Article by Daniel Twilla, Esq. and Josephine Mlakar, Law Clerk
The Pennsylvania Supreme Court recently affirmed that the household vehicle exclusion may be applied to deny underinsured (UIM) coverage for claims arising out of an insureds use or occupancy of a household vehicle that was covered by a separate policy issued by a separate insurer and which does not provide UIM coverage. See Erie Insurance Exchange v. Albert Mione and Lisa Mione, 2023 WL 2008314 (Pa. Feb. 15, 2023).
In Mione, an insured driver was injured while operating his motorcycle. The motorcycle was insured under a policy that did not provide UIM coverage. The insured and his wife jointly owned an automobile that a different insurer insured under a separate automobile policy that provided stacked UIM coverage. The automobile policy contained a household vehicle exclusion which stated that UIM coverage did not apply to injuries sustained while an insured occupied a motor vehicle owned by the insured but not listed on the policy under which benefits are sought. The insured asserted a claim for UIM benefits under the automobile policy, and the insurer denied coverage, citing the household vehicle exclusion.
The insurer filed a declaratory judgment action seeking enforcement of the exclusion. The insurer then filed a motion for judgment on the pleadings, which the trial court granted. The insureds appealed to the Superior Court, which affirmed the trial court. The Pennsylvania Supreme Court granted the insureds’ petition for allowance of appeal.
The Supreme Court affirmed the lower courts and held that the insureds could not have reasonably expected coverage when they rejected UIM coverage in the motorcycle policy and the automobile policy explicitly excluded UIM coverage if the vehicle in which the accident occurred did not itself have UIM coverage. In support of its decision, the Court relied upon its own holding in Eichelman v. Nationwide Ins. Co., a case in which the Court upheld the application of the household vehicle exclusion when the plaintiff motorcycle driver waived UIM coverage in his motorcycle policy. The Court noted that in both cases, the policy under which coverage was sought clearly stated that coverage was unavailable if the vehicle in which the accident occurred did not have UIM coverage.
The Court rejected the insureds’ argument that Gallagher v. GEICO Indemnity Co. precluded enforcement of the household exclusion. The Court found that the household vehicle exclusion in the UIM-containing policy was not operating as the sort of “disguised waiver” of stacking that was disapproved in Gallagher, rather, the household vehicle exclusion served as an unambiguous preclusion of all UM/UIM coverage for damages sustained while operating an unlisted household vehicle. The Court noted that for a household vehicle exclusion to be acting as an impermissible de facto waiver of stacking, the insured must have received UM/UIM coverage under some other policy first, or else Section 1738 is not implicated at all.
Moreover, the Court further rejected the view that household vehicle exclusions are ipso facto unenforceable.