In a recent decision in Rush v. Erie Insurance Exchange, No. 77 MAP 2022 (Pa. Jan. 29, 2024) (Maj. Op. by Donohue, J.)( Wecht, J., Concurring) the Supreme Court of Pennsylvania considered the question of whether the “regular use exclusion,” commonly included in auto insurance policies in Pennsylvania, violates the provisions of the Motor Vehicle Financial Responsibility Laws.

In Rush, the claimant was a police office injured while operating his police vehicle in the course and scope of his employment. After recovering the liability benefits from the tortfeasor as well as the underinsured (“UIM”) motorist benefits from the policy insuring the police vehicle involved in the accident, he sought additional benefits from two separate household auto insurance policies issued to him as a named insured. Neither of the household policies insured the police cruiser involved in the accident and both contained the “regular use exclusion,” which eliminated UIM coverage where the claimant occupied a vehicle he regularly used or had access to but was not insured under the subject policy. The insurer denied UIM benefits subject to the “regular use exclusion” and the claimant filed suit.

The trial court and Superior Court both concluded that the exclusion violates the express statutory provisions of the MVFRL and was thus void. The Supreme Court of Pennsylvania reversed the decision and applied the exclusion to preclude recovery. In its analysis, the Supreme Court began by noting that the “regular use exclusion” has been upheld by the Supreme Court on prior occasions in both Burstein v. Prudential Prop. & Cas. Ins. Co., 809 A.2d 204, (Pa. 2002) and Williams v. GEICO Gov’t Emps. Ins. Co., 32 A.3d 1195, (Pa. 2011). The Court explained that in Burstein it rejected the idea that the same exclusion violates the “portability” requirements of UIM coverage and explained that the Superior Court’s decision effectively renders UIM coverage “mandatory in virtually all instances.” The Court explained that “if UIM coverage must follow the person in all circumstances, then an insurer cannot exclude coverage in any situation.” In finding that the Burstein decision expressly rejected this premise, the Court rejected the unlimited portability argument, accordingly.

Turning to the Williams decision, the Court initially acknowledged that the primary focus therein concerned public policy considerations. However, the Court refused to omit analysis of the claimant’s argument in Williams that the exclusion violates “the express terms of the MVFRL.” Specifically, in Williams, the claimant also argued that the exclusion violated 75 Pa.C.S. § 1731. In rejecting the claimant’s arguments that 75 Pa.C.S. § 1731 requires payment of the UIM benefits purchased due to a lack of a statutory waiver of those benefits, the Court analogized the argument to the same UIM “portability” argument that it previously rejected. The Court concluded that “Once it is decided that UIM coverage is not universally portable—given the express non-priority of an insured’s UIM policy coverage in Section 1733 and the contrary priority of coverage for first party benefits—any argument that Section 1731 prohibits exclusions from coverage in the insurance contract must fail.” The Court re-affirmed the vitality of the Burstein and Williams decisions and held that the “regular use exclusion” is a permissible auto insurance limitation in Pennsylvania, accordingly.

The Rush decision can be found here.

For additional questions, please contact Glen Shikunov, Esq. and/or Scott Tredwell, Esq.

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