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PA Update – Insurance Policy’s Household Exclusion Provision Enforceable Says Superior Court in Erie v. Colebank Opinion

The Pennsylvania Superior Court recently held in a non-precedential opinion that Household Exclusion provisions of motor vehicle insurance policies are enforceable in Pennsylvania, and that a Plaintiff who chose not to procure Under Insured Motorist (“UIM”) coverage for his own vehicle was not entitled to UIM coverage under his parent’s policy merely because he lived in the same household. Erie Insurance Exchange v. Lloyd Colebank et al., 1244 WDA 2021 (Pa. Super. April 20, 2022).

In Colebank, the Plaintiff was injured while driving a vehicle insured by State Farm. Notably, the Plaintiff had rejected all UIM coverage on the State Farm policy. After an accident with an allegedly underinsured driver, the Plaintiff made a claim for stacked UIM coverage under his parents’ policy with Erie Insurance. Erie Insurance denied coverage to the Plaintiff on the basis of the household exclusion contained within the parents’ Erie Insurance policy.

The Plaintiff argued that his rejection of stacking under the State Farm motorcycle policy was irrelevant as to the issue of whether he was entitled to stacked coverage under the Erie policy.  The Plaintiff asserted that he was still entitled to stacked coverage under the terms of the Erie policy possessed by his parents as he was a resident relative. The Plaintiff also cited to the Gallagher v. GEICO case to argue that the household exclusion was contrary to the mandates of the MVFRL and was, therefore, void and unenforceable.

Erie asserted that the Gallagher case was not controlling because the Plaintiff had knowingly rejected UIM coverage under his own State Farm policy and, therefore, the issue of stacking was not in play.

The Superior Court ruled that enforcing the household exclusion in the parents’ policy was consistent with the legislative intent of MVFRL and with Gallagher because such enforcement will have the effect of holding the Plaintiff to his voluntary choice of coverage or a lack thereof. Because the Plaintiff had rejected UIM coverage on his motorcycle policy, “Gallagher is not applicable and did not invalidate the household exclusion.”  Rather, the court found that, where the injured party did not purchase stacked coverage under his own policy, he did not have the requisite coverage on which to stack the UIM coverages under his parents’ separate household policies.

The Superior Court concluded by noting that the law on the issue was not entirely clear, and that there were prior Superior Court opinions that held both that a party’s own individual insurance did and did not have any bearing on the UIM coverage available through a parent’s policy. The Superior Court suggested that the issue was ripe for review by the Pennsylvania Supreme Court.

No concurring or dissenting opinion was entered, and so there was no contradictory analysis to the court’s reasoning as to any element of its opinion.