Can Plaintiffs Recover Liability and UIM Coverage Under the Same Auto Policy?
Historically, the answer was no. According to a recent Superior Court decision, however, the answer is now sometimes.
In Erie Insurance Exchange v. Baluch, No. 2025 Pa. Super 2 (Pa. Super. Jan. 2, 2025), the Pennsylvania Superior Court held that the plaintiff could recover stacked UIM coverage under two separate household policies even though one of the policies excluded vehicles insured under the policy from the definition of "underinsured motor vehicle."
The plaintiff sustained serious injuries while riding as a passenger on a motorcycle. The accident did not involve any other vehicles. At the time of the accident, the plaintiff lived with his stepfather and mother, who were named insureds on a policy covering the motorcycle and other vehicles (Policy 1). Policy 1 provided liability and stacked UM/UIM coverage with per-person limits of $100,000. The plaintiff also had a separate policy for her personal vehicle that provided stacked UM/UIM coverage with a limit of $100,000. (Policy 2).
Erie paid the plaintiff $100,000 in liability coverage under Policy 1 and $100,000 in UIM coverage under Policy 2. It denied UIM coverage under Policy 1 through stacking. Policy 1 defined "underinsured motor vehicle" to exclude vehicles insured under the policy. Erie relied on this exclusion to deny UIM coverage under Policy 1.
Erie filed a declaratory judgment action seeking a judicial determination that no further benefits were due to the plaintiff under Policy 1. Erie moved for judgment on the pleadings citing Woglemuth v. Harleysville Mut. Ins. Co., 535 A.2d 1145 (Pa. Super. 1988) (en banc) and Newkirk v. United Servs. Auto Ass'n, 564 A.2d 1263 (Pa. Super. 1989) for the position that liability and UIM coverage cannot come from the same, single policy. The trial court granted Erie's motion, and the plaintiff appealed to the Superior Court.
The Superior Court reversed and held that the plaintiff could recover under both the liability and UIM coverage sections of Policy 1. It distinguished the Woglemuth and Newkirk decisions on the basis that they addressed only a single policy and not any issues of stacked coverage between multiple policies. Citing Gallagher v. GEICO, 201 A.3d 131 (Pa. 2019), the Superior Court reasoned that Policy 1's "underinsured motor vehicle" definition acted as a disguised waiver of stacked UIM coverage that conflicted the requirement under the MVFRL that a carrier obtain written stacking waivers from its insureds. As a result, the court declined to enforce the exclusionary language in the definition.
Finally, the Superior Court emphasized that under Pennsylvania law, "an insured should receive the coverage for which he has paid." Because the insureds under both Policy 1 and Policy 2 had paid for stacked coverage, the plaintiff was entitled to such coverage.
The Baluch case is a notable shift in Pennsylvania UM/UIM law and will generate significant litigation moving forward.
If you have any questions about Baluch or Pennsylvania UM/UIM coverage in general, please contact Attorney Matthew Fuchs or the MacDonald, Illig, Jones & Britton LLP insurance coverage team.