Yesterday, in Erie Ins. v Baker, the Pennsylvania Supreme Court upheld the validity of a common automobile Underinsured Motorist (UIM) exclusion. The decision is a victory for the insurance industry and blow to Pennsylvania consumers. Click here to read the Erie Ins. v Baker opinion.
UIM coverage protects car crash victims injured by drivers who don’t have adequate liability insurance coverage. For an increased premium, consumers may also “stack” UIM benefits. “Stacking” effectively multiplies the amount of coverage by the number of vehicles insured on the policy.
In the Baker case, the victim suffered fatal injuries when a careless driver crashed into his motorcycle. At the time of his death, Baker owned three passenger vehicles and a motorcycle. The motorcycle was insured with Universal Underwriters and the passenger vehicles were insured with Erie. It’s not at all unusual for automobile insurance carriers (like Erie) to refuse to cover motorcyles on the same policy as passenger vehicles.
Mr. Baker purchased $15,000.00 UIM coverage on the Universal motorcycle policy and $100,000.00 in UIM coverage on the Erie policy. In addition, Mr. Baker paid an increased premium on both policies for the “Stacking” benefit.
The Baker Estate settled with the negligent driver’s insurance company for the liability policy limits and settled with Universal for the $15,00o.oo in UIM limits. The Baker Estate then sought additional UIM coverage with Erie. Erie denied the claim based on what is known at the “Household Vehicle” exclusion. The Household Vehicle exclusion precludes coverage for insureds if they are occupying a vehicle they own that is not insured on the policy they seek coverage from.
In Baker, Erie argued that since the Decedent Baker was occupying a vehicle not insured on the Erie policy, it did not have to provide UIM coverage. Baker’s Estate argued that the policy was in conflict with PA law. The Pennsylvania Supreme Court sided with the insurance company.
What’s the lesson? IT’S IMPERATIVE THAT YOU PUT ALL HOUSEHOLD VEHICLES ON THE SAME POLICY. Often times, automobile insurance carriers will not insure motorcycles on the same policy as passenger vehicles. What’s do you do in that situation? FIND AN INSURANCE COMPANY THAT WILL PUT ALL VEHICLES ON THE SAME POLICY!
Often times when couples marry, they delay insuring their vehicles on the same policy. Often times parents insure the kids’ vehicles on different policies to reduce premiums. By doing so, however, consumers may be under-insuring themselves and family members.
If you have any questions regarding your automobile and/or motorcycle insurance policies or coverages, feel free to contact us. Click here to contact the lawyers at Handler, Henning & Rosenberg, LLP about your car or motorcycle insurance policies or coverages.