In Erie Insurance Exchange v. Mione, 2021 Pa. Super. 91 (2021), the Superior Court of Pennsylvania declined to follow Gallagher v. GEICO and upheld the validity of a household exclusion, in a limited circumstance. This decision was entered before the holding of Donovan v. State Farm, and therefore may be subject to Supreme Court review.
In Mione, the plaintiff was involved in a motorcycle accident with a third-party tortfeasor. The motorcycle was insured under a Progressive policy. The plaintiff rejected UIM coverage on the Progressive motorcycle policy. After recovering the tortfeasor liability limits, the plaintiff sought UIM benefits from two Erie auto policies in his household. Erie contended that the plaintiff was precluded from recovering UIM benefits under the two Erie policies because the motorcycle was not listed as a covered vehicle on either Erie policy and the Erie policies contained a “household exclusion” that barred him from recovering UIM benefits for injuries arising out of an operation of a non-listed miscellaneous vehicle.
In Gallagher, the insured had purchased both his motorcycle policy and his auto policy from GEICO. The insured did not sign the UIM Stacking Waiver Form for either of his GEICO policies. GEICO paid Gallagher the UIM policy limits available on his motorcycle policy, but denied his claim for stacked UIM benefits under his auto policy based upon the household exclusion in that policy. The Gallagher court held that the household exclusion in the auto policy violated Section 1738 of the MVFRL because it impermissibly acted as a de facto waiver of stacked coverages. Under those circumstances, the Gallagher court held that the household vehicle exclusion deprived the insured of stacked UIM coverage that he had purchased, and the household exclusion violated the clear mandates of the waiver provisions of Section 1738.
In Mione, the plaintiff asserted that Gallagher invalidated household exclusions in Pennsylvania and that the rationale in Gallagher applied to the issue in this case. Erie contended that the Pennsylvania Supreme Court’s decision in Eichelman v. Nationwide was controlling. In Eichelman, the Supreme Court held that a person who voluntarily elects not to carry UIM coverage on his own vehicle is not entitled to recover UIM benefits from separate insurance policies issued to family members with whom they reside, and an unambiguous household exclusion language explicitly precludes UIM coverage.
The Superior Court declined to follow Gallagher in Mione and followed the rationale in Eichelman and held that because the plaintiff had rejected UIM stacking on his motorcycle, the host vehicle, he could not then seek UIM coverage on the Erie policies because there was coverage to stack and the household exclusions in the Erie policies were enforceable to preclude plaintiff from recovering UIM benefits.
Questions regarding this issue can be directed to David Friedman.
