In the case of Mid-Century Ins. Co. v. Werley, No. 23-1822 (3d. Cir. Sept. 5, 2024 Krause, J., Chung, J., and Randell J.) (Op. by Rendell, J.), the Third Circuit Court of Appeals upheld the application of a household exclusion in a UIM case.
In this Opinion, Judge Marjorie Rendell provides a thorough and excellent overview of the applicable law under Pennsylvania’s Motor Vehicle Financial Responsibility Law with regards to the availability of underinsured motor vehicle coverage and the process for rejecting the same and with regards to the stacking of such coverage.
In this case, a 15 year old Plaintiff, who did not have a driver’s license, was operating
his family’s uninsured dirt bike offroad with several friends on private property. Another driver struck the Plaintiff while that other driver was driving a Jeep.
The driver of the Jeep paid out to the injured party the bodily injury limits available under that driver’s liability policy. The Plaintiff then sought UIM coverage under his parent’s own household automobile insurance policies. The family had two (2) such policies.
The court noted that intra-policy stacking had been validly rejected by the family. However, it was indicated that the family could not waive inter-policy stacking because one of the policies was a multi-vehicle policy that insured multiple vehicles.
The multi-vehicle policy contained a household vehicle exclusion. Under the family’s second household automobile insurance policy there was also a household exclusion but the carrier had determined that, under the separate and different language of that exclusion, that exclusion did not serve to exclude coverage.
As such, the carrier paid out UIM benefits under one of its policies but denied coverage under the second policy by virtue of the household exclusion.
In its Opinion, the Third Circuit provided a thorough overview of the recent Pennsylvania jurisprudence on the law of the validity of the household exclusion, including such cases as the Gallagher and Donovan cases in which there was a discussion regarding household exclusions, at times, acting as de facto stacking waivers and violations of 75 Pa. C.S.A. §1738.
The court noted that a crucial distinguishable fact involved in the case before it, as compared to the facts in the Gallagher and Donovan cases, was that, in the case before it, the injured party was driving an uninsured dirt bike whereas in the Gallagher and Donovan cases, the injured parties were operating insured motorcycles.
The Third Circuit additionally noted that the Pennsylvania Supreme Court has cautioned that the Gallagher case “should be construed narrowly.” [citations omitted] See Op. at 15. The Third Circuit predicted that the Pennsylvania Supreme Court would conclude that the collective logic of the previous cases of Gallagher, Donovan, Eichelman, and Mione is that a household vehicle exclusion is only valid if, (1) a policy insureds the vehicle involved in the accident, (2) that policy provides UIM coverage on that vehicle, and (3) the household vehicle exclusion of a second policy sought to stack on top of the first policy would exclude UIM coverage for that vehicle. See Op. at 20.
Since the first condition was not satisfied in this case, the court found that the household vehicle exclusion was valid and enforceable.
Anyone wishing to review a copy of this decision may click this LINK.
I send thanks to Attorney Candace Edgar of the Camphill, PA office of Marshall Dennehey for bringing this case to my attention.
The driver of the Jeep paid out to the injured party the bodily injury limits available under that driver’s liability policy. The Plaintiff then sought UIM coverage under his parent’s own household automobile insurance policies. The family had two (2) such policies.
The court noted that intra-policy stacking had been validly rejected by the family. However, it was indicated that the family could not waive inter-policy stacking because one of the policies was a multi-vehicle policy that insured multiple vehicles.
The multi-vehicle policy contained a household vehicle exclusion. Under the family’s second household automobile insurance policy there was also a household exclusion but the carrier had determined that, under the separate and different language of that exclusion, that exclusion did not serve to exclude coverage.
As such, the carrier paid out UIM benefits under one of its policies but denied coverage under the second policy by virtue of the household exclusion.
In its Opinion, the Third Circuit provided a thorough overview of the recent Pennsylvania jurisprudence on the law of the validity of the household exclusion, including such cases as the Gallagher and Donovan cases in which there was a discussion regarding household exclusions, at times, acting as de facto stacking waivers and violations of 75 Pa. C.S.A. §1738.
The court noted that a crucial distinguishable fact involved in the case before it, as compared to the facts in the Gallagher and Donovan cases, was that, in the case before it, the injured party was driving an uninsured dirt bike whereas in the Gallagher and Donovan cases, the injured parties were operating insured motorcycles.
The Third Circuit additionally noted that the Pennsylvania Supreme Court has cautioned that the Gallagher case “should be construed narrowly.” [citations omitted] See Op. at 15. The Third Circuit predicted that the Pennsylvania Supreme Court would conclude that the collective logic of the previous cases of Gallagher, Donovan, Eichelman, and Mione is that a household vehicle exclusion is only valid if, (1) a policy insureds the vehicle involved in the accident, (2) that policy provides UIM coverage on that vehicle, and (3) the household vehicle exclusion of a second policy sought to stack on top of the first policy would exclude UIM coverage for that vehicle. See Op. at 20.
Since the first condition was not satisfied in this case, the court found that the household vehicle exclusion was valid and enforceable.
Anyone wishing to review a copy of this decision may click this LINK.
I send thanks to Attorney Candace Edgar of the Camphill, PA office of Marshall Dennehey for bringing this case to my attention.
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