Erie Indemnity Co. Involved in Uninsured Motorist/Underinsured Coverage Stacking Dispute

Erie Indemnity Co., one of Pennsylvania’s main insurance companies, has found itself involved in an uninsured motorist (UM) and underinsured motorist (UIM) coverage dispute, which has grasped the attention of the Insurance Department.

According to The Legal Intelligencer, a collection of plaintiffs have sued Erie Indemnity Co. for depriving them of stacked UM/UIM coverage under its household exclusion cause. A summary judgment motion was denied by a Fayette County common pleas court judge last year in August in a class action suit against Erie. While the next step seems to be trial, the insurance company seems to still be trying to get the case out of the common pleas court’s jurisdiction and into the hands of Pennsylvania’s Insurance Department.

One possible reason that Erie wants the case to be addressed by the insurance commissioner is that the company may be able to claim that all of these insurance rate exclusions are legitimate as long as they were approved by the Insurance Department.

In response to the claims of one Waynesburg, PA family who filed for stacked UIM benefits after the father was killed and the mother was seriously injured in a motorcycle accident, Erie cited a 2009 Pennsylvania Supreme Court decision. In Erie v. Baker, it was decided that an insurance policy’s household exclusion clause could bar recovery of UM/UIM benefits in a claim relating to a vehicle owned by the insured by covered by a different policy provided by another company.

In initially denying Erie’s claim that the Insurance Department had chief jurisdiction of the case, the judge argued that the case actually centered around the insurance company failing to provide coverage for which it charged its customers, and did not focus on an opposition to premiums and rate.

As this case demonstrates, insurance rate litigation is an intricate process. However, while the aftermath of any auto accident presents many challenges for those involved, especially when insurance issues arise, these cases can be resolved no matter how complex they seem at first.