Pennsylvania Supreme Court Enforces Household Vehicle Exclusion in Automobile Policy
In 2018, Albert Mione (“Mione”) was in a collision while operating his motorcycle. Mione’s motorcycle was insured by Progressive Insurance, under a policy that did not include UM/UIM coverage (“the motorcycle policy”). Albert and his wife Lisa (“the Miones”) jointly owned a car, which was insured by Erie Insurance on a single-vehicle policy that included UM/UIM coverage with stacking (“the automobile policy”). Mione’s adult daughter Angela also lived in the couple’s home, and she too owned a car, which Erie insured on a single-vehicle policy (“Angela’s policy”). Both of the Erie policies contained household vehicle exclusions barring UM/UIM coverage for injuries sustained while operating a household vehicle not listed on the policy under which benefits are sought.
After Mione’s motorcycle collision, the Miones sought benefits from the at-fault driver’s insurance company, which paid out the policy’s maximum benefit. The Miones then tried to recover UIM benefits from Erie under both the automobile policy and Angela’s policy. Erie denied coverage for both claims, citing the household vehicle exclusions in the policies. The company then filed suit in the Lehigh County Court of Common Pleas seeking a declaratory judgment that it was not required to pay the Miones UIM benefits under either of the policies.
Erie eventually filed a motion for judgment on the pleadings, which the trial court granted. The court noted that “the facts in this case are nearly identical to the facts in” Eichelman v. Nationwide Insurance Co., 711 A.2d 1006 (Pa. 1998), where this Court rejected the argument that household vehicle exclusions are per se unenforceable on public policy grounds. The trial court reasoned that the household vehicle exclusion in the Miones’ automobile policy was unambiguous and enforceable. Like the Eichelman court, the trial court emphasized that Mione had waived UIM coverage for his motorcycle, meaning that the public policy of cost containment would be furthered by enforcing the household vehicle exclusion.
The trial court rejected the Miones’ argument that the Supreme Court’s ruling in Gallagher v. GEICO Indem. Co., 650 Pa. 600, 613, 201 A.3d 131, 138 (2019), sub silentio overruled Eichleman when it held that the household vehicle exclusion violates the MVFRL; and therefore, is unenforceable as a matter of law. However, the trial court distinguished Gallagher, noting that Mione lacked UM/UIM coverage on his motorcycle, whereas the insured in Gallagher had purchased UM/UIM coverage for his motorcycle. On appeal, the Pennsylvania Superior Court affirmed the trial court’s decision explaining that “Gallagher only invalidated household exclusions in cases where they are used to circumvent Section 1738’s specific requirements for waiving stacking.”
On appeal, the Supreme Court analyzed Section 1738 of the MVFRL, which states that, when multiple vehicles are insured under one or more policies, any UM/UIM coverage is stacked by default. This means that the amount of coverage “shall be the sum of the limits for each motor vehicle as to which the injured person is an insured.” While stacked coverage is the default, an insured nevertheless may waived stacked coverage limits by signing a written waiver form, the text of which is dictated by Subsection 1738(d). The Supreme Court affirmed the lower courts’ decisions because there was no UM/UIM coverage on Mione’s motorcycle policy, the Miones’ claim under the automobile policy did not implicate the rules for waiving stacking in writing found under 75 Pa. C.S.A. §1738, (or Gallagher), since there is no underlying coverage upon which to “stack” the automobile policy. The Court further explained because the Miones were not attempting to stack UIM benefits from the household policies on top of UIM benefits from the motorcycle policy, Section 1738’s rules for waiving stacking—which were the basis for this Court’s decision in Gallagher—were not implicated. Erie Ins. Exchange v. Mione, No. 89 MAP 2021 (Pa. Feb. 15, 2023).