Continuing the trend of rulings in favor of providing UM/UIM coverage to insureds where their policy expressly excludes such coverage, the Pennsylvania Superior Court has ruled that the “regular use” exclusion conflicts with the Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”), 75 Pa. C.S.A. §1701, et seq., and thus, is unenforceable. In so ruling, the Superior Court in Rush v. Erie Ins. Exch., 2021 PA Super 215 (October 22, 2021 Bender, P.J.E., Dubow J., and Stevens, P.J.E), affirmed the trial court’s entry of partial summary judgment in favor of the insureds, reasoning that §1731 provides UIM coverage for injuries arising out of the maintenance or use of “a motor vehicle,” regardless of who owns or insures the vehicle or the frequency with which the insured uses it.
Generally speaking, the “regular use” exclusion protects an insurer from providing UM/UIM coverage for bodily injury its insured sustains while occupying a vehicle the insurer does not insure and its insured does not own, but the insured is nonetheless using regularly. The most common scenario in which this exclusion applies is an employer-owned vehicle the insured is using regularly as part of his or her employment. So was the scenario in Rush where the insured, a police officer, was injured while driving his police car, a vehicle he regularly used. After settling with both tortfeasors and collecting the $35,000 UIM limit of the policy covering the police car, the insured sought UIM benefits under his own auto policies, one personal providing $250k in UIM benefits for a single vehicle and one commercial providing $250k stacked for two vehicles. The insureds had never signed a waiver of UM/UIM coverage for either policy.
The insurer denied the UIM claims under both policies, citing the “regular use” exclusion. The insured then filed a declaratory judgment action in the Court of Common Pleas of Northampton County, arguing that the regular use exclusion violates the MVFRL and is, therefore, void and unenforceable. In granting the insured’s motion for partial summary judgment, the trial court agreed, analogizing the regular use exclusion to the household vehicle exclusion invalided by the Supreme Court in Gallagher v. GEICO Indem. Co., 201 A.3d 131, 135 (Pa. 2019), under §1738 governing the stacking of UM/UIM coverage. The trial court further found the regular use exclusion to run afoul of §1734, mandating UM/UIM coverage equal to the policy’s bodily injury limit absent a written waiver signed by the insured. An appeal to the Superior Court ensued.
While the Superior Court affirmed the trial court’s order, its reasoning differed. Specifically, in what the Superior Court considered to be a case of “first impression,” it found that the regular use exclusion improperly limits UIM coverage under §1731, which provides such coverage for “persons who suffer injury arising out of the maintenance or use of a motor vehicle and are legally entitled to recover damages therefor from owners or operators of underinsured motor vehicles” absent a written rejection of UIM coverage. (emphasis in original opinion). According to the Superior Court, the regular use exclusion affords UIM coverage for only those injuries arising out of the maintenance or use of an owned or occasionally used motor vehicle without any signed rejection form from the insured, thus conflicting with the plain language of §1731.
Although Pennsylvania courts, both state and federal, had upheld the regular use exclusion for decades, even after the Gallagher decision, the Superior Court discussed only one prior opinion, Williams v. GEICO Govt. Emp. Ins. Co., 32 A.3d 1195, 1199 (Pa. 2011), in which the Supreme Court held that the regular use exclusion, as it applied to a state trooper, was not void as against a public policy in favor of protecting first responders. The Superior Court acknowledged that the Supreme Court in Williams expressly stated that the regular use exclusion did not violate the terms of the MVFRL, but dismissed this statement as mere dicta and, thus, nonbinding. The Superior Court further reasoned that Williams was premised upon a decision, Erie Ins. Exch. v. Baker, 972 A.2d 507 (Pa. 2008), Gallagher abrogated and, like the Supreme Court in Gallagher, the Superior Court was unmoved by the insurer’s pleas against being forced to provide UM/UIM coverage for a vehicle of which it knew nothing before the claim and for which the insured never paid any premium to insure.
In short, in its nine-page decision, the Superior Court in Rush departs from three decades of precedent upholding the validity of the regular use exclusion as a permissible way for insurers to curb escalating insurance costs caused by coverage of unknown risks. Under its unprecedentedly broad interpretation of §1731, the Superior Court in Rush invalidates the regular use exclusion, ignoring repeated decisions that flatly rejected prior attempts to characterize the exclusion as an implicit waiver of coverage by the insured or an improper limitation on the statutorily mandated coverage. Indeed, if the Superior Court’s reasoning in Rush is to be followed, it would seem that any exclusion not specifically contained within the MVFRL is void as against public policy and, should that become the law of the land, then the affordability of automobile insurance premiums, which the MVFRL was specifically enacted to protect, will be a thing of the past.