In National General Insurance Company v. Sheldon, No. 20-3222 (3rd. Cir. July 14, 2021) [Not Precedential], the Third Circuit determined the household exclusion in the insurance carrier’s policy was invalid and applied Gallagher v. GEICO, 201 A.3d 131 (Pa. 2019).
Defendant Mark Sheldon purchased a motorcycle and insured it with Dairyland Insurance Company (Dairyland), and also had a pre existing automobile insurance policy with National General Insurance (National General). Defendant did not tell National General about the motorcycle purchase and the Court noted that it was unclear if his insurance broker informed them of the purchase.
Defendant was subsequently injured when a third party struck him while operating his motorcycle, which was insured by Dairyland. Defendant settled his third party claim, recovered Underinsured Motorist Coverage benefits (UIM) from Dairyland and then sought UIM benefits from his National General automobile policy.
National General denied coverage under the “household vehicle” exclusion in their policy. They argued that Gallagher v. GEICO was inapplicable in cases where two separate insurance companies issued two separate policies that included stacked UIM coverage for motor vehicles versus a motorcycle.
The Third Circuit noted that Gallagher involved two insurance policies with the same defendant company including one with UIM coverage for a motorcycle and one with UIM coverage for two automobiles. The plaintiff in Gallagher selected stacked coverage on both policies. After an injury involving a third party tortfeasor while on his motorcycle, the plaintiff in Gallagher sought stacked UIM benefits under both his motorcycle policy and automobile policy with GEICO, who denied benefits under the household exclusion exception. The Gallagher court found that because the household exclusion did not take into account the statutory requirements of UIM coverage waivers and acts as a de facto stacking waiver, it was invalid.
The Third Circuit determined that the only difference between Gallagher and the case at bar was the fact that the motorcycle and automobile policies were issued by two different insurance companies. The court determined that Gallagher’s reasoning applied regardless of who provided benefits, one company or two, and held the Household Exclusion to be invalid in this matter, as well.
Questions regarding this case can be directed to Jennifer L. Stauffer, Esquire.
