage under his own policy, he did not have the requisite coverage on which to stack the UIM coverages under his parents' separte household policies.  

Notably, the Superior Court noted that this analysis "is consistent with the MVFRL as the [claimant] voluntarily chose not to purchase UIM coverage in his automobile policy, and in return received reduced insurance premiums."  See Op. at p. 25.

Anyone wishing to review this decision may click this LINK.

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

Source of image:  Photo by Andrea Piacquadio on www.pexels.com.