Thursday, May 11, 2023

Eastern District Court Declines to Apply Household Exclusion in UIM Context

In the case of Mid-Century Ins. Co. v. Werley, No. 21-CV-5592 (E.D. Pa. March 30, 2023 Smith, J.), the Eastern District Federal Court addressed the issue of whether or not a household vehicle exclusion in an automobile insurance policy excluded UIM coverage for a Plaintiff in a motor vehicle accident matter.

In this case, Judge Edward G. Smith of the Eastern District Federal Court took into account, and distinguished the recent Pennsylvania Supreme Court decision in the case of Erie Ins. Exch. v. Mione, in which the Pennsylvania Supreme Court confirmed that the Household exclusion remains valid in certain scenarios.

In this matter, the injured party had UIM coverages available under other household policies.  However, he was on the family's dirt bike at the time of the accident.  The accident was allegedly caused by an allegedly underinsured motorist while the dirt bike was being operated in an off-road fashion.

The issue was whether, where the host vehicle (the dirt bike) was uninsured, was there any policy upon which the injured party could stack UM/UIM benefits?

The Court noted that it could find no case on point.

Here, the Court found that since insureds did not knowingly waive inter-policy stacking on the policy at issue, they were entitled to inter-policy stacking.

Judge Smith went on to state that he was also constrained to hold that enforcing the household vehicle exclusion in this case would have amounted to an impermissible de facto waiver of stacking in violation of the Pennsylvania Motor Vehicle Financial Responsibility Law.

As such, the court granted the injured party’s Motion for Summary Judgment, denied the carrier’s Cross-Motion for Summary Judgment, and entered a declaratory judgment in favor of the Plaintiffs and against the carrier. 

The court held that the carrier had a duty to provide UIM coverage under the applicable policy for injuries allegedly sustained in the underlying accident.

In the end, Judge Smith urged the General Assembly to reexaming the MVFRL stacking provisions in order to bring clarity to the recurring issues faced by the Courts in this context.    

Anyone wishing to review a copy of this decision may click this LINK.  Check out Judge Smith colorful opening lines of his Opinion.

The Court's companion Order can be viewed HERE

I send thanks to Attorney Peter F. Schuchman, Jr. of the Wyomissing, Pa law office of Kozloff Stoudt for bringing this case to my attention.

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