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Victims' Estates Could Not Recover Underinsured Motorist Insurance Benefits After A Single-Car Accident Involving Tortfeasor Driving Vehicle Owned By Victim

In Estate of O'Connell v. Progressive Ins. Co., 2013 PA SUPER 271 (October 8, 2013), the Superior Court of Pennsylvania affirmed the trial court's dismissal of claims for underinsured motorist insurance benefits asserted by the Estates of a father and son that were killed in a single-car accident involving a vehicle ownedBrandonMcCullough--Insurance Blog Photo 2.jpg by the father but driven by the acknowledged tortfeasor.

Michael Weber ("Weber") was driving a vehicle owned by Philip O'Connell ("Father") and Diane O'Connell, with the permission of Father. Father and Philip S. O'Connell ("Son") were passengers in the vehicle when it was involved in a single-car accident that killed Weber, Father, and Son. The vehicle was covered by an auto insurance policy issued by Progressive to the O'Connell's. The Progressive policy provided stacked underinsured motorist ("UIM") coverage of $300,000 per person/$900,000 per accident. Weber maintained auto insurance issued by Allstate. Following the accident, Progressive paid the Estates of Father and Son $100,000 each in liability coverage. Allstate paid the Estates of Father and Son $15,000 each in liability coverage. Following the liability coverage payments, the Estates of Father and Son sought to recover UIM benefits from Progressive, asserting that Weber's automobile was an underinsured motor vehicle. Progressive denied coverage on grounds that the vehicle involved in the accident belonged to the O'Connell's and, thus, did not meet the definition of an "underinsured motor vehicle" contained in the Progressive policy.

The Estates of Father and Son filed a complaint against Progressive asserting claims for breach of contract and bad faith. Progressive filed preliminary objections in the nature of a demurrer to the complaint. The trial court sustained the preliminary objections and dismissed the complaint. On appeal, the Superior Court considered whether the trial court properly determined that the Progressive policy did not provide UIM benefits to the Estates.

In analyzing Progressive's obligations, the court first looked to the policy language. The Progressive policy provided UIM coverage, in pertinent part, when "an insured ... is legally entitled to recover from the owner or operator of an underinsured motor vehicle because of bodily injury ... sustained [and] arising out of the ownership, maintenance, or use of an underinsured motor vehicle. "Underinsured motor vehicle" was expressly defined in the policy to include a motor vehicle "to which a bodily injury liability bond or policy applies at the time of the accident, but the sum of all applicable limits of liability for bodily injury is less than the damages that an insured person is entitled to recover from the owner or operator of the motor vehicle because of bodily injury." However, "underinsured motor vehicle" excludes any vehicle "owned by you or a relative" (the so-called "family car exception") or that is a "covered auto" (the so-called "covered auto exception"). The Superior Court found that under the clear and unambiguous terms of the policy "coverage ... is triggered when a tortfeasor's liability for the injury is dependent upon his ownership, maintenance, or use of an underinsured motor vehicle." Since Weber was driving the O'Connell's vehicle when it was involved in a single-car accident, Weber's liability was not dependent on his ownership, maintenance or use of an underinsured vehicle. Thus, the Superior Court held that the Estates are not entitled to UIM coverage under the plain terms of the policy.

The Estates contended that they are entitled to UIM coverage because Weber failed to maintain sufficient coverage on his own vehicle insured by Allstate and, thus, Weber's vehicle is an "underinsured motorist vehicle" under the Progressive policy. The court rejected that argument. The court found that the O'Connell vehicle was the only vehicle relevant to the claim for UIM coverage, as it was the only vehicle involved in the accident. The court noted that "the purpose of underinsured motorist coverage is to protect the insured (and his additional insureds) from the risk that a negligent driver of another vehicle will cause injury to the insured (or his additional insureds) and will have inadequate coverage to compensate for the injuries caused by his negligence. Thus, the court concluded that "the availability of UIM coverage requires a multi-vehicle accident." The court also found that permitting the Estates to collect UIM benefits based on the amount of liability coverage available under Weber's policy when Weber's vehicle was not involved in the accident would undermine the cost containment policy inherent in the Motor Vehicle Financial Responsibility Law and would afford them gratis coverage.

The full decision can be found here: Estate of O'Connell v Progressive Ins Co, 2013 PA SUPER 271 (Oct 8, 2013).pdf

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