The Household Exclusion in PA Car Insurance Policies
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. Under the Motor Vehicle Financial Responsibility Law (MVFRL), any relatives who live in the same residence could seek benefits from policies issued to other “resident relatives” in the household. While the MVFRL clearly stated this, insurers used these clauses to deny claims against the policies of the other household members that would have been permissible under the MVFRL.
While the language of the exclusion could vary, it essentially prevented injured household members from seeking underinsured motorists benefits from other policies applicable in the household, unless they were insured under the same policy. As an example, suppose mom and dad each have a vehicle and they are insured under a policy with Erie, which includes stacked UIM benefits. Their daughter, a college student still has a permanent residence in the household, and she has her own car which is insured with Progressive.
By applying the household exclusion, Erie could deny any claim against the parents’ UIM coverage if daughter was involved in an accident while driving her own vehicle because their vehicles were insured under a different policy from their daughter. In fact, if a parent was in daughter’s vehicle at the time of the accident, they would most likely have not been able to file a claim against their own UIM coverage.
In January 2019, the Supreme Court of Pennsylvania issued an opinion in Gallagher v. Geico Indemnity Co., which held that household exclusion clauses were no longer enforceable in Pennsylvania as they were contrary to the express provisions of the MVFRL. Hence, a person seriously injured in an auto accident has a right to seek benefits from the policies of any resident relatives at the time of their accident. This can involve complicated legal questions regarding “residency” and damages and you should seek legal advice in attempting to pursue such a claim.
In fact, if you were in an accident within the last 4 years, and you were advised that you could not pursue a claim against UM (uninsured motorists) or UIM benefits because of the applicability of a household exclusion, you should contact our car accident lawyers immediately, as you may still be able to pursue claims for additional UM or UIM benefits. Our office offers free consultations and doesn’t take a fee unless we make you a recovery.