Third Circuit Applies Regular Use Exclusion as a Valid Exclusion

In a recent non-precedential opinion issued by the United States Court of Appeals for the Third Circuit in the case of Eberly v. LM General Ins. Co., No. 21-2995 (3d Cir. Aug. 1, 2024),  that court determined that the regular use exclusion does not violate Section 1738 of the Motor Vehicle Financial Responsibility Law. 

In Eberly, the Third Circuit rejected the insured’s argument that Gallagher controls whether the regular use exclusions violate Section 1738 by acting as de facto waivers of stacking.

However, the Third Circuit noted that the Supreme Court, in the case of Rush v. Erie Insurance Exchange, had expressly rejected the argument that Gallagher stands for the proposition that “insurance policy provisions that conflict with the specific requirements of the MVFRL will be declared invalid and unenforceable.

The Third Circuit decided that the regular use exclusion does not act as a de facto waiver of stacked coverage because, in this case, Plaintiffs could still access stacked coverage on their cars and on any cars they drove provided they do not fit within any applicable exclusions to such coverage. 

However, the Third Circuit also noted that the regular use exclusion only applies in the limited circumstance presented in the case before it, that is, where the injured party was operating a vehicle which he did not own but that was provided to him for his regular use and which was not covered under the policy at issue.

As such, the Third Circuit ruled that the regular use exclusion did not violate Section 1738 of the MVFRL under the facts at issue in this matter.

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