By: John Livingood, January 10, 2025
On January 3rd, 2025, the Pennsylvania Superior Court held that a plaintiff may recover both liability coverage and underinsured motorist (“UIM”) coverage from the same policy. See Erie Ins. Exch. v. Baluch, 2025 PA Super 2. This represents a departure from precedent established by Wolgemuth v. Harleysville Mut. Ins. Co., 370 Pa. Super. 51 (1988), and Newkirk v. United Servs. Auto. Ass’n, 388 Pa. Super. 54 (1989), cases which for nearly four decades have stood for the proposition that liability coverage and UIM coverage cannot come from the same policy. The Baluch decision challenges long held and widely accepted interpretations of both the Motor Vehicle Financial Responsibility Law (“MVFRL”) and the concept of stacking.
Factual Background
Plaintiff sustained injuries in a single vehicle motorcycle accident in which she was a passenger; the motorcycle was operated by her stepfather who sustained fatal injuries. The accident triggered coverage under two Erie policies. The first policy, covering the motorcycle, was issued to the plaintiff’s mother and stepfather and provided $100,000 per person in liability coverage and $100,000 per person in uninsured (UM) and underinsured (UIM) coverage. As a member of the household, the plaintiff received $100,000 in liability coverage under the first policy. The second policy was issued to the plaintiff and covered her personal vehicle. Under this policy, the plaintiff received $100,000 in UIM coverage. Notably, in both policies, the insureds elected stacking of UM/UIM coverage.
Erie denied the plaintiff’s claim for $100,000 in stacked UIM coverage under the first policy, since vehicles insured under the policy are excluded from the definition of “underinsured motor vehicle.” Erie’s denial is consistent with the well-established precedent of the Wolgemuth and Newkirk cases. Finding it was bound by such precedent, the trial court granted Erie’s motion for judgment on the pleadings and denied the plaintiff’s cross-motion for judgment on the pleadings.
Analysis of the Baluch Court’s Decision
In its opinion, the Baluch Court invalidated Erie’s definition of “underinsured motor vehicle” as a disguised waiver of UIM coverage. The Court found that disguised waivers cannot prevent an insured from recovering UIM benefits and are thus invalid under the Motor Vehicle Financial Responsibility Law. Focusing its decision on the principle that “an insured should receive the coverage for which he has paid,” the Court held that the plaintiff could recover UIM and liability coverage from the first policy. The Court went to great lengths to distinguish the plaintiff’s case from Wolgemuth and Newkirk, citing as a key distinction, the fact that those cases involved a single policy rather than two policies. Ultimately, the Court’s decision in Baluch is a marked departure from the well-established principle that an insured may not recover UIM and liability coverage from the same policy.
