Skip to main content


Mid-Century Ins. Co. v. Werley, 2023 U.S. Dist. LEXIS 54688, 2023 WL 2727575 (E.D. Pa. March 30, 2023) (Smith, J.), appeal filed (May. 09, 2023) (No.23-1822). In this case, the court has been requested to resolve a UIM coverage dispute between an insurer and its insureds, two parents and their then-minor son, where the son was injured in an accident caused by an underinsured motorist while the son was operating the family’s dirt bike off-road. At the time of the accident, the son was insured under his parents’ two automobile insurance policies they had purchased from the plaintiff insurer. One of those policies was a single-vehicle policy and the other a multi-vehicle policy, and the parents expressly waived intra-policy stacking for both policies. As for the dirt bike, it was not insured under any policy. However, the insurer does not dispute that the dirt bike did not have to be insured under the MVFRL (insofar as it was only operated off-road), and it is not currently contesting the parents’ assertion that they did not believe they had to insure the dirt bike or know whether they could insure the dirt bike. The insureds first sought and obtained payment of the policy limits from the underinsured motorist’s policy. They then submitted UIM claims under both of their policies with the plaintiff insurer. The insurer paid the UIM limits under the single-vehicle policy but refused to pay on the multi-vehicle policy because it contained a “household vehicle exclusion,” which excluded UIM coverage for any “bodily injury sustained by you or any family member while occupying . . . any motor vehicle owned by you or any family member which is not insured for this coverage under any similar form.” Essentially, since the dirt bike was uninsured, the insurer determined that this exclusion precluded UIM coverage for the son’s injuries in the accident. The insurer’s refusal to pay on the multi-vehicle policy led the parties to file competing declaratory judgment actions in this court, where they seek to have the court determine whether the insurer must pay UIM benefits under the multi-vehicle policy. The parties have now filed cross-motions for summary judgment and, as they are not contending that there are any genuine issues of material fact, this court can resolve the dispute over the insurer’s obligations under the multi-vehicle policy. To resolve this dispute, the court must address two issues: The first issue is whether the parents’ policies can be stacked. If they can, the second issue is whether the household vehicle exclusion precludes stacking. The court will briefly discuss both issues, but in reverse order. Regarding this second issue, the Pennsylvania Supreme Court, as recently as 2021, has made it abundantly clear that if an insured has not knowingly waived inter-policy stacked UM/UIM coverage, a household vehicle exclusion is unenforceable if it operates as a de facto waiver of this form of stacked UM/UIM coverage. Therefore, if the son can stack coverage, even though the household vehicle exclusion in this case is unambiguous and would exclude coverage of the accident, this court could not enforce it to prevent inter-policy stacked coverage. As for the first issue, it appears to be an issue of first impression by a state or federal court in this Commonwealth: If an uninsured or underinsured motorist injures a person while the person is occupying or operating a vehicle which is not required to be insured and, in fact, is uninsured, and the insurer pays UM/UIM benefits under a policy covering a vehicle not involved in the accident to which the injured person is insured (also known as a “second-priority policy”), may the injured person stack UM/UIM coverage on another second-priority policy? Stated differently, does inter-policy stacking under the MVFRL depend on the vehicle involved in the accident having UM/UIM coverage when the person seeking stacked coverage receives UM/UIM benefits from a second-priority policy and is insured under another second-priority policy? As discussed below, no matter which way the question is framed, the answer is the same: The MVFRL does not delineate that stacking may only occur if there is UM/UIM coverage on a host vehicle. Rather, inter-policy stacking is dependent on there being a policy covering a vehicle under which the claimant is an insured first providing UM/UIM coverage for an accident. The lack of UM/UIM coverage on the host vehicle is only relevant (and, admittedly, it is relevant almost all the time) when the individual seeking UM/UIM benefits from a second-priority policy is seeking benefits from that second-priority policy in the first instance, and the second-priority policy contains an enforceable exclusion that would deny coverage in the first instance. In these circumstances, courts unequivocally decline to stack UM/UIM coverage because there is no first policy providing UM/UIM benefits upon which to stack the second-priority policy. Although the Werleys expressly waived intra-policy stacking when purchasing the multi-vehicle Subject Policy, Donovan holds that the section 1738(d) waiver the Werleys executed for intra-policy stacking is insufficient as a matter of law to show that they knowingly waived interpolicy stacking in a multi-vehicle policy with UM/UIM coverage. The Werleys are therefore entitled to inter-policy stacked UIM coverage by default under section 1738(a). In addition, although the Subject Policy has an unambiguous household vehicle exclusion that would exclude coverage for Levi’s injuries in this case based on the plain language of the exclusion, this court cannot enforce it because it operates a de facto waiver of stacking pursuant to Gallagher and Donovan. At bottom, Levi is entitled to stack UIM coverage limits from the Subject Policy onto those of the Other Policy. Accordingly, the court will grant the Werleys’ motion for summary judgment, deny Mid-Century’s motion for summary judgment, enter a judgment in favor of the Werleys and against Mid-Century on the complaint and the Werleys’ counterclaim, which includes a declaration that Mid-Century has a duty to provide UIM coverage under the Subject Policy to Levi for the subject accident.