Auto Insurance Law: Pa. Superior Ct. upholds household vehicle exclusion
(2/11/2022) --The Pennsylvania Superior Court on Feb. 9 ruled that the household vehicle exclusion clause in auto insurance policies is valid and enforceable and does not violate public policy. In the case of State Farm v. Craley, the Court upheld the household exclusion, but also reaffirmed its decision in State Farm Mut. Ins. Co. v. Rizzo regarding intra- and inter- policy stacking.
The ruling means that if there is a household vehicle exclusion clause, there is no coverage for any car owned by a resident relative other than the one in the accident, according to the 5-page opinion written by Judge Richard B. Klein. “The result is that coverages are not stacked,” Klein wrote.
On the issue of inter-policy stacking, the Court ruled that if there is no household exclusion, it is a violation of the statutory scheme to allow waiver of stacking when different cars are insured under different policies. The Court used the example of a driver and a passenger living in separate households, and both have cars that are insured under policies where stacking is waived, the waiver is invalid and the passenger can recover under the driver’s policy and then under the passenger’s policy.
On intra-policy stacking, the Court ruled that a waiver of stacking is effective if two cars are insured under the same policy, even if there is no household vehicle exclusion, meaning only the UIM policy of the car in the accident is payable.
A copy of the court’s opinion is available by clicking on the related file below.
State Farm v Craley