Yesterday, the Pennsylvania Supreme Court, in Gallagher v. Geico, No. 35 WAP 2017, made a ruling that drastically helps all individuals with automobile insurance. The ruling will allow many individuals to utilize all of the coverage they pay for and stops insurance companies from utilizing a loop hole to limit your coverage.
Pennsylvania law requires that insurance policies be stacked by default. This means, if you own three vehicles, with each vehicle being insured for $100,000.00 of coverage, by default, you can stack the three insurance policies together to have $300,000.00 of coverage. The logic behind this is, you are paying the premiums for all three policies, so, if you are seriously injured and the coverage is needed, you should be able to utilize all three policies.
However, you can elect to waive stacking for a marginally lower premium. According to Pennsylvania law, this must be done in writing by signing a prescribed form.
In Gallagher v. Geico, the Plaintiff, Brian Gallagher, was severely injured while riding his motorcycle when a man ran a stop sign and hit him. The man who hit the Plaintiff carried a minimal insurance policy. The entire amount of the minimal policy was paid to the Plaintiff. The Plaintiff carried a motorcycle policy with Geico that provided $50,000.00 of under insured motorist (UIM) coverage. Additionally, the Plaintiff carried an automobile insurance policy with Geico that provide for $100,000.00 in UIM coverage stacked twice, i.e. he had two vehicles with $100,000.00 in UIM coverage and elected to stack the policies. The Plaintiff never signed any documentation to waive stacking, and, in fact, elected to have stacking to provide himself with more coverage.
Because the Plaintiff was severely injured, and the person who hit him was underinsured (his insurance policy did not fully cover the Plaintiff’s injuries), the Plaintiff turned to Geico, his insurer, to collect UIM benefits.
The Plaintiff argued that he should be able to collect the $50,000.00 of UIM coverage from his motorcycle policy, plus the $200,000.00 of coverage of UIM from his automobile policy. The Plaintiff had paid the premiums for both policies and elected stacking in both policies. Therefore, the Plaintiff rightfully expected the full $250,000.00 in UIM coverage he signed up and paid for.
Geico, the Defendant, argued that an exclusion in the policies called the “household exclusion” prevented the Plaintiff from collecting under both policies. The household exclusion in this case stated: “This coverage does not apply to bodily injury while occupying or from being struck by a vehicle owned or leased by you or a relative that is not insured for Under Insured Motorist Coverage under this policy.” Geico argued that, because of this exclusion, the Plaintiff could only recover the $50,000.00 of UIM from his motorcycle policy.
On January 23, 2019, the Supreme Court of Pennsylvania determined that the household exclusion violates Pennsylvania law and these exclusions are unenforceable as a matter of law. The Court also determined that the household exclusion operates as a de facto waiver of stacking, which is expressly against Pennsylvania law. Waiver of stacking can only be done by following the clearly delineated procedures established in Pennsylvania’s Motor Vehicle Financial Responsibility Law.
If you have any questions about your car insurance policy or a claim you have had for an accident in Pennsylvania, please do not hesitate to call us at 800-777-4081 for a free consultation.