Burstein v. Prudential Property & Casualty Insurance

McEWEN, President Judge,

concurring and dissenting:

¶ 1 While I hasten to agree with the majority that the trial court properly disregarded the exclusion at issue and awarded appellees, class one insureds, UIM benefits, I proceed to this conclusion by way of a slightly different path from that of my learned colleagues of the majority.

¶ 2 It merits mention at the outset that I am unable to agree with the statement that “underinsured motorist coverage follows the person, not the vehicle”. UIM and UM insurance are now optional coverages which may be, but are not required to be, purchased by an insured. Allwein v. Donegal Mutual Insurance Co., 448 Pa.Super. 364, 671 A.2d 744, 754 (1996)(en banc). While often referred to as “first party benefits,” UM and UIM benefits are not true “first party benefits”, for the current incarnation of the MVFRL defines “first party benefits” as “medical benefits, income loss benefits, accidental death benefits and funeral benefits.” 75 Pa.C.S. § 1702. First party benefits, unlike UM and UIM benefits, truly do “follow the insured”, because the MVFRL provides for first party benefits to be paid “[f]or a named insured, [by] the policy on which he is the named insured; (2)[f]or an insured, [by] the policy covering the insured.” 75 Pa.C.S. § 1713(a)(1) and (2). It is only when the injured claimant is not an “insured” under a policy of insurance that first party benefits are payable by the insurer of the vehicle in which the injured claimant was an occupant. 75 Pa.C.S. § 1713(a)(3).

¶ 3 Section 1733 of the MVFRL provides a priority of recovery for UIM and UM benefits which is the inverse of first party benefits, i.e., an injured claimant must first look to the vehicle in which he or she was an occupant. 75 Pa.C.S. § 1733(a)(1). “A policy covering a motor vehicle not involved in the accident with respect to which the injured person is an insured”13 is an alternative, secondary source of UM/ UIM benefits under the scheme created by the MVFRL.

¶4 The appellees in the instant case purchased UM/UIM coverage for each of the three cars which they owned. Many, if not most, of the claimants who have litigated the issue of entitlement to UM/UIM benefits have claimed entitlement to such coverages based solely on the fact that *692they were members of the named insured’s household and were injured in an accident involving a vehicle not insured by the policy under which the resident relative sought UM/UIM benefits. In such cases, this Court has repeatedly denied coverage by reasoning that “the MVFRL was never intended to apply in a manner that would allow individuals and family members who owned several vehicles to purchase coverage for only one vehicle and recover uninsured or underinsured motorist benefits while operating a vehicle which was not insured.” Insurance Co. of the State Of Pennsylvania v. Hampton, 441 Pa.Super. 382, 657 A.2d 976, 980 (1995), appeal denied, 542 Pa. 647, 666 A.2d 1056 (1995).

¶ 5 Part 5 of the policy issued to appel-lees by appellant specifically provided coverage for:

UNDERINSURED MOTORISTS COVERAGE
If you have this coverage (see the Declarations), we will pay up to our limit of liability for bodily injury that is covered under this part when an insured (whether or not occupying a car) is struck by an underinsured motor vehicle. Our payment is based on the amount that an insured is legally entitled to recover for bodily injury but could not collect from the owner or driver of the underinsured motor vehicle because:
The owner or driver is underinsured.
This part covers ears for which a premium charge for this coverage is shown on the Declarations.
‡ ‡ $
OTHER NON-OWNED CARS
In addition to SUBSTITUTE CARS, we will cover a non-owned car. The owner must give permission to use it. The non-owned car must be used in the way intended by the owner. This includes a rented car for a period of up to 30 consecutive days. The non-owned car has the same coverage as any one of your cars insured with us.
WHO IS INSURED (PART 5)
IN YOUR CAR (INCLUDES A SUBSTITUTE CAR)
You and a resident relative are insured while using your car or a substitute car covered under this part.
Other people are insured while using your car or a substitute car covered under this part if you give them permission to use it. They must use the car in the way you intended.
IN A NON-OWNED CAR
You and a resident relative are insured while using a non-owned car. The owner must give permission to use it. It must be used in the way intended by the owner.
HIT BY A MOTOR VEHICLE
You and a resident relative are insured if hit by an underinsured motor vehicle while a pedestrian.
LOSSES WE WILL NOT PAY FOR (PART 5)
REGULARLY USED NON-OWNED CARS
We will not pay for bodily injury to you or a household resident using a non-owned car not insured under this part, regularly used by you or a household resident.

Thus, the policy issued by appellant expressly provided for UM/UIM benefits for a named insured, such as the appellees, even when operating a non-owned car for business purposes.14 The exclusionary clause upon which appellant relies in the instant case, which operates to preclude *693coverage for a non-owned vehicle “regularly used by you or a household resident”, is applicable not because appellees were injured while using a vehicle owned by Mrs. Burstein’s employer, but only because of the “regular use” of the non-owned vehicle by appellants. This exclusion for “regularly used” vehicles was specifically designed to prevent a household with multiple vehicles from being able to purchase a policy with UM/UIM benefits for only a single vehicle and yet collect UM/UIM benefits when any of the other vehicles, not insured for such coverages, were involved in an accident. “[T]he exclusion prevents ‘abuse by precluding the insured and his family from regularly driving two or more cars for the price of one policy.’ ” Crum and Forster Personal Insurance Co. v. Travelers Corp., 428 Pa.Super. 557, 631 A.2d 671, 673 (1993), quoting Highlands Ins. Co. v. Universal Underwriters Insurance Co., 92 Cal.App.3d 171, 176, 154 Cal.Rptr. 683, 687 (1979).

¶ 6 This Court in Pecorara v. Erie Insurance Exchange, 408 Pa.Super. 153, 596 A.2d 237 (1991), observing the settled principle that exclusions to an insurer’s general liability are strictly constructed against the insurer, found that an exclusion in a policy, issued pursuant to the MVFRL, applicable to use of the vehicle by any person “employed by an automobile business”, was inapplicable because “[t]he automobile business exclusion was intended to encompass a specific risk, a risk which did not exist under the present circumstance [where it was only coincidental that the driver was an employee of an automobile business].”

¶ 7 Thus it is that, upon that same rationale, I would find that the specific risk which the exclusion at issue in the instant case was drafted (and approved by the Insurance Commissioner) to preclude, was the payment of only one premium by an insured household which could then attempt to claim coverage for multiple vehicles not insured under the policy. This risk, of course, is not implicated under the specific facts of this case. As our learned colleague Judge Joseph A. Del Sole noted in McKuhn v. Aetna Casualty and Surety Co., 444 Pa.Super. 483, 664 A.2d 175, 177 (1995), “what Pecorara teaches is that we are to examine the conduct at issue to see if it is contemplated by the exclusion. We must ask whether the exclusion was meant to protect against the risk occasioned by the conduct.” Having examined the conduct at issue, I do not hesitate to find that the exclusion is inapplicable to the facts presently before this Court. Thus I concur in the result of the majority.

¶ 8 Moreover, in direct contradiction of the argument of appellant, I am unable to find any support in the record for the proposition that the effect of a decision by this Court invalidating the clause at issue under the precise facts of the instant case would cause an increase in the cost of car insurance.15 UIM and UM benefits are not first party benefits which are mandatory, but are separate, optional benefits, regulated by a separate subchapter of the MVFRL. See: 75 Pa.C.S. §§ 1731-1738; Hall v. Amica Mutual Insurance Co., 538 Pa. 337, 348, 648 A.2d 755, 760-761 (1994). UM/UIM coverages are marketed by insurance companies as providing “personal protection” for the insured and members of his or her family. The majority, by finding the clause at issue herein invalid under the particular circumstances of this case, is simply requiring appellant to provide the coverage which appellees attempted to purchase from appellant and for *694which appellees paid appellant premiums.16 Thus, I concur in the decision to affirm the order entered by the distinguished Judge Mary D. Colins.

¶ 9 FORD ELLIOTT and LALLY-GREEN, JJ., join this Concurring and Dissenting Statement.

. 75 Pa.C.S. § 1733(a)(2).

. The policy at issue also specifically excluded coverage for business-related uses as follows:

BUSINESS OR JOB
We will not pay for bodily injury to anyone (other than you or a resident relative) using a non-owned car in any business or job.

. Since UM/UIM coverages are now optional, I am at a loss to comprehend how an increase in the costs of such optional, separately billed coverages could result in an increase in the cost of the required coverages and thus cause or contribute to an increase in the number of illegally uninsured motorists in this state. I agree, of course, with the members of the minority that the public policy embodied in the current MVFRL, as noted by our Supreme Court in Windrim v. Nationwide Insurance Co., 537 Pa. 129, 134, 641 A.2d 1154, 1157 (1994), is cost-containment of required coverages to preclude or reduce the number of illegally uninsured vehicles on the highways.

. As all of the vehicles owned by appellees were insured for UM/UIM benefits, the fee charged by appellant surely reflected the actual underwriting risk.