Wolgemuth v. Harleysville Mut. Ins. Co.

• Decision Date: 11 January 1988
• Citation: 535 A.2d 1145,370 Pa.Super. 51
• Court: Pennsylvania Superior Court
• Parties: Galen H. WOLGEMUTH, Administrator of the Estate of Gail M. Wolgemuth, Appellant, and Todd W. Hummel, Appellee, v. HARLEYSVILLE MUTUAL INSURANCE CO. and Ross J. Spera and Quentin Riding Club, Erie Insurance Exchange, Ohio Casualty Insurance Co. and Aetna Life & Casualty Company, Appellees.

Page 1145

535 A.2d 1145

370 Pa.Super. 51

Galen H. WOLGEMUTH, Administrator of the Estate of Gail M Wolgemuth, Appellant and Todd W. Hummel, Appellee, v. HARLEYSVILLE MUTUAL INSURANCE CO. and Ross J. Spera and Quentin Riding Club, Erie Insurance Exchange, Ohio Casualty Insurance Co. and Aetna Life &amp Casualty Company, Appellees.

Superior Court of Pennsylvania.

Argued June 8, 1987.

Filed Jan. 11, 1988.

Kenneth C. Sandoe, Myerstown, for appellant.

Alexander Kerr, Philadelphia, for Harleysville, appellee.

Before CIRILLO, President Judge, and BROSKY, ROWLEY, WIEAND, McEWEN, OLSZEWSKI, BECK, TAMILIA and JOHNSON, JJ.

McEWEN, Judge.

We here provide en banc review of whether a guest passenger, who is a covered person under the terms of a policy of motor vehicle insurance applicable to the host vehicle, and who is injured in a single vehicle accident, may recover underinsurance benefits under the policy of insurance applicable to the host vehicle, when that passenger has already received the limits of the liability coverage under that same policy.

This declaratory judgment action was commenced by appellant, Galen H. Wolgemuth, as administrator of the estate of Gail M. Wolgemuth, to determine whether Harleysville Mutual Insurance Company had properly denied appellant's claim for underinsurance benefits on the grounds that the policy issued by appellee Harleysville precluded such a claim on the behalf of the estate of Gail M. Wolgemuth. The trial court determined that the policy did preclude such a claim and that the terms of the policy did not violate either the Pennsylvania Motor Vehicle Financial Responsibility Law, 75 Pa.C.S. §§ 1701 et seq., or public policy. Appellant has taken this appeal from the entry of summary judgment in favor of appellee Harleysville. We affirm.

Gail M. Wolgemuth and Todd W. Hummel were passengers in a vehicle owned and operated by Ross J. Spera when the automobile was involved in a single vehicle accident, resulting in the death of Gail M. Wolgemuth. ¹ Appellee Harleysville had issued a policy of automobile insurance to Ross J. Spera which provided liability coverage in the amount of $100,000.00 as well as uninsured/underinsured motorist coverages each in the amount of $100,000.00. Harleysville paid the full amount of the liability coverage to appellant, but denied the claim for underinsurance benefits on the ground that the claim was precluded by the terms of the policy which provided that the insured vehicle could not be an "underinsured motor vehicle" for purposes of determining entitlement to underinsured motorist benefits.

Appellant concedes that the express terms of the policy itself preclude recovery of underinsured benefits by the estate of Gail M. Wolgemuth, but argues that the policy definition of "underinsured motor vehicle" is void as violative of public policy, and is, as well, contrary to the express provisions as well as the intent of the Pennsylvania Motor Vehicle Financial Responsibility Law, 75 Pa.C.S. §§ 1701 et seq.

As a result of the enactment of the Pennsylvania Motor Vehicle Financial Responsibility Law, every motor vehicle liability insurance policy issued in the Commonwealth of Pennsylvania must provide underinsured motorist coverage. Section 1731 of the Act provides, inter alia:

§ 1731. Scope and amount of coverage

(a) General rule.--No motor vehicle liability insurance policy shall be delivered or issued for delivery in this Commonwealth, with respect to any motor vehicle registered or principally garaged in this Commonwealth, unless uninsured motorist and underinsured motorist coverages are provided therein or supplemental thereto in amounts equal to the bodily injury liability coverage except as provided in section 1734 (relating to request for lower or higher limits of coverage).

* * *

* * *

(c) Underinsured motorist coverage.--Underinsured motorist coverage shall provide protection for persons who suffer injury arising out of the maintenance or use of a motor vehicle and are legally entitled to recover damages therefor from owners or operators of underinsured motor vehicles.

75 Pa.C.S. § 1731(a), (c).

The act defines the term "underinsured motor vehicle" as a "motor vehicle for which the limits of available liability insurance and self-insurance are insufficient to pay losses and damages." 75 Pa.C.S. § 1702.

The act, as well, requires that all policies of motor vehicle insurance issued in the Commonwealth provide for liability coverage in no less than "the amount of $15,000 because of injury to one person in any one accident, in the amount of $30,000 because of injury to two or more persons in any one accident and in the amount of $5,000 because of damage to property of others in any one accident...." 75 Pa.C.S. § 1702. ² Where an insured obtains liability coverage in the minimum amount permitted under the statute, the policy must provide uninsured and underinsured motorist coverages in amounts equal to the liability coverage. 75 Pa.C.S. §§ 1731(a), 1734. An insured who purchases liability coverage in an amount greater than the minimum amount required by the Motor Vehicle Financial Responsibility Law may obtain uninsured and underinsured coverages in amounts equal to, but not greater than, the amount of his liability coverage. See: 75 Pa.C.S. §§ 1731(a), 1736. ³

The instant policy of insurance issued by Harleysville provided, with respect to the underinsured motorist coverage:

We will pay damages which a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle or underinsured motor vehicle because of bodily injury:

1. Sustained by a covered person; and

2. Caused by an accident.

* * *

* * *

"Covered person " as used in this endorsement means:

1. You and any family member.

2. Any other person occupying your covered auto.

3. Any person for damages that person is entitled to recover because of bodily injury to which this coverage applies sustained by a person described in 1. or 2. above.

"Underinsured motor vehicle" means a land motor vehicle or trailer of any type to which a bodily injury liability bond or policy applies at the time of the accident but its limit for bodily injury liability is not enough to pay the full amount the covered person is legally entitled to recover as damages.

* * *

* * *

In addition, neither "uninsured motor vehicle" nor "underinsured motor vehicle " includes any vehicle or equipment:

1. Owned by or furnished or available for the regular use of you or any family member. (emphasis supplied).

Appellant argues that because the legislature has made underinsured motorist coverage mandatory, any policy provision such as the provision set forth in appellees policy, which operates to deny a claimant underinsured motorist benefits violates the public policy of this Commonwealth. This argument reflects a misapprehension of the nature of underinsured motorist coverage.

Prior to the passage of the Motor Vehicle Financial Responsibility Law, underinsured motorist coverage, unlike uninsured motorist coverage, was not required in Pennsylvania or regulated by statute. See: Votedian v. General Accident Fire and Life Assurance Corp., 330 Pa.Super. 13, 18, 478 A.2d 1324, 1327 (1984). Our Supreme Court in Davis v. Government Employees Insurance Co., 500 Pa. 84, 454 A.2d 973 (1982), recognized the often inequitable results occasioned by the failure to require mandatory underinsured motorist coverage and noted the:

"oft cited anomaly that those in the position of [claimants who had purchased uninsured motorist coverage and who were injured by a minimally insured driver] would find themselves in a better position were the tortfeasor's vehicle totally uninsured rather than underinsured." Gorton v. Reliance Insurance Co., 77 N.J. 563, 570, 391 A.2d 1219, 1223 (1978). This anomaly, however, stems from the fact that the legislature has chosen not to require insurance coverage for those instances in which a tortfeasor's insurance is insufficient to satisfy the injured party's claim.

Davis v. Government Employees Insurance Co., supra at 91, 454 A.2d at 976 (footnote omitted). Our legislature responded to and resolved this anomaly with the passage of the Motor Vehicle Financial Responsibility Law.

The legislature, in establishing $15,000/$30,000 as the minimum permissible liability coverage, unquestionably realized that in many instances an accident victim would be insufficiently compensated by the tortfeasor even though the tortfeasor was insured. But the legislature, with the passage of the Motor Vehicle Financial Responsibility Law, did ensure that every insured individual who is injured by a negligent, underinsured motorist, will have recourse to at least $15,000 of underinsured motorist benefits either (1) pursuant to the policy of insurance applicable to the vehicle in which the individual was a passenger (if the vehicle was not at fault), or (2) pursuant to a policy of insurance under which the injured claimant is an insured ⁴ person.

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 liability coverage to compensate for the injuries caused by his negligence. Thus, an insured who purchases $100,000.00 of liability coverage to protect others from his negligence, must, by law, be offered the option of purchasing up to $100,000.00 of underinsured motorist coverage to protect himself and his additional insureds from the risk that they will be severely injured by a negligent driver who has liability coverage in an amount insufficient to fully compensate them for their injuries.

The language of the statute itself suggests that underinsurance motorist coverage requires the existence of at least two applicable policies of motor vehicle insurance. See 75 Pa.C.S. § 1731(c). An...