Are regular use exclusions enforceable in Pennsylvania? Today's Legal Intelligencer is reporting on the following underinsured motorist case involving the ability to recover insurance benefits from your own insurance policy when you are working and injured while operating an employer's vehicle. Do you think that these benefits should be recoverable when a person purchases underinsured motorist coverage but there is an exclusion on the policy which limits the coverage when you are injured while driving a work vehicle?
2012-10-02 12:00:00 AM
In relying on the state Supreme Court's decision to deny a police officer UIM benefits for a motor vehicle accident on the job, the Superior Court has denied a bus driver those same benefits.
In Adamitis v. Erie Insurance Exchange, a three-judge Superior Court panel found that Berks Area Reading Transit Authority bus driver Matthew Adamitis could not collect underinsured motorist benefits from his personal insurer for injuries sustained while driving the BARTA bus.
The court ruled that the regular-use exclusion in Adamitis' personal auto insurance policy with Erie Insurance was valid under Motor Vehicle Financial Responsibility Law Section 1731 and as a matter of public policy.
Adamitis' case was similar to that decided in the state Supreme Court's 2011 ruling in Williams v. GEICO. In Williams, the high court said a Pennsylvania state trooper could not collect UIM benefits under his personal policy for an accident in his police cruiser. The Supreme Court said that even if it were to decide protecting first responders was a valid public policy concern that was contemplated by the legislature, it was not enough to invalidate the regular-use exclusion in the officer's personal policy. That exclusion bars coverage for accidents in vehicles regularly used by the insured but not insured under the policy.
The Supreme Court in Williams said the police officer's position was in conflict with the overall policy goals of MVFRL, which include cost containment and the correlation between the scope of coverage and the reasonable premiums paid. The Williams court relied on a 2002 decision it rendered in Burstein v. Prudential Property & Casualty Insurance.
The justices in Williams ruled that it was the legislature's role to weigh competing public-policy interests, not the court's role.
"The same cost-containment principles apply to defeat [Adamitis'] claim that the regular-use exclusion at issue violates public policy, as [Adamitis] simply cannot distinguish the pertinent facts of his case from those of Burstein and Williams," President Judge Correale F. Stevens said.
"Like the plaintiffs in those cases, [Adamitis] asks that we compel his insurer to underwrite unknown risks for which he has paid no premium. Our jurisprudence has rejected this position as untenable."
In his appeal, Adamitis had argued that he had no control over the purchase of UIM coverage for his work vehicle or the ability to negotiate UIM coverage on the vehicle. The BARTA bus did not carry UIM coverage because BARTA was self insured and did not have to carry UIM coverage, according to the opinion. Adamitis also argued that he had no option but to accept the regular-use exclusion.
Adamitis further argued that the regular-use exclusion conflicts with the mandate of Section 1731(d) of MVFRL that requires UIM coverage be provided for an insured who doesn't reject it.
Stevens said Williams also governs Adamitis' contention that the regular-use exclusion violates Section 1731. The court in Williams said the regular-use exclusion is "'neither an implicit waiver of coverage nor an improper limitation on the statutorily mandated coverage.'" Rather it is a reasonable preclusion of coverage of unknown risks, the court said.
Adamitis had further argued that he did not receive a legally sufficient notice and explanation of the regular-use exclusion. Adamitis first became a customer of Erie Insurance in 2001 and at that point there was no regular-use exclusion in his policy. The insurer, however, had sent him a notice in April 2004 informing Adamitis that the exclusion was being added to his policy. Adamitis' bus accident occurred in October 2005.
Adamitis testified that he never remembered receiving the notice. A representative from Erie Insurance testified that the notices are handled on an automated, computer-driven process and that Adamitis' notice was included with his billing renewal notice in 2004. Stevens said the totality of the evidence supports the Philadelphia trial judge's conclusion that Adamitis did in fact receive proper notice of the exclusion.
Judge Anne Lazarus and Senior Judge Robert Colville joined Stevens in the ruling.
Scott B. Cooper of Schmidt Kramer in Harrisburg represented Adamitis. Attorneys at Swartz Campbell represented Erie Insurance.
Cooper said he was disappointed in the court's ruling "because I think that the courts are still looking at the fact that the company is writing an unknown risk and there is evidence in the record that they knew about this risk the entire time." Adamitis had argued that Erie Insurance knew of his regular use of the bus.