Yesterday, the Pennsylvania Supreme Court rendered a decision which could have a significant impact on auto liability underwriting. The facts: motorcyclist, Gallagher, was struck by a truck operated by Stouffer who ran a stop sign. Gallagher had two motor vehicle policies, both underwritten by GEICO: a motorcycle cover with 50K in UIM limits and an auto policy with 100K UIM for each of two listed vehicles. Gallagher had paid for “stacked” coverages on both policies. Gallagher settled with Stouffer and sued GEICO for the UIM benefits under both the motorcycle and auto policies for a total stacked limit of 250K.

GEICO offered the 50K limit on the motorcycle policy, but, filed a motion for summary judgement contending Gallagher was not entitled to collect UIM under the auto policy based upon the “household vehicle exclusion.” Gallagher countered he paid the additional premiums for the “stacked” coverages and was therefore entitled to the 250K limit afforded by the two policies combined.

The trial court granted GEICO’s MSJ, the Superior Court affirmed and the Supreme Court decision, considering whether the “household vehicle exclusion” acts as a de facto waiver of stacked UM and UIM coverages, reversed holding the stacked coverage is the default coverage available to every insured and provides stacked coverage on all vehicles and all policies. The Supreme Court found the “household” exclusion was invalid and unenforceable because it effectively denied Gallagher the coverage for which he paid a premium. In his dissenting opinion, Justice Wecht noted the Court could ultimately be in the “exclusion-umpiring business for the foreseeable future.”

If you would like a copy of the full opinion, please contact me. The citation: Gallagher v. Geico Indem. Co., No. 35 WAP 2017, 2019 Pa. LEXIS 345 (Pa. Jan. 23, 2019).