You Only Get What You Pay For – No UIM Cover No Benefits
Lloyd, Janet, and Eric Colebank (collectively, Appellants) appealed from the September 22, 2021 order entered in the Fayette County Court of Common Pleas, granting the motion for judgment on the pleadings filed by Erie Insurance Exchange (Erie) in this declaratory judgment action. The crux of Appellants’ argument is that the trial court erred when it relied upon the policy provisions of a separate insurance policy, issued by a separate insurance carrier, to determine whether coverage was owed by Erie. In Erie Insurance Exchange v. Lloyd Colebank, Janet Colebank And Eric Colebank, No. 1244 WDA 2021, Superior Court of Pennsylvania (April 20, 2022) the trial court refused to be controlled by Eric’s serious injuries and found the family exclusion and the rejection of UIM coverage for his own vehicle, gave up the right to UIM benefits.
FACTS
Lloyd and Janet are husband and wife, and Eric is their 27-year-old son, who resides with them in Fayette County. On February 2019, Eric was driving his 2016 Jeep Wrangler SUV, which he owned, southbound on Brownsville Road, Jefferson Township, Fayette County, Pennsylvania. At the same time, the tortfeasor, Wilbert Brown, was operating his vehicle northbound on the same road when he lost control of his vehicle, crossed the center line, and collided with Eric’s vehicle. As a result of the accident, Eric suffered numerous personal injuries, which required several surgeries.
Eric filed a personal injury claim against Brown, who was insured by Allstate Insurance under a policy that provided $25,000.00 in bodily injury liability coverage. On behalf of Brown, Allstate tendered the $25,000.00 liability limits to Eric. Eric, through his counsel, advised Erie of the Allstate tender, and Erie waived subrogation and consented to the settlement with Allstate. The parties agree that the injuries and damages suffered by Eric as a result of the underlying accident exceeded the $25,000.00 policy limits.
At the time of the accident, Eric’s Jeep was insured under a policy issued to Eric by State Farm (the State Farm Policy). Eric specifically rejected underinsured motorist (UIM) coverage under his State Farm Policy.
Eric subsequently submitted a claim for UIM coverage to Erie under an insurance policy issued to Lloyd and Janet, that provided for, inter alia, UIM benefits in specifically defined circumstances (the Erie Policy). The Erie Policy insured two vehicles, neither of which was involved in the accident at issue or owned by Eric. The Erie Policy provides for $100,000.00 of UIM with stacking and two vehicles, for a total of $200,000.00 in UIM benefits. Erie collected premiums from Lloyd and Janet for UIM and stacked UIM benefits under their policy.
The Erie Policy contained a household exclusion clause in its UIM endorsement.
Erie filed a motion for judgment on the pleadings, alleging that:
Eric was operating a vehicle owned by him and insured under a different automobile insurance policy (the State Farm Policy) at the time of the underlying accident;
Eric knowingly and voluntarily rejected UM/UIM coverage under the State Farm Policy, which insured the Jeep he was driving when the accident occurred; and therefore,
Erie did not owe a duty to tender UIM benefits to Eric under the Erie Policy issued to Lloyd and Janet pursuant to applicable Pennsylvania law and the Erie Policy exclusion provision.
Following the argument, the court entered an order granting Erie’s motion. The court stated:
“[It] has applied the persuasive reasoning set forth in Erie Insurance Exchange v. Sutherland, [1113 WDA 2020, 2021 WL 2827321 (Pa. Super. July 7, 2021) (unpub. memo),] and finds that Donovan v. State Farm [Mutual Automobile Insurance Company, 256 A.3d 1145 (Pa. 2021),] is distinguishable from the facts of this case since the insured did not waive or reject underinsured motorist benefits as [Eric] Colebank did here.”
ANALYSIS
The standard of review over a decision sustaining a judgment on the pleadings requires us to determine whether, on the facts averred, the law makes recovery impossible. [Cagey v. Commonwealth, 179 A.3d 458, 463 (Pa. 2018)]. Eric contended that Erie promised to pay UIM benefits to the named insureds and their resident relatives if they were injured by an underinsured motorist up to the amount of UIM coverage purchased.
Based on the nature of the appeal the appellate court found it was necessary to explain the relevant legal history concerning UIM coverage and the household exclusion. A person who has voluntarily elected not to carry underinsured motorist coverage on his own vehicle is not entitled to recover underinsured motorist benefits from separate insurance policies issued to family members with whom he resides where clear and unambiguous “household exclusion” language explicitly precludes underinsured motorist coverage for bodily injury suffered while occupying a motor vehicle not insured for underinsured motorist coverage.
After a detailed review of UM/UIM precedent, the Superior Court, contrary to Appellants’ arguments, found two prior cases dispositive as both cases are substantially similar in facts and procedural posture to this case. In all three cases, the insured suffered injuries while operating a vehicle or motorcycle and the individual had explicitly rejected UIM coverage on that host policy. Likewise, the injured individual sought coverage from a separate policy that included stacked UIM coverage and a household exclusion provision. Since Eric did not purchase UIM coverage for his own policy he did not have the requisite UIM coverage on which to stack his parents household policies with UIM benefit.
For the foregoing reasons Appellants were not entitled to UIM benefits under their Erie policy in the case sub judice. Accordingly, we affirm the trial court’s order granting Erie’s motion for judgment on the pleadings.
ZALMA OPINION
Uninsured and Underinsured Motorist Coverages must be intentionally purchased or rejected. In this case Eric rejected UM/UIM coverage on the vehicle involved in the accident. Because his injuries were greater than the insurance available to the tortfeasor he sought UIM coverage from policies issued to his parents vehicles that were not involved in the accident. Coverage was clearly and unambiguously excluded and the attempt to get an insurer to pay for damages that exceeded available insurance can’t change the facts or the law.
(c) 2022 Barry Zalma & ClaimSchool, Inc.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.
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