Rush v. Erie Insurance Exchange
In Rush v. Erie Insurance Exchange, 2021 Pa Super 215, No. 1443 EDA 2020, the Superior Court held the “regular use” exclusion clause is unenforceable because it violates the Motor Vehicle Financial Responsibility Law (“MVFRL”).
Matthew Rush, a City of Easton police detective, suffered serious injuries when two other drivers crashed into the police car he regularly used, but was owned and insured by the City of Easton. “The Easton Policy” provided for $35,000 in underinsured motorist (“UIM”) coverage. Rush insured three personal automobiles on two insurance policies through Erie Insurance (“Erie Policies”). Rush paid for stacked UIM coverage on both policies. The first policy provided for $250,000 of UIM coverage on one vehicle and the second provided for $250,000 of UIM coverage stacked on two vehicles. Both Erie Policies include identical “regular use” exclusion clauses, which provided:
This insurance does not apply to:
Bodily injury to “you” or a “resident” using a non-owned “motor vehicle” or a “non-owned” miscellaneous vehicle which is regularly used by “you” or a “resident,” but not insured for uninsured or underinsured motorist coverage under this policy.
After the other drivers and the City of Easton tendered their policy limits to Rush, he filed a claim for UIM benefits under the Erie Policies. Erie Insurance denied coverage based on the “regular use” exclusion. Rush then filed the underlying declaratory judgment action seeking judicial determination of whether the MVFRL allows Erie Insurance to limit the scope of its UIM policies through the “regular use” exclusion. The trial court granted summary judgment in favor of Rush, holding that the “regular use” exclusion in the Erie Policies violated the MVFRL. Erie Insurance appealed the trial court’s decision, arguing that the “regular use” exclusion is an enforceable limitation on the scope of UIM coverage that it must provide to Insureds.
Where a provision of an insurance contract contravenes the MVFRL, [Pennsylvania courts] shall find that provision unenforceable. Sayles v. Allstate Ins. Co., 219 A.3d 1110, 1124 (Pa. 2019). Section 1731 of the MVFRL governs the scope of UIM coverage in Pennsylvania. 75 Pa.C.S. § 1731. Section 1731 mandates that insurers provide insureds coverage when the insured satisfies three requirements. The insured must (1) have suffered injuries arising out of the maintenance or use of a motor vehicle; (2) be legally entitled to recover damages from the at-fault underinsured driver; and (3) have not rejected UIM coverage by signing a valid rejection form. Id. at §§ 1731(c), (c.1). Here, Rush satisfied all three of the Section 1731 requirements.
In support of its argument that the “regular use” exclusion is an enforceable limitation on the scope of UIM coverage, Erie Insurance cited Williams v. GEICO Govt. Emp. Ins. Co., 32 A.3d 1195, 1199 (Pa. 2011). In Williams, the Pennsylvania Supreme Court addressed “whether the regular-use exclusion, as applied to a state trooper, is void as against public policy that favors protecting first responders.” After conducting a public policy analysis, the Supreme Court in Williams concluded that the insured had failed to meet the high burden of establishing that the regular use exclusion violated the public policy supporting the MVFRL. Also, the Supreme Court in Williams stated, in dicta, that a “regular use” exclusion clause did not violate the express terms of the MVFRL.
Here, the Superior Court determined that because the Supreme Court’s statement that a “regular use” exclusion did not violate the express terms of the MVFRL was dicta, it was not bound by it. See Commonwealth v. Romero, 183 A.3d 364, 400 n.18 (Pa. 2018). (explaining that dictum is “judicial comment made while delivering a judicial opinion, but one that is unnecessary to the decision in the case and therefore not precedential[.]”). The Superior Court also noted that the Supreme Court in Williams relied upon Erie Ins. Exch. v. Baker, 972 A.2d 507 (Pa. 2008), which the Pennsylvania Supreme Court abrogated in Gallagher v. GEICO Indemn. Co., 201 A.3d 131, 135 (Pa. 2019).
Ultimately, the Superior Court determined the “regular use” exclusion in the Erie Policies conflicted with the broad language of Section 1731(c), which requires UIM coverage in those situations where an insured is injured arising out of the “use of a motor vehicle.” Stated differently, the court found that the exclusion limited Section 1731(c)’s coverage mandate to situations where an insured is injured arising out of “use of an owned or occasionally used motor vehicle.” Therefore, the Superior Court held that since the “regular use” exclusion conflicts with the clear and unambiguous language of Section 1731 of the MVFRL, it is unenforceable.