Pennsylvania Supreme Court Now Says That Household Exclusions Can Be Valid and Enforceable

In the case of Erie Ins. Exchange v. Mione, No. 89 MAP 2021 (Pa. Feb. 15, 2023) (Op. by Wecht, J.), the court addressed the enforceability of two (2) household vehicle exclusions in a pair of automobile insurance policies.  In the end, whereas the Pennsylvania Supreme Court previously ruled that household exclusions are unenforceable, that Court has now held that household exclusions do remain enforceable under Pennsylvania law in certain circumstances.

In its previous decision in the case of Gallagher, the Pennsylvania Supreme Court wrote “we hold that the household vehicle exclusion violates the MVFRL; therefore, these exclusions are unenforceable as a matter of law.”  Gallagher v. GEICO Indem. Co., 650 Pa. 600, 613, 201 A.3d 131, 138 (2019).

According to the Pennsylvania Supreme Court in this Mione decision, the courts below had held that the household exclusions were valid and enforceable and had cited to the Supreme Court’s previous decision in the case of Eichelman v. Nationwide Ins. Co., 711 A.2d 1006 (Pa. 1998).   

In this Mione case, the insureds contended that the lower courts had erred in applying Eichelman and argued that the Pennsylvania Supreme Court sub silentio overruled that decision in the Pennsylvania Supreme Court’s decision in Gallagher v. Geico, 201 A.3d 131 (Pa. 2019).   

Although the Pennsylvania Supreme Court in the previous case of Gallagher v. Geico, and again in the case of Donovan v. State Farm, attempted to eradicate the household exclusion across the board, in this decision of Erie Ins. Exchange v. Mione, the Pennsylvania Supreme Court rejected the insured’s arguments, distinguished its previous decision in Gallagher v. Geico and affirmed the lower court decisions that the household exclusions were valid and enforceable. 

In this Erie Ins. Exchange v. Mione case, Erie had asserted that the Gallagher decision as factually distinguishable because the insureds had waived UM/UIM coverage on the insured’s motorcycle policy, whereas the insured in Gallagher did not waive coverage.

The Pennsylvania Supreme Court in this Mione case accepted that argument and noted that the insureds in this case were not attempting to stack anything between the various automobile insurance policies available.   

The Pennsylvania Supreme Court in Mione noted that the insureds had not yet received any UIM benefits but that the insured’s theory was that one or both of the household policies that possessed could provide them with UIM coverage in the first instance as opposed to in conjunction with another policy.   The Pennsylvania Supreme Court found that the “problem” with that argument is that the policies at issue had valid household exclusions which, under the facts of this case, the Pennsylvania Supreme Court found, in a 6-0 decision, did not conflict with the MVFRL.   

In other words, unlike as was found in the Gallagher decision, the household exclusions in this Mione case did not act as de facto waiver of stacking.   In other words, because the insureds in this case were not attempting to stack UIM benefits from the other household policies on top of the UIM benefits from their motorcycle policy, the rules for waiving stacking in writing found under 75 Pa. C.S.A. §1738, which were the basis for the court’s decision in Gallagher, were not implicated.  See Op. at 9-10.   

Although, as confirmed above, the Pennsylvania Supreme Court decision in Gallagher attempted to phrase that decision as eradicating the household exclusion across the board and never limited the decision to the facts before the Court in that matter, in this Mione decision, Justice Wecht noted that the Court “reiterate[s] today that the holding in Gallagher was based upon the unique facts before [the court] in that case, and that the decision there should be construed narrowly.”  See Op. at 10.   [Bracket inserted here].

Although the Pennsylvania Supreme Court stated otherwise in the Gallagher decision, Justice Wecht also stated in the Mione decision that the Pennsylvania Supreme Court “continue[s] to reject the view that household vehicle exclusions are ipso facto unenforceable.”  See Op. at 12.   

In the end, the Pennsylvania Supreme Court in Mione ultimately concluded that the lower courts correctly distinguished the Gallagher decision from the facts in this case and correctly enforced the household exclusions contained in the insured’s automobile insurance policies.   

Anyone wishing to review a copy of this decision may click this LINK.

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