Wade Clark Mulcahy LLP

<p style="text-align: justify;">On October 22, 2021, in <a href="https://www.wcmlaw.com/wp-content/uploads/2021/11/Rush-v.-Erie-Of-Interest-case-2.pdf"><em>Rush</em> <em>v. Erie Insurance Exchange</em></a><em>,</em> 2021 Pa.Super 215 (2021), the Pennsylvania Superior Court held that an Erie Insurance Exchange (“Erie”) regular use exclusion was unenforceable because it modified the clear and unambiguous requirements of Pennsylvania’s Motor Vehicle Financial Responsibility Law, 75 Pa.C.S. §§ 1701-99.7 (“MVFRL”), by functionally precluding insureds from accessing uninsured motorist benefits (“UIM”) to which they would otherwise be entitled.</p>
<p style="text-align: justify;">This precedential decision arises from a motor vehicle accident where City of Easton Police Officer Matthew Rush (“Plaintiff”) suffered serious injuries after the police vehicle he was operating was struck by uninsured motorists. The City of Easton maintained UIM coverage through Erie which included a “regular use” exclusion. This exclusion precludes coverage if an insured is injured while using a motor vehicle that the insured regularly uses but does not own. Thus, Erie denied coverage under their “regular use” exclusion because the City of Easton owned the car, not Plaintiff. Plaintiff brought the underlying declaratory judgment action claiming that such exclusions were unenforceable under the the broad scope of the MVFRL which requires UIM coverage in those situations where an insured is injured arising out of “use of a motor vehicle.” 75 Pa.C.S. 1731(c).</p>
<p style="text-align: justify;">On appeal, the Pennsylvania Superior Court affirmed the Northampton County Court of Common Pleas who granted Plaintiff summary judgment. The Superior Court found that this exclusion was unenforceable because it limited the scope of coverage required under the MVFRL. As such, Plaintiff was entitled to summary judgement because it was undisputed that absent the otherwise unenforceable “regular use” exclusion, Plaintiff would have been entitled to coverage.</p>
<p style="text-align: justify;">The Superior Court importantly did not address whether this exclusion expressly violates the MVFRL because Erie had waived the issue on appeal. Rather, as applied, the <em>Rush</em> court held the “regular use” exclusion unenforceable to the extent it conflicts with the MVFRL’s public policy initiatives which mandate UIM coverage for injuries associated with the use of all motor vehicles - not just those an insured owns as required by the “regular use” exclusion.</p>
<p style="text-align: justify;">However, the court indicates their position had Erie raised the novel issue of express violation by pointing to the Pennsylvania Supreme Court’s reasoning in <em>Gallagher v. GEICO Indemn. Co.</em>, 201 A.3d 131, 138 n.6 (Pa. 2019) rejecting the same public policy argument proposed by Erie in <em>Rush</em>. The <em>Rush</em> court reiterated:</p>
<p style="text-align: justify;">“[W]e recognize that this decision may disrupt the insurance industry's current practices; however, we are confident that the industry can and will employ its considerable resources to minimize the impact of our holding.”</p>
<p style="text-align: justify;"><em>Rush</em>, 2021 Pa.Super at 223 n. 5 (2021) citing to <em>Gallagher</em>, 201 A.3d at 138 n.6. In this issue of first impression, the Rush court has essentially opened the door on a novel question of Pennsylvania law concerning whether a regular use exclusion classifies as an express violation of the MVFRL. However, the court’s discussion of <em>Gallagher</em> does not leave a promising for prospect for the success of the insurers. Insurers would be wise to account for this decision with respect to underwriting practices and premium collection for risks the insurer may be forced to cover.</p>
Thanks to Kendal Hutchings for her contribution.  Should you have any questions, please contact <a href="mailto:mcare@wcmlaw.com">Matthew Care</a>.