On Wednesday, Pennsylvania’s Third Circuit ruled that a precedent set by the Pennsylvania Supreme Court barred National General insurance Co. from denying additional underinsured motorist benefits to a motorcyclist who was injured in a crash.
The motorcycle was covered by a different insurance company, and National General wanted to use a household vehicle exclusion to avoid providing stacked underinsured motorist benefits. The rider had already exhausted underinsured motorist benefits from a policy from Dairyland Insurance Co., which is why he was seeking additional benefits.
In denying the insurance company’s attempt to avoid providing coverage, the Third Circuit cited the landmark decision by the Pennsylvania Supreme Court in Gallagher v. Geico Indemnity Co., a case argued by Schmidt Kramer partner Scott Cooper.
In this case, the state supreme court ruled household vehicle exclusions violate the Motor Vehicle Financial Responsibility Law as they have the effect of waiving stacked uninsured and underinsured motorist coverage. The Pennsylvania Supreme Court ruled the household vehicle exclusion directly violates the law.
One of the main differences between the current case and Gallagher v. Geico is the latter involved two policies with the same insurance company. In the current case, the plaintiff had two policies with separate insurance companies. However, the Third Circuit said a household exclusion violates the law whether there is one or two insurance companies involved.
The Third Circuit granted the plaintiff’s motion for summary judgment and said the National General policy’s household vehicle exclusion is invalid and unenforceable.
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