Since the Pennsylvania Supreme Court’s decision in Gallagher v. GEICO Indem. Co., 201. A.3d 131 (Pa. 2019), voluminous litigations ensued concerning whether the “household exclusion” contained in nearly all Pennsylvania auto insurance policies remains valid.
On February 15, 2023, the Pennsylvania Supreme Court issued a decision in Erie Ins. Exch. v. Mione, 89 MAP 2021 (Pa. February 15, 2023), handled by Glen Shikunov, Esquire of McCormick & Priore P.C. on behalf of Erie Insurance Exchange throughout the life of the litigation. The Mione decision clarified both the scope and applicability of Gallagher and further affirmed the continuing vitality of the “household exclusion” in Pennsylvania auto insurance policies.
In Mione, the claimant was involved in an accident while occupying a motorcycle he owned and insured under a Progressive Insurance policy which did not contain uninsured/underinsured (“UM/UIM”) coverage. After an accident, the claimant made a claim for underinsured motorist benefits under two Erie household policies, one issued in his own name and the other in his resident-relative daughter’s. Neither policy listed the subject motorcycle as an insured vehicle. Accordingly, Erie denied coverage under both policies by virtue of the “household exclusion.” Plaintiff in turn argued that the “household exclusion” is void under Gallagher and precludes him from recovering the “stacked” UIM benefits under this household policies in violation of Section 1738 of the MVFRL.
The Supreme Court initially explained that the Gallagher decision was limited to instances where the claimant was precluded from recovering stacking of benefits from his household policy on top of those recovered under the motorcycle policy he occupied. Unlike Gallagher, the Court explained that the Mione case did not implicate stacking at all “because [claimants] are not attempting to stack UIM benefits from the household policies on top of UIM benefits from the motorcycle policy, Section 1738’s rules for waiving stacking—which were the basis for this Court’s decision in Gallagher—are simply not implicated.) Mione, supra at *9. Accordingly, the Court held 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.” Where, as in Mione, no UIM benefits were collected on top of which to stack the UIM benefits under the household policy pursuant to Section 1738 of the MVFRL, the statute was not implicated and in turn not violated by the exclusion.
The Supreme Court affirmed the Superior Court’s decision upholding the “household exclusion” in Mione while limiting Gallagher to its “unique” facts. It further rejected “the view that household vehicle exclusions are ipso facto unenforceable.” Instead, the Court explained that the “household exclusion” remains valid in Pennsylvania “in cases where the exclusion does not interfere with the insured’s ability to stack UM/UIM.”
The Mione decision can be found here.
For additional questions, please contact Glen Shikunov, Esq. and/or Scott Tredwell, Esq.
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