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Keep on Stacking . . . PA Court Declines Insurer’s Request to Deny UIM Benefits (PA)

September 17, 2020

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<p style="text-align: justify;">In <em><a href="">Donegal</a> Mutual Insurance Company v. Kevin Krautsack, et al</em>, the Court of Common Pleas of Lancaster County held that “the household vehicle exclusion violates the Motor Vehicle Financial Responsibility Law (“MVFRL”); therefore, these exclusions are unenforceable as a matter of law.”</p>
<p style="text-align: justify;">The case stems from an accident in which Kevin Krautsack was injured while riding his mother’s motorcycle. After the accident, the Krautsacks claimed and accepted the maximum uninsured benefits allowed under the motorcycle’s policy, which was issued by Progressive. The Krautsacks then initiated a claim with Donegal for stacked UIM benefits. Donegal responded that it had no duty to provide UIM benefits to Krautsack because the motorcycle he was riding at the time of the injury was not insured under the Donegal policy. As such, Donegal sought to enforce the household exclusion. In Pennsylvania, the “household exclusion” is a clause that insurance companies began using in the 1990’s in auto insurance policies to limit the amount of uninsured motorists (UM) and underinsured motorists (UIM) coverage they had to provide after claims made by their insureds after a car accident.</p>
<p style="text-align: justify;">In this case, the Krautsacks argued that the pivotal case of <em>Gallagher v. GEICO Indemnity Company</em>, 201 A.3d 131 (2019), invalidated all household exclusions. Donegal attempted to argue that <em>Gallagher</em> was limited to the specific facts of that case. The Court, however, agreed with the Krautsack, and Judge Ashworth held that the household exclusion is unenforceable as a matter of law.</p>
<p style="text-align: justify;"><em>Donegal</em> is further evidence in the Pennsylvania court trend eliminating the household exclusion. It indicates that insurers should no longer rely on the exclusion to deny claims.</p>
Thanks to John Lang for his contribution to this post. Please contact <a href="">Heather Aquino</a> with any questions.

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