The Pennsylvania Superior Court, in Rush v. Erie Insurance Exchange, No. 1443 EDA 2020 (Pa. Super. October 22, 2021), affirmed a Northampton County Trial Court’s decision finding the regular use exclusion to be invalid and that the exclusion violated the Motor Vehicle Financial Responsibility Law (MVFRL). The exclusion is found in many Pennsylvania auto policies and allows for the denial of uninsured and underinsured motorist coverage claims when a person is injured while driving a vehicle which is owned by a someone else, such as an employer, but is available for their regular use. The insurance industry argued that this exclusion insulated it from unknown risks caused by the insured regularly operating vehicles which are unknown to the insurer.
In Rush, a police officer was injured while driving a police car owned by the municipality. The patrol car was available for his use. He also owned three personal vehicles that were insured by Erie with UM/UIM coverages. The household policy contained the regular use exclusion. He sought UIM coverage for his injures under the Erie policy and was denied coverage due to the exclusion. A declaratory judgment action was filed thereafter seeking the coverage.
The Superior Court, based on a rationale different from the Trial Court, found the Erie’s regular use exclusion impermissibly limited the broad coverage of section 1731 of the MVFRL. The Superior Court examined the Supreme Court’s holding in Williams v. GEICO, 32 A. 3d 1110 (Pa. 2011) where the Pennsylvania Supreme Court found that precluding a law enforcement officer from recovering personal UIM benefits when injured in a police car did not violate public policy. In that case the Supreme court noted in dicta that the regular use exclusion did not violate the MVFRL. However, as that finding was not the issue on appeal, the Superior Court was not bound by Williams. Further, it noted that Williams had relied in part on Erie Insurance Exch. v. Baker, 972 A.3d 507 (Pa. 2008) which was then overruled by the Supreme Court’s holding in Gallagher v. GEICO, 201 A.3d 131, 135 (Pa. 2019). Gallagher, importantly, invalidated the household vehicle exclusion in multi vehicle policies. Many note that the regular use exclusion and household vehicle exclusions are interpreted similarly. The Rush Court noted in a footnote, as the Supreme Court had in Gallagher, that the insurance carriers could use their significant resources to minimize the impact of the decision.
An application for re-argument was filed on November 4, 2021 and we will continue to update as the appeal progresses.
Questions regarding this opinion may be directed to David Friedman or James Watson.
