Pennsylvania auto insurance ‘regular use’ exclusion comes under scrutiny in state high court

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The Pennsylvania Supreme Court has agreed to consider a case that could limit the application of the “regular use exclusion” in auto insurance policies.

The state’s high court has agreed to review a Superior Court ruling that the regular use exclusion violates the state’s Motor Vehicle Financial Responsibility Act. A regular use exclusion excludes coverage for injuries sustained by policyholders while using vehicles they do not own but use regularly.

Last October, the three-judge Superior Court panel ruled that a regular use exclusion is unenforceable because it limits the scope of underinsured motorist (UIM) coverage that the Vehicle Financial Responsibility Act automobiles (MVFRL) requires insurers to provide. The Superior Court held that an insurer has an obligation to provide UIM coverage unless the insured has signed a valid denial form. This decision upheld a 2020 ruling by a lower court.

Erie Insurance Exchange challenges the Superior Court’s position. It argues that the regular use exclusion is a legitimate and enforceable limitation on the extent of UIM coverage it is required to provide to policyholders.

The state Supreme Court will now decide whether the lower court erred in striking down the regular use exclusion.

The case involves Matthew Rush, a City of Easton police detective, who was seriously injured when two other drivers rammed his police cruiser on November 28, 2015. The City of Easton owned the police car. policy and insured it through an insurance policy that provided for UIM coverage.

Erie Insurance Exchange denied the Rushes’ UIM claim because he did not own, but regularly used, the police car.

The Rushes insured three personal automobiles on two insurance policies through Erie Insurance. They paid for stacked UIM coverage on both policies. Both Erie policies include identical “regular use” exclusion clauses that prevent Erie Insurance from providing UIM coverage when an insured sustains injuries resulting from the use of a motor vehicle that the insured regularly uses, does not own or insure on Erie fonts. UIM coverage is triggered when the tortfeasor’s liability coverage is not sufficient to cover injuries sustained in an accident.

According to the Supreme Court, it must decide whether the Superior Court’s decision is in direct conflict with the Pennsylvania Supreme Court’s own prior decisions and whether the Superior Court erred in law in concluding that the exclusion of use regularly violates the Financial Responsibility Act.

The Superior Court said insurers are only relieved of the obligation to provide uninsured or underinsured coverage, or both, when an insured waives that coverage by signing a “statutory waiver form.” “.

The court said the Financial Responsibility Act requires insurers to provide coverage to policyholders when the policyholder meets three requirements. The insured must have suffered injuries resulting from the maintenance or use of a motor vehicle; be legally entitled to recover damages from the underinsured driver at fault; and have not rejected UIM coverage by signing a valid rejection form.

“[T]he provisions of the MVFRL relating to the required extent of cover and content of motor vehicle insurance policies, and the benefits payable thereunder, impose mandatory obligations applicable to all motor vehicle insurance providers. in this Commonwealth. Importantly, where a provision of an insurance contract violates the MVFRL, we will declare that provision unenforceable,” the Superior Court concluded.

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