Pennsylvania Supreme Court Upholds Validity of Regular Use Exclusion

On January 29, 2024, the Pennsylvania Supreme Court issued its long-awaited, much anticipated decision in the Regular Use Exclusion case of Rush v. Erie Insurance Exchange, No. 77 MAP 2022 (Pa. Jan. 29, 2024)(Maj. Op. by Donohue, J.)(Concurring Op. by Wecht, J.).

The Pennsylvania Supreme Court has ruled that, as presented in this case, the Regular Use Exclusion contained in motor vehicle insurance policies does not violate the express language of Pennsylvania's Motor Vehicle Financial Responsibility Law [MVFRL].

The Plaintiff in Rush was a police officer who was injured in a motor vehicle accident while driving his police vehicle.  

The Plaintiff recovered the liability limits from the tortfeasor's policy and the UIM limits on the police vehicle.

The Plaintiff then sought to obtain additional recoveries from the Erie Insurance policies that covered his personal vehicles at home.  Erie Insurance relied upon a Regular Use Exclusion contained in the policy to deny coverage on the UIM claim.

The trial court and the Superior Court had ruled, in part, that the Regular Use Exclusion violated the provisions of the MVFRL, and in particular, the terms of 75 Pa.C.S.A. Section 1731.  

More specifically, the lower courts had held that the Regular Use Exclusion conflicted with the language of Section 1731's mandate of the provision of UIM coverage to insureds by limiting the scope of the coverage provided by Section 1731 by precluding coverage if an insured is injured while using a motor vehicle that the insured regularly uses but does not own.

As noted, in its decision, the Pennsylvania Supreme Court reversed the lower courts' decisions and upheld the validity and enforceability of the Regular Use Exclusion.

In so ruling, the Pennsylvania Supreme Court pointed to prior decisions it had rendered repeatedly upholding the validity of the Regular Use Exclusion.  The Court found the Plaintiff's arguments in this case to be a mere recitation of at least one of the same arguments that had been previously rejected by the Court relative to the validity of the Regular Use Exclusion.

The Supreme Court rejected the Plaintiff's argument that UIM coverage must be provided in all circumstances regardless of which vehicle the injured party was located in at the time of the accident.  The Court noted that, to accept such an argument would render all exclusions invalid.  The Supreme Court rejected this argument.

The Supreme Court also rejected the Plaintiff's reliance upon the Pennsylvania Supreme Court's decision in  Gallagher v. GEICO for the proposition that the Regular Use Exclusion should be eradicated across the board just as the Household Exclusion had been eradicated in Gallagher as a allowing for a de facto waiver of stacked coverage when the MVFRL required the carrier to secure a written waiver of coverage from its insureds.

In this Rush v. Erie Insurance Exchange case, the Pennsylvania Supreme Court confirmed that it had clarified and narrowly limited its Gallagher decision in its more recent decision in the case of Erie Insurance Exchange v. Mione.  See Op. at p. 31-32.  In Mione, the Court had confirmed that the Household Exclusion remained valid and applicable except possibly in cases where the insured was attempting to stack coverage under 75 Pa.C.S.A. Section 1738.

Here, in Rush v. Erie Insurance Exchange, the Supreme Court ruled that "[i]f the MVFRL does not require that UIM coverage follow the insured in all circumstances, then the MVFRL cannot be read to prohibit exclusions from UIM coverage."  See Op. at p. 36.  

As such, the Court ruled that the terms of the UIM insurance contract between the parties still controlled relative to the scope of the UIM coverage available, or not available, and that, therefore, the Regular Use Exclusion remained enforceable.  Id.

The Supreme Court in Rush also specifically held that the Regular Use Exclusion remained a permissible limitation of UIM coverage within the language of the MVFRL and that, "[w]ith decades of reliance by insureds and insurers, and no justification to allow this Court to depart from decades of established law," the Court would maintain its continued course on this issue "unless and until the General Assembly or the Insurance Department acts in a way that would suggest we do otherwise."  Id. at p. 36-37.

Ultimately, the Supreme Court overruled the lower court decisions and held that the Regular Use Exclusion remained valid and enforceable.

Anyone wishing to review the Majority's Opinion may click this LINK.  Justice Wecht's Concurring Opinion can be viewed HERE.

Source of image:  Photo by d koi on www.unsplash.com.