Recently, the Pennsylvania Superior Court decided the case of Erie Insurance Exchange v. Baluch, which expanded Underinsurance coverage for car and motorcycle accidents. The decision was a big win for injured victims and car insurance policy holders, and a setback for insurance companies.
Recovery for Victims Can be Limited by Insurance Shortfalls
It’s a sad reality, but vehicle accident victims, no matter how serious their injuries, are often limited in their recovery because of limited insurance.
You Can’t Get Blood from a Stone
95% of the time all compensation that an accident victim will receive comes from insurance rather than the assets of the responsible party. This is because, most of the time, the Defendant will not have assets or they will be held jointly or by a legal entity that cannot be pursued.
Underinsurance Coverage Can Provide Extra Recovery
Luckily though, vehicle accident victims are not limited to relying on the insurance that was bought by the defendant. Instead, they have the ability to buy Underinsurance coverage on their own policy to provide additional coverage in the event of a short fall caused by a defendant’s limited insurance coverage.
But Insurance Company Exclusions Try to Limit Coverage
However, at the same time, car insurance companies lose money when they pay claims and make money when they charge premiums, so they have come up with creative Exclusions to attempt to limit the application of underinsured coverage.
Household Exclusion
One of the tricks that insurance companies use is a “Household Exclusion” which attempts to limit your ability to recover underinsured benefits if you are injured in a vehicle from your household.
Before this recent case, it was thought that it was impossible to recover both Liability coverage and Underinsurance coverage from household vehicle because of this Exclusion.
This scenario would happen in the event that you were a passenger in a household vehicle and were injured in a crash caused by the driver of your household vehicle. You could recover the Liability limits, but the Household Exclusion would preclude you for making an underinsurance claim for additional compensation, even though you or someone in the household paid premiums for that additional coverage.
What Happened in Erie Insurance Exchange v. Boluch?
The Erie Insurance Exchange v. Baluch case changed all that and decided that a car accident victim should get the insurance they paid for and be able to make a claim for both liability and undeinsurance coverage under certain circumstances.
Ms. Boluch was a passenger on a motorcycle being driven by her stepfather and he caused a serious crash in which he was killed and she was seriously injured. The motorcycle was covered under a policy with Erie insurance that provided for $100,000 of liability coverage and $100,000 I have underinsured coverage. Baluch lived with her stepfather, but also had her own separate car insurance policy with Erie that was covered by $100,000 of underinsured coverage.
After the crash, Baluch made a liability claim against Erie and Erie paid the limits. In addition, she made an underinsurance claim against her own underinsured coverage which was paid.
However, when Baluch made an underinsurance claim against her stepfather‘s Erie policy, Erie denied the claim because the policy had a Household Exclusion. Erie argued that Baluch could not recover underinsurance benefits because she already recovered liability limits from a Household Vehicle.
Wisely, both Ms. Boluch and her stepfather had chosen to “Stack“ their underinsured benefits. ”Stacking” allows underinsured coverage to be used for multiple vehicles and also allows the limits to be multiplied by the number of vehicles that are covered on a particular policy.
The fact that ”stacking” was chosen on both policies was crucial to the Pennsylvania Superior Court decision that Erie had to pay both liability limits and underinsured limits to Baluch.
The Court reasoned that since an extra premium was paid on both policies to provide for stacking, it would be unfair to enforce the Household Exclusion because that would invalidate the stacking selection and lead to the insurance policy holder not getting what he she paid for. The Court decided that since Baluch and her stepfather had both paid for stacking, she should be allowed to recover underinsured benefits from both her own policy and her stepfather‘s policy. Ultimately, “she should get what she paid for.”
This decision is an important win for car accident victims and car insurance policy holders because it results resulted in a victim receiving both liability and underinsurance limits from a single policy, something that had previously thought was impossible.
Because this is a decision from the Pennsylvania Superior Court, which is an intermediate level appellate court, there is a possibility that the case may be appealed to the Supreme Court and may or may not be upheld.
In my opinion, the decision was correct. Insurance policy holders should get what they paid for. If they paid for stacking, they should get stacking and insurance companies should not be allowed to craft creative Exclusions that eliminate coverage that was paid for and that is needed to fully compensate injured victims.
The Take Away Lesson – Buy Plenty of Underinsurance Coverage and Always Choose Stacking
The important lesson for you is that to protect yourself and your family, you need to have the foresight to purchase significant amounts of underinsurance coverage and always choose to stack the coverage. I recommend that you have $300,000, $500,000, or even $1 million of underinsured coverage and always choose stacking.
If you have any other car insurance questions or questions related to any personal injury matters, you can check out my book on these topics. https://macelree.s3.amazonaws.com/ProtectingFamily.pdf
You can contact Personal Injury Lawyer Tim Rayne at 610-840-0124 or trayne@macelree.com or check out his website at www.TimRayneLaw.com.
