INSURANCE-FINANCIAL RESPONSIBILITY LAW-EXCLUSIONS-HOUSEHOLD EXCLUSION

June 27th, 2019 by Rieders Travis in Insurance

Gallagher vs. Geico Indem. Co., 201 A.3d 131, *131; 2019 Pa. LEXIS 345, **1 Justice Bear.  This appeal requires the Court to determine whether a “household vehicle exclusion” contained in a motor vehicle insurance policy violates Section 1738 of the Motor Vehicle Financial Responsibility Law (“MVFRL”).  75 Pa. C.S.1738, because the exclusion impermissibly acts as a de facto waiver of stacked uninsured and underinsured motorist (“UM” and “UIM,” respectively) coverages.   We hold that the household vehicle exclusion violates the MVRFL.  Accordingly, we vacate the Superior Court’s judgment, reverse the trial court’s order granting summary judgment in favor of Appellee GEICO Indemnity Company (“GEICO”), and remand to the trial court for further proceedings.   On the morning of August 22, 2012, Appellant Brian Gallagher (“Gallagher”) was operating his motorcycle when William Stouffer (“Stouffer”) failed to stop his pickup truck at a stop sign.  Stouffer’s truck collided with Gallagher’s motorcycle, causing Gallagher to suffer severe injuries.   At the time of the accident, Gallagher had two insurance policies; notably, he purchased both of the policies from GEICO.  One policy, which included $50,000 of UIM coverage insured only Gallagher’s motorcycle (“Motorcycle Policy”).  The second policy insured Gallagher’s two automobiles and provided for $100,000 of UIM coverage for each vehicle (“Automobile Policy”).  Gallagher opted and paid for stacked UM and UIM coverage when purchasing both policies.   Stouffer was insured by Progressive Insurance Company (“Progressive”), and Gallagher eventually settled his claim against Stouffer and Progressive.   However Stouffer’s insurance coverage was insufficient to compensate Gallagher in full.  Consequently, Gallagher filed claims with GEICO seeking staked UIM benefits under both of his GEICO policies.  While GEICO paid Gallagher the $50,000 policy limits of UIM coverage available under the Motorcycle Policy, it denied his claim for stacked UIM benefits  under the Automobile Policy.  GEICO based its decision on a household vehicle exclusion found in an amendment to the Automobile Policy.   The exclusion states as follows:  “This coverage does not apply to bodily injury while occupying or from being struck by a vehicle owned or leased by you or a relative that is not insured for Underinsured Motorists Coverage under this policy.”   Because Gallagher suffered bodily injury while occupying his motorcycle, which was not insured under the Automobile Policy, GEICO took the position that the household vehicle exclusion precluded Gallagher from receiving stacked UIM coverage pursuant to that policy.  Here, it is undisputed that: (1) Stouffer, the tortfeasor who caused the accident, was underinsured; (2) Gallagher did not sign the statutorily-prescribed UIM stacking waiver form for either of his GEICO policies; and (3) he would have received the UIM coverage that he bought and paid for under both of his GEICO policies pursuant to Subsection 1738(a) of the MVFRL, save for the “household vehicle exclusion” found in an amendment to the Automobile Policy for which no explicit, formal acknowledgment was provided.   This policy provision, buried in an amendment, is inconsistent with the unambiguous requirements of Section 1738 of the MVFRL uner the facts of this case insomuch as it acts as a de facto waiver of stacked UIM coverage provided for in the MVFRL, despite the indisputable reality that Gallagher did not sign the statutorily-prescribed UIM coverage waiver form.   Instead, Gallagher decided to purchase stacked UM/UIM coverage under both of his policies, and he paid GEICO premiums commensurate with that decision.  He simply never chose to waive formally stacking as is plainly required by the MVFRL.   For all these reasons, we hold that the household vehicle exclusion violates the MVRFL; therefore, these exclusions are unenforceable as a matter of law.  Accordingly, we vacate the Superior Court’s judgment, reverse the trial court’s order granting GEICO’s motion for summary judgment, and remand the matter to the trial court for further proceedings consistent with this opinion.