Failure to Use Consistent Exclusionary Language Dooms UIM Limitation (PA)
Timothy Clarke suffered serious injuries when his motorcycle crashed into a car. Clarke was thrown from his motorcycle and spent eleven days on life support at Paoli Memorial Hospital. After the accident, Clarke sought coverage under the underinsured motorist coverage clause (“UIM”) of an insurance policy issued by MMG Insurance. MMG denied Clarke any UIM coverage, stating that the motorcycle involved in the accident was not a “covered vehicle” under the policy. The MMG policy covered Clarke’s two automobiles, while an American Modern Select Insurance Company policy specifically covered Clarke’s motorcycle. The trial court agreed that the policy language of the exclusion clearly and unambiguously excluded coverage. Upon Clarke’s appeal, the question was the breadth of the MMG’s exclusion of UIM coverage. The Court concluded that the policy had to be read as a whole, interpreting multiple provisions together to construe the meaning of their words. Under these facts, this meant reading the UIM exclusion together with a separate exclusion for uninsured motorists (“UM”) coverage. The court held that the plain language of MMG’s UIM form excluded coverage only for injuries sustained in vehicles “not insured for this coverage.” In contrast, the UM provision excluded coverage for injuries sustained in vehicles “not insured under this policy.” Thus, the exclusions contained the UIM and UM coverages used different exclusionary language. The court determined that if the UM and UIM exclusions were intended to have the same meaning, they would have used the same language. The court concluded that the plain language of MMG’s policy only excluded coverage for vehicles that did not maintain UIM coverage under any policy, not merely for vehicles not insured under MMG’s policy. Fortuitously, Clarke’s American Modern Select Insurance policy for his motorcycle had UIM coverage so it was insured for UIM coverage. Thus, Clarke’s motorcycle was insured for UIM coverage (i.e., had “coverage under any policy”) so the UIM exclusion was not triggered. The court’s holding in Clarke is a reminder to insurance companies to be precise and consistent particularly when drafting exclusionary language. Any inconsistencies will be magnified when an insurer seeks to deny coverage based on an exclusion. Thanks to Erica Woebse for her contribution to this post. If you have any questions, please email Paul at pclark@wcmlaw.com.
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