Auto Law: Exclusion does not violate public policy

A copy of the opinion in Burstein v. Prudential Property and Casualty Insurance Co. is available to members by contacting Kristy Mitchell 
[email protected] or 215-546-6451.

The �regularly used, non-owned car� exclusion does not violate public policy, the state Supreme Court ruled on July 17 in Burstein v. Prudential, reversing the Superior Court decision.

According to the opinion, Sid and Doreen Burstein were struck and injured by a speeding motorcyclist in September of 1993. The motorcyclist�s insurance company paid the maximum under its liability limits, but it was not enough to compensate the Bursteins. 

Sid Burstein was driving the vehicle at the time of the accident. The vehicle was owned by Doreen Burstein�s employer. She paid her employer $25.00 a week to allow she and her husband to drive the vehicle for personal use. Sid Burstein rarely drove the car. The employer had insurance on the car through Kemper Insurance Company, but declined UM/UIM coverage. Doreen Burstein never knew that the vehicle did not have UM/UIM coverage.

The Bursteins owned three other vehicles, which were not involved in the crash. All three had UM/UIM coverage through Prudential Property and Casualty Insurance Company. The Bursteins made a claim through that insurance, which Prudential denied. Prudential said that the Bursteins� policy excluded regularly used, non-owned vehicles. The Bursteins sued Prudential on the grounds that the exclusion violated public policy.

Arbitrators determined that the exclusion violated public policy in Sid Burstein�s case, but not in Doreen�s case. Both parties appealed, and the trial court determined that the exclusion was unenforceable in both cases, and that it violated public policy. Prudential appealed and the Superior Court affirmed the trial court�s ruling. Prudential then appealed to the Supreme Court.

In the Supreme Court�s opinion, Chief Justice Stephen A. Zappala wrote that the court �must give plain meaning to a clear and unambiguous contract provision unless to do so would be contrary to a clearly expressed public policy.� Zappala then stated that, �Here, voiding the exclusion would frustrate the public policy concern for the increasing costs of automobile insurance, as the insurer would be compelled to underwrite unknown risks that it has not been compensated to insure. Most significantly, if this court were to void the exclusion, insureds would be empowered to regularly drive an infinite number of non-owned vehicles, and receive gratis UIM coverage on all of those vehicles if they merely purchase UIM coverage on one owned vehicle. The same would be true even if the insureds never disclose any of the regularly used, non-owned vehicles to the insurers, as is the case here. Consequently, insurers would be forced to increase the cost of insureance, which is precisely what the public policy behind the MVFRL strives to prevent.�

The opinion went on to say that Doreen Burstein should have taken affirmatives steps to find out the extent of coverage on the employer-provided vehicle. She then would have been able to make an informed choice about driving the vehicle. Zappala concludes in saying �we hold that the regularly used, non-owned car exclusion and its contractual restraint on UIM portability comport with the underlying policies of the MVFRL, and reverse the order of the Superior Court.�

Justices Flaherty and Newman did not participate in the decision of the case. Justice Saylor filed a dissenting opinion. 

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