In the recent case of Donegal Mutual Insurance Company v. Krautsack, No. CI-19-04904 (C.P. Lancaster Co. Aug. 28, 2020), Court of Common Pleas Judge David Ashworth granted summary judgment to Devin Krautsack and denied Donegal’s cross-motion for summary judgment. Plaintiff, Donegal sought a declaration that Krautsack was not entitled to stacked underinsured motorist coverage under its policy. The trial court disagreed with Donegal’s position.
This case arose out of an accident involving Devin Krautsack, who was operating a motorcycle owned by his mother and insured with Progressive. Krautsack was living with his parents. The Progressive motorcycle policy contained a valid rejection of underinsured motorist stacking. Krautsack’s parents were also the named insureds on a separate automobile insurance policy with Donegal which covered two of the parent’s automobiles. The parents selected stacked underinsured motorist coverage under the Donegal policy, however, the Donegal policy did not cover the motorcycle which was in the subject accident. Donegal’s policy contained a household exclusion and argued that Krautsack was not entitled to underinsured motorist benefits.
Donegal argued that Gallagher v. GEICO was not applicable to the instant case. In Gallagher, the Supreme Court invalidated a household exclusion because it impermissibly acted as a de facto waiver of stacked uninsured and underinsured motorist coverages. Krautsack argued herein that Gallagher should be read as eliminating the household exclusion entirely. Donegal asserted that Gallagher must be interpreted narrowly and should be limited to the facts in the Gallagher case, which were distinguishable from the facts in Krautsack.
The Lancaster County Court held that Gallagher should be read literally, so as to make the household exclusion unenforceable as a matter of law. The court determined that Donegal was required to secure a written waiver or rejection of underinsured motorist stacking for such a rejection to be valid. Because that was not done by Donegal, the household exclusion was invalid and Krautsack was entitled to stacked UIM coverage.
Questions regarding this case can be directed to Ted Winicov or David Friedman.
