The year 2025 is starting off with a Pennsylvania Superior Court decision that will cause a change of seismic propotions in automobile UM/UIM litigation going forward.
In the case of
Erie Insurance Exchange v. Baluch, No. 2025 Pa. Super. 2 (Pa. Super. Jan. 2, 2025 Panella, P.J.E., Lane, J., and Stevens, P.J.E.)(Op. by Panella, P.J.E.), the Pennsylvania has ruled that, in certain circumstances a Plaintiff can recover both liability and UIM coverage from the same policy.
The appellate court framed the issue in this case as whether an insured is entitled to stacked UIM benefits although another household policy excludes vehicles that are insured under the policy from the definition of “underinsured motor vehicles.”
According to the Opinion, in April 2022, the Plaintiff, while riding as a passenger on a motorcycle, suffered serious bodily injury from a single vehicle motorcycle accident.
Two insurance policies issued by Erie were relevant to this case. The Plaintiff’s stepfather and mother were named insureds on a policy that covered the motorcycle and other vehicles (“Policy 1”). As a member of her parent’s household, the Plaintiff was an insured of Policy 1. Policy 1 provided $100,000 per person in liability coverage and $100,000 per person in uninsured motorist (“UM”) and UIM coverage.
The Plaintiff also had a separate policy for her personal vehicle (“Policy 2”). Policy 2 provided $100,000 in UM/UIM coverage.
The Superior Court noted that, “[i]mportantly,” under both Policy 1 and Policy 2 the insureds had selected stacking UIM coverage.
According to the Opinion, Erie paid out to the Plaintiff the $100,000 liability coverage from Policy 1 and $100,000 in UM/UIM coverage from Policy 2. However, Erie denied the Plaintiff’s claim seeking $100,000 in UM/UIM coverage from Policy 1 through stacking.
Under Policy 1, vehicles that are insured under the policy were excluded by the language of the policy from the definition of “underinsured motor vehicle.” It is this exclusion that Erie relied upon to deny the Plaintiff UIM benefits from Policy 1.
The Superior Court disagreed with the carrier’s position, as well as the trial court’s position, that the resolution of the issue presented was controlled by Wolgemuth v. Harleysville Mut. Ins. Co., 535 A.2d 1145 (Pa. Super. 1988) (en banc) and Newkirk v. United Servs. Auto. Ass’n, 564 A.2d 1263 (Pa. Super. 1989).
The Superior Court noted that the Wolgemuth and Newkirk decisions stand for the proposition
that liability coverage and primary underinsured motorist (“UIM”) coverage cannot come from the same, single policy. The Superior Court in this Erie Insurance v. Baluch case emphasized that the Wogelmuth and Newkirk cases addressed only a single insurance policy, not any issues of stacked coverage between two or more policies.
The Superior Court distinguished this Erie Insurance v. Baluch case by noting that this Baluch case involved secondary UIM coverage on another vehicle in the household that was stacked on top of the primary UIM coverage from a separate policy that actually covered the vehicle/motorcycle that was involved in the accident.
The Superior Court reasoned that when an insured has their own motor vehicle insurance policy that provides stacked UIM coverage, under Pennsylvania’s Motor Vehicle Financial Responsibility Law, they are entitled to stack UIM coverage from other household policies unless they expressly choose to waive stacked coverage. See 75 Pa.C.S.A. § 1738(a).
In this regard, the Superior Court cited favorably to the case of Gallagher v. GEICO, 201 A.3d 131 (Pa. 2019) and related cases as precedent that prevents an automobile insurance carrier from having policy language that acts as a de facto waiver of stacked coverage where the MVFRL requires carriers to secure written waivers of stacked coverage from its insureds.
Here, the Superior Court found that the insured Plaintiff elected and paid for stacked UIM coverage under her own separate policy. As such, Erie Insurance Exchange’s limited definition of “underinsured motor vehicle,” in the eyes of this Superior Court panel, acted as a disguised waiver of UIM coverage and the Court therefore found the exclusionary language under the policy to be invalid as conflicting with the requirements of the MVFRL relative to UIM coverage.
Accordingly, the Superior Court ruled that, because Erie’s policy provision prevented the Plaintiff from recovering stacked UIM benefits for which she paid, and given that the trial court had erred in concluding that the present case was controlled by Wolgemuth and Newkirk, the Superior Court reversed the trial court’s decision and entered a ruling in favor of the Plaintiff.
In the end, the Superior Court reasoned that, under Pennsylvania law, an injured party should be entitled to receive the coverage for which they paid. Here, the Plaintiff paid for stacked coverage and, in the eyes of this panel, was entitled to such coverage.
Anyone wishing to review this Opinion may click this
LINK.
I send thanks to Scott Cooper, Esq. of the Harrisburg, PA law firm of Schmidt Kramer, as well as Adam T. Wolfe, Esq. and Ally Sholley, Esq. of the Enola, PA law firm of Shollenberger, Januzzi & Wolfe for bringing this notable decision to my attention.
