At the time of the accident, the Plaintiff was injured while in an accident while driving a salt truck for his employer. In addition to other recoveries, the Plaintiff sought to recover UIM benefits under an Erie Insurance policy that covered one of his personal vehicles at home.
According to the Opinion, the insurance company commenced this action seeking to enforce the “regular use” exclusion found in its personal automobile insurance policy issued to the Defendant. Erie asserted that the Plaintiff had regular access to a work vehicle,i.e. a vehicle that was not covered under the Erie policy. The Plaintiff was allegedly injured while driving that work vehicle. As such, Erie was seeking a ruling that it did not have to pay UIM benefits to the insured.
The insured argued that, at the time he made a claim for his personal UIM benefits, Erie knew that its interpretation of its “regular use” exclusion had been rejected by the Pennsylvania Superior Court. More specifically, the Plaintiff argued that, as of that time, the Superior Court had determined in the case of Rush v. Erie Insurance Exchange that Erie’s “regular use” exclusion was invalid and therefore, unenforceable.
The insured otherwise argued that, in any event, he was not regularly using the work vehicle that he was injured in. Rather, he asserted that the use of the work vehicle was incidental.
According to the Opinion, the insurance company commenced this action seeking to enforce the “regular use” exclusion found in its personal automobile insurance policy issued to the Defendant. Erie asserted that the Plaintiff had regular access to a work vehicle,i.e. a vehicle that was not covered under the Erie policy. The Plaintiff was allegedly injured while driving that work vehicle. As such, Erie was seeking a ruling that it did not have to pay UIM benefits to the insured.
The insured argued that, at the time he made a claim for his personal UIM benefits, Erie knew that its interpretation of its “regular use” exclusion had been rejected by the Pennsylvania Superior Court. More specifically, the Plaintiff argued that, as of that time, the Superior Court had determined in the case of Rush v. Erie Insurance Exchange that Erie’s “regular use” exclusion was invalid and therefore, unenforceable.
The insured otherwise argued that, in any event, he was not regularly using the work vehicle that he was injured in. Rather, he asserted that the use of the work vehicle was incidental.
As such, the insured asserted a breach of contract a statutory bad faith claim against the carrier in a counterclaim. In response, Erie filed a summary judgment motion.
Erie argued that, further up the appellate ladder, the Pennsylvania Supreme Court had more recently ruled in Rush v. Erie Insurance Exchange that the regular use exclusion was still valid in at least certain circumstances, which circumstances applied in this case.
Erie argued that there can be no bad faith where the carrier correctly applies a policy exclusion. Erie asserted that, despite conflicting decisions in recent years on the validity of the regular use exclusion, Erie argued that it had reasonably relied upon existing legal precedent on the regular use exclusion to deny UIM benefits to the insured.
The Plaintiff countered by arguing that, at the time Erie denied coverage, the law was that the exclusion was “invalid.” The Plaintiff asserts that Erie had no good faith basis to disregard the Superior Court’s ruling and to deny coverage when it did so in this matter.
In this decision, the trial court noted that, in order to show bad faith on the part of an insurance company, an insured must show that the carrier breached its duty of good faith through some motive of self-interest or ill-will. The court also noted that bad faith must be shown by clear and convincing evidence. The insured must additionally show that the carrier did not have a reasonable basis for denying benefits under the policy, and that the carrier knew or recklessly disregarded its lack of a reasonable basis in denying the claim.
The trial court in this case noted that the carrier had remained in regular communication with the insured regarding the status of the claim. It was also noted that the carrier had informed the insured’s attorney that Erie was requesting a reconsideration of the Rush decision. In light of this, Erie requested that no further action be taken until a decision was made on that request by the appellate courts.
The court also noted that the insured in this case did not go so far as to argue that Erie lacked a bona fide belief that it had a good chance of ultimately succeeding in having the Pennsylvania Supreme Court declare that the “regular use” exclusion was valid under Pennsylvania law.
The court emphasized that, in this case, the insured did not offer any evidence to demonstrate that Erie’s manner in handling the claim was anything other than an attempt to enforce a written exclusion in the contract.
Erie argued that, further up the appellate ladder, the Pennsylvania Supreme Court had more recently ruled in Rush v. Erie Insurance Exchange that the regular use exclusion was still valid in at least certain circumstances, which circumstances applied in this case.
Erie argued that there can be no bad faith where the carrier correctly applies a policy exclusion. Erie asserted that, despite conflicting decisions in recent years on the validity of the regular use exclusion, Erie argued that it had reasonably relied upon existing legal precedent on the regular use exclusion to deny UIM benefits to the insured.
The Plaintiff countered by arguing that, at the time Erie denied coverage, the law was that the exclusion was “invalid.” The Plaintiff asserts that Erie had no good faith basis to disregard the Superior Court’s ruling and to deny coverage when it did so in this matter.
In this decision, the trial court noted that, in order to show bad faith on the part of an insurance company, an insured must show that the carrier breached its duty of good faith through some motive of self-interest or ill-will. The court also noted that bad faith must be shown by clear and convincing evidence. The insured must additionally show that the carrier did not have a reasonable basis for denying benefits under the policy, and that the carrier knew or recklessly disregarded its lack of a reasonable basis in denying the claim.
The trial court in this case noted that the carrier had remained in regular communication with the insured regarding the status of the claim. It was also noted that the carrier had informed the insured’s attorney that Erie was requesting a reconsideration of the Rush decision. In light of this, Erie requested that no further action be taken until a decision was made on that request by the appellate courts.
The court also noted that the insured in this case did not go so far as to argue that Erie lacked a bona fide belief that it had a good chance of ultimately succeeding in having the Pennsylvania Supreme Court declare that the “regular use” exclusion was valid under Pennsylvania law.
The court emphasized that, in this case, the insured did not offer any evidence to demonstrate that Erie’s manner in handling the claim was anything other than an attempt to enforce a written exclusion in the contract.
The court went on to find that, where an insurer has no duty to provide coverage, there can be no bad faith.
Here, the insured argued that Erie failed to take enough steps to limit the enforceability of the Superior Court decision in Rush while the Supreme Court of Pennsylvania considered whether or not to accept the case for review and then decide the case. In essence, the insured argued that Erie should have paid him UIM benefits even though Erie had otherwise appealed the Superior Court decision in Rush to the Pennsylvania Supreme Court.
The trial court in this matter found that this fact, alone, did not amount to potentially clear and convincing evidence of a dishonest purpose, a lack of a reasonable basis to deny benefits, or a knowing or reckless disregard of a reasonable basis to deny coverage on the part of the carrier.
The trial court also noted that the Pennsylvania Supreme Court decision in Rush made clear that the Superior Court decision in Rush deviated from well-established precedent that had continually upheld the validity of the regular use exclusion.
Accordingly, the trial court in this case found that the insured did not produce evidence to establish any bad faith on the part of the carrier. As such, Erie’s Motion for Summary Judgment was granted and the Plaintiff’s bad faith clam was dismissed.
Anyone wishing to review a copy of this decision may click this LINK.
I send thanks to Attorney Joseph Hudock of the Pittsburgh office of the law firm of Summers, McDonnell, Hudock, Guthrie & Rauch, P.C. for bringing this interesting case to my attention.
The trial court in this matter found that this fact, alone, did not amount to potentially clear and convincing evidence of a dishonest purpose, a lack of a reasonable basis to deny benefits, or a knowing or reckless disregard of a reasonable basis to deny coverage on the part of the carrier.
The trial court also noted that the Pennsylvania Supreme Court decision in Rush made clear that the Superior Court decision in Rush deviated from well-established precedent that had continually upheld the validity of the regular use exclusion.
Accordingly, the trial court in this case found that the insured did not produce evidence to establish any bad faith on the part of the carrier. As such, Erie’s Motion for Summary Judgment was granted and the Plaintiff’s bad faith clam was dismissed.
Anyone wishing to review a copy of this decision may click this LINK.
I send thanks to Attorney Joseph Hudock of the Pittsburgh office of the law firm of Summers, McDonnell, Hudock, Guthrie & Rauch, P.C. for bringing this interesting case to my attention.
Source of image: Photo by Jay Brand at www.pexels.com.
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