*1 part; part; Reversed in affirmed and remanded to the Opinion. trial court for consistent with this proceedings relinquished. Jurisdiction
DONEGAL MUTUAL INSURANCE Superior Pennsylvania. Court of
Argued Nov. 1995.
Filed Feb. *2 Reed, Jr., Lebanon, for appellant.
Harry W. Ronca, Harrisburg, appellee. James Sloane, Media, A. amicus curiae. Leonard McEWEN, ROWLEY, Judge, President Before POPOVICH, BECK, CIRILLO, SOLE, TAMILIA, DEL *3 ELLIOTT, SAYLOR, and JJ. FORD ELLIOTT, Judge: FORD 27, 1994, appeal July is an from the order entered
This modify or correct an arbitration denying appellant’s petition proce- A review of factual and We affirm. brief the award. case, opinion, of taken from trial court history dural the follows. riding A. Michael Allwein was his August
On operated by to work he was struck a vehicle bicycle by when Allwein as a result of Michael died Jeremiah Lauver. during suffered the accident. injuries owned operated by by vehicle Jeremiah Lauver and The Eastern Henry by Lauver was insured the self-insured $15, carried Pennsylvania Mennonite Church. The vehicle 000/$30,000 liability coverage. automobile accident, the time of Michael Allwein resided with
At H. and M. Allwein. his James Allwein Christine parents, Allweins’ three insured with auto- owned vehicles [sic] Com- by Donegal mobile insurance Mutual Insurance issued (Donegal). provided This underinsurance cov- pany $35,000 of stacking of vehicle and allowed erage per liability for a total underinsured motorist cover- coverages $105,000. age of Allwein, Donegal
Both and Robert J. Administrator Allwein, Deceased, of the Estate of Michael A. C.T.A. ... experienced by admit the value of the loss [decedent] Allwein because of the death of exceeds the [decedent] $15,000 fault, liability party operator limits of the Lauver, Henry Jeremiah Lauver and the owner $105,000 liability Donegal. against Donegal seeking payment
Allwein filed a claim $105,000. underinsurance benefits the amount of Done- has gal obligation pay admitted its underinsurance bene- $90,000 fits position only but has taken the that it owes may underinsurance benefits because it offset the amount it $15,000 owes from liability insurance benefits Lauvers’ on policy. Donegal position following bases its limiting language policy: found its liability paid C. The limit of shall be reduced all sums because of the or ‘bodily injury’ by persons on behalf organizations who This in- may legally responsible. be all sums for an paid attorney cludes ‘insured’s’ either or as of the amount directly part paid ‘insured.’ It also paid damages includes all sums for the same under Part policy. A. Petition,
See Exhibit A of Exhibit 1 of Form PPD 04 19 3/92, page 2 of 3. opinion,
Trial court at 1-3. 7/25/94 *4 any disputes Pursuant to the terms of the insurance policy, between the parties through were to be resolved arbitration accordance with the Arbitration Act of 1927. As result, a parties dispute panel submitted their By vote, arbitrators. a two-to-one the arbitrators found that $105,000 full Donegal. Allwein was entitled to the from Done then gal appealed the arbitrators’ award to the trial court. 7302(d)(2) Both forth parties agree Pa.C.S.A. sets the proper standard of review of an arbitrators’ award under 7302(d)(2) the 1927 provides: Act. Section an reviewing a court applicable is paragraph Where this shall, not- subchapter to this pursuant award arbitration modify subchapter, of this any provision other withstanding contrary is to law and or the award where award correct would jury had it a verdict of a court is such that been judgment notwith- judgment have a different entered the verdict. standing 7302(d)(2). 15; appel- See brief at appellee’s Pa.C.S.A.
lant’s at 36. brief issue; single namely, with a presented court was trial valid or Donegal’s policy cited
“whether the $15,000 an in under- owes Allwein additional Donegal whether 3.) (Trial In its opinion, court insurance benefits.” 7/25/94 “gap” trial court found the opinion, the so-called well-reasoned supra, cited which Done- Donegal’s policy, allowed to Allwein payable the underinsurance benefits gal offset pursuant to tortfeasor’s against liability payments received Pennsyl- the public policy to be violative of separate policy, vania. affirming
In its from trial court order appeal award, raises The first four Donegal arbitrators’ five issues.1 issue arguments larger divide into four merely issues They raised below. are: 1731(a) of the
A. amendment to Section "Whether Law], Responsibility Financial [Motor MVFRL Vehicle coverage optional, elimi- making underinsured motorist argument underinsured any gap nates policy. public violates can vague public policy
B. notions of be Whether used unambiguous policy provisions. invalidate UIM policy’s ‘gap’ C. "Whether automobile insurance [underinsured is consistent with motorist] balanc- insurance cost reduction express of MVFRL. ing public goals review, agree parties on the we need Because the correct standard five, appellant's posits not address issue number which 42 Pa.C.S.A. 7302(d)(2) as the correct standard. *5 ‘offer’ of underinsured motorist required D. Whether the 1731(a) under and the definition of Section prohibit ‘underinsured motor vehicle’ Section 1702 gap underinsured motorist under MVFRL.
Appellant’s brief at 2. In addition to counsel’s appellant’s (PDI) brief, Pennsylvania The Defense Institute has filed an amicus brief on behalf of We shall appellant.2 adopt curiae argument appel- structure the PDFs section to address result, lant’s arguments. As a we shall address appellant’s argument fourth first.
STATUTORY LANGUAGE PDI argues that “The unambiguous language of 75 Pa.C.S.A. Section ... merely defines what an underin- sured motor any vehicle is and does not make attempt define what underinsured motorist ‘coverage’ should be (PDI 7.) Pennsylvania.” result, brief at As a appellant argues gap insurance provisions are not violative of the law or public policy Pennsylvania. addressing Before issue, exegesis a brief on the two forms of underinsurance dispute will helpful. be
“Excess” underinsurance are only by benefits limited limits, victim’s damages or the policy whichever is smaller. As the trial court stated:
Under coverage, excess at fault is party underinsured when his liability limits are less than the insured victim’s total damages. The policy tortfeasor’s acts as primary policy and the insured victim’s acts as secondary coverage. The victim policy recovers under the tortfeasor’s up to the limits and then recovers under his own up coverage limits or up total amount of damages, whichever is less.
Trial court opinion, at 4. Under excess coverage, 7/25/94 therefore, appellee $105,- would be entitled to recover the full (PATLA) 2. The Lawyers Trial Association has also filed an brief, amicus on behalf of the Allweins. under policy, benefits available his dam- the total amount of his agree parties because *6 the available both combined benefits under exceeds the ages and underinsurance bene- appellee’s limits policy tortfeasors’ fits. insurance, hand: on the other “gap”
Under when or her] at fault is underinsured party [his [T]he limit of the policy than a liability specified limits are less amount of the insured’s To determine the insured victim. from recovery, recovery the tortfeasor’s underinsurance the the from the amount recoverable under is policy deducted recovery The insured’s policy. insured’s [underinsurance] to the amount up the two total policies fills the between gap limits, is [up policy whichever damages the] of suffered to less. result, at appellee court 4. As opinion,
Trial 7/25/94 of case be entitled to benefits the amount only instant would $15,000 under the tortfea- of “gap” between $105,000 liability of underinsur- sors’ and the limits Furthermore, $90,000. policy; namely, under his own ance insurance, liability if a tortfeasor’s gap under carried than the underinsurance greater victim, the be entitled to zero underinsurance victim would damages his or are far in excess recovery, even where her For in the instant liability example, limits. tortfeasor’s $150,000 case, insur- liability if the had carried tortfeasors $15,000, damages and were deter- appellee’s ance instead of $500,000, recover from appellee nothing mined to be would underinsurance benefits Donegal appellee’s “gap” because $105,000 liability coverage, than would be less the tortfeasors’ gap that there be no to fill. so would of underinsurance Having compared types two turn next the definition of underinsur instantly, issue we not MVFRL. This definition has ance contained in 1984. the MVFRL was enacted Section changed since “A motor as motor vehicle defines underinsured vehicle liability available insurance and self-insur which the limits of 75 Pa. pay damages.” are losses and ance insufficient Thus, C.S.A. the statute defines underinsured cover age damages terms of the sustained by plaintiff. Appellant, however, that this argues statutory language does address instead, of coverage; appellant argues issue merely major defines an underinsured “vehiele.” find a We flaw this analysis.
As noted
under a
supra,
gap
policy,
underinsurance
tortfeasor’s vehicle would not be an
if the
underinsured vehicle
tortfeasor’s
limits were
liability
greater
equal
than or
benefits,
victim’s
regardless
underinsurance
the victim’s
and,
insurance,
damages.
losses
The result under
there-
gap
fore, is that the victim of a
driver
negligent
liability
whose
indemnify
insurance is not
adequate
victim for losses
damages
would receive no
from or
his
her
own
if
liability
the tortfeasor’s
insurance were greater
*7
equal
than or
to the victim’s underinsurance benefit. See
Co.,
Fisher v.
Casualty
USAA
Insurance
F.2d
(3d Cir.1992);
Co.,
v.
Casualty
Surety
Ober Aetna
(3d
(W.D.Pa.1990),
F.Supp.
347-48
Id. at 140. Widiss then typical cites a statutory type: of a operator is the owner or
An motorist underinsured liability automobile insurance with motor who carries vehicle damages than the amount coverage in an amount less financial persons pursuant applicable [the insured legally are entitled recover because responsibility statute] disease, result- including death injury, sickness bodily ing therefrom. jurisdic- then lists those (emphasis original).
Id. Widiss tions, Pennsylvania,3 which have this of insur- type including ance. focusing
Another treatise on insurance requir- characteristics of statutes following MVFRL offers coverage: ing “excess”
(1) one an ‘underinsured’ motor vehicle as They define (or damages than the insured’s
whose is less recover.) the insured is entitled to amount (2) explicit recovery not limitation on any do contain They plus the underin- payments tortfeasor’s
except total payments may motorist carrier’s exceed sured damages. Ronca, al, Pennsylvania R. et Motor Vehicle Insur-
James § 8.2 Responsibility of the Financial Law Analysis ance—An added).4 (1986) clearly of 1702 falls language (emphasis description. within this analysis
In our own independent addition to jurisdictions §of also find that courts of other we under- require § 1702 have construed it to excess interpreting court, for exam coverage. supreme The Vermont *8 excess opined “Pennsylvania example an an ple, state____” Co., 158 coverage Fidelity Guaranty v. & Webb 137, 143, 1344, 1347(1992), § Feder citing 605 A.2d 1702. Vt. § require have it construing al courts 1702 also found Fisher, See, coverage. example, excess underinsurance amendments; 1732, repealed by Widiss 75 the 1990 cites Pa.C.S.A. however, language language cited is identical to the of the current § 1702. Ronca, recognize 4. While that Mr. one of the of the cited we co-authors treatise, appearance appellee his on behalf of in' the instant entered case, Pennsylvania guide we cite the treatise as a useful MVFRL.
373 1108; Tabor, at North River Insurance v. supra Co. F.2d (3d Cir.1991), below; Ober, discussed more fully supra at 347-48; Ronca, Schemberg, supra at 622. See also observing 8.2 n. that the Insurance Depart ment’s Guidelines as their provide, example underinsured a clear coverage, coverage; injured instance excess $50,000 insured with underinsurance and damages $150,000 from his should recover underinsurance carrier the $50,000, $15,000], full where the tortfeasor’s liability [not $35,000 Id., provides only coverage. citing Insur Guidelines, C-1, Department ance in Appendix C-2.
We find
support
further
for our view that the plain language
§of
1702 defines underinsurance
“excess” terms
from prior decisions of this court.
In Davis v. Erie Insurance
Group,
(1990),
400 Pa.Super.
Finally, we support find for our conclusion that 1702 was written to require excess underinsurance coverage from other 515,000/ only 5. Because the statutory MVFRL mandated a minimum of $30,000 reading and because the court was into legislatively a no-fault contract a provi- mandated underinsurance sion in accord with the MVFRL and the liberalization clause in the contract, the court refused to read into the contract more than the statutory minimum amount of excess underinsurance in view providing in the only contract that the would be provide broadened the insured require with benefits that did not premiums. additional *9 statutory language or in the same similar jurisdictions which Ronca, See require coverage. excess been determined has 7, citing n. Louisiana Rev.Stat.Ann. § at 8.2 1983) (“For (West 22:1406(D)(2)(b) this cover purposes of § ... be motor vehicle shall the term uninsured age [sic] when the automo ah insured motor vehicle to include deemed less than on such vehicle is liability bile insurance an insured damages by suffered the amount of and/or of an acci vehicle at time in the insured’s passengers 48.22.030,(1)(1984) dent____”); Ann. Washington Rev.Code ’ (“ ... a motor vehicle motor vehicle means ‘Underinsured liability limits of all under respect to which the sum liability and insurance injury damage bonds bodily property or an accident is less person to a covered after policies applicable person which the covered damages the applicable than recover.”); Rev.Stat.Ann. Arizona entitled legally 20.259.01(E) (1984) (“‘Underinsurance coverage’ motorist sum the limits of for if the person includes a and injury liability or death bonds liability bodily under all of the acci- applicable at time liability policies bodily damages injury less the total death dent is than added).6 accident.”) (emphasis resulting from the jurisdictions requiring that some other Appellant argues similar to perhaps using language while excess statutory language is Appellant jurisdiction one which the has cited in allegedly which court and in similar provision[] in a gap was] underinsured when written [it "enforced [a] (PDI 14, citing unambiguous v. fashion.” brief clear Griffin Battles, Griffin, (Ala.Civ.App.1995)). We have reviewed So.2d set-off, beneficial case in the trial court allowed the which tortfeasor reversed, noting that while Appeals of Civil in dicta but Court set-offs, types payment as for medical certain such set-offs insurers, coverage may they are motorist be allowed to and uninsured may [plain- claimed "[W]hile allowed to tortfeasors: set-off be express policy, that set-off insurer virtue its tiff’s] For ... Id. at 1225. several is not available to the tort-feasor...." First, reasons, unpersuasive. as appellant’s we citation to find Griffin Second, noted, only three addressed the set-off issue dicta. court unspecified judges panel concurred. out of an number Griffin enacting Finally, Legislature of the Alabama its financial intent responsibility law is not discussed. *10 1702, Pennsylvania’s § “have that specifically indicated there is an limitation explicit clearly, concisely and unambigu ously states that the coverage will be excess and that a payment by the tort feasor not [sic] ‘shall reduce’ the underin (PDI 16, sured coverage.” Nevada, motorist brief at citing Oklahoma, Carolina, Utah, law.) South Virginia and West true; however, This may be it may merely be an on attempt part of those states circumvent the rising tide of litigation, with its concomitant of policyholder’s “waste money time,” and the court’s that often surrounds any amendment or revision to a statutory provision. Keeton, al., See Robert E. et Law, Insurance a Guide to Principles, Fundamental Legal Doctrines and (1988), § Commercial Practices 3.11 n. 4 quot Haines, ing 665, Schoenecker v. 675, 88 Wis.2d 277 N.W.2d .7 (1979) 782, 786-87 STATUTORY INTERPRETATION Appellant next argues 1702 must be interpreted with an eye toward the legislative intent behind the MVFRL. See 1 Pa.C.S.A. brief, 1921. As PATLA however, observes in its “ the words of a ‘[w]hen statute are clear and free from all ambiguity, the letter of it is not to disregarded be under the ” pretext of pursuing 7, its PATLA spirit.’ brief at quoting 1921(b). Pa.C.S.A. While we find that the words of the clear, statute are we shall nevertheless address appellant’s argument. court, supreme
Our
in Windrim v. Nationwide Insur
Co.,
129,
ance
537 Pa.
(1994),
A.2d 1154
recently adopted
analysis
set forth by this court in Allen v. Erie Insurance
Co.,
6,
369 Pa.Super.
(1987),
‘In passing Legislature primarily was concerned with the rising consumer cost of automobile insurance, created in part by the substantial number of recognize 7. We that the context in which the Schoenecker court made supra however, the comment noted instantly; differs from the situation the rationale apposite. behind the comment is nothing to the pool who contributed
uninsured motorists paid. The from which claims were insurance funds regis- all owners of requiring the effect of has [MVFRL] in the of insurance before to share burden tered vehicles to a By denying benefits can obtain benefits. they their insuring registered people certain class of —those of insur- purchase encourages [MVFRL] vehicles—the which can be register vehicles by all owners who ance highways.’ on the operated legally Allen, Windrim, quoting supra 641 A.2d at at omitted). (other Thus, as citations at 840-41 A.2d cost goal of the MVFRL was major appellant argues, reduction. *11 however, it is that analysis, problem appellant’s
The Lee stated Judge the horse. As places the cart before Ober, supra: have held that the courts of appellate
[T]he frequently of uninsured motorist law has been ‘purpose protection our as interpreted by providing courts Farm, drivers,’ v. State Boyle innocent victims of uninsured Co., 21, 156, 10, A.2d 162 Pa.Super. 456 Mut. Auto. Ins. 310 to (1983), ‘designed give the statutes have been and that persons ... of who monetary large group to that protection injuries use of those through negligent ... grave suffer Cas. v. Harleysville others.’ Mut. Co. See highways (1968).... 389, 395, 112, Pa. 241 A.2d 115 Blumling, 429 Ober, of Recently, the context underinsur- supra at of objects court reaffirmed that one of ance to afford: the MVFRL was injured greatest coverage. Danko possible claimant the 223, A.2d Exchange, Pa.Super. 428 630 Erie Insurance
[v. (1994) ]; 572, 935 (1993), Pa. 649 A.2d affirmed, 1219 538 117, Pa.Super. 407 595 Group, v. Erie Insurance Sturkie McClure, 257, (1991); Pa.Super. 152 Lambert 407 [v. A.2d (1991) cases, must A.2d In close or doubtful we ]. 595 629 legislature language the intent of the interpret Dan- for the insured. favor policies Lambert, ko, supra; supra.
377
524, 538,
444
Companies
Emig,
Pa.Super.
Motorists Ins.
v.
(1995).
559,
analysis
court’s
was
Emig
664 A.2d
566
1928(c),
1
which
part upon
provides
based
Pa.C.S.A.
1928(b),
“All
those delineated in
provisions [excluding
other
shall be
applies]
to which strict construction
statute
liberally
objects
promote
construed to effect their
and to
538,
justice.”
378 is, therefore, mis- on cost-control- emphasis
Appellant’s
concerned with
true that the MVFRL was
placed. While it is
then-
insurance under the
the
of automobile
spiralling costs
laws,
the
the
for the concern was
no-fault
reason
existing
drivers on
uninsured and underinsured
increasing number of
inability of those drivers
the
and the resultant
highways,
sustained as
damages
for losses and
indemnify their victims
Windrim,
supra.
See
goal
negligence.
result of their
therefore,
was,
goal
tied to the broader
reducing costs
disagree
appellant’s
conclu-
Because we
indemnification.
us to read
Legislature requires
the
of the
sion that
intent
we turn to
permitting gap
1702 as
language
that the
argument; namely,
next
appellant’s
such a result.
policy
itself mandates
POLICY LANGUAGE
INSURANCE
give
this court must
effect
appellant,
According
of insurance where that
policy
contained
its
language
(PDI
20.)
In
at
unambiguous.
is clear and
brief
language
v. Motor
cites Bateman
of this
proposition, appellant
support
Co.,
241,
(1991),
Ins.
As a with, to, which are statutory provisions repugnant conflict or contract, of, to, consequently part and form a applicable statute, invalid, are since contracts yield must and laws. change existing statutory cannot (Rev. ed) § Couch, 13.7 at on Insurance 2d George J. Couch “[njeither (1984). appellant with agree While we a to rewrite a courts nor the board of arbitration have license Couch, contract,” 3), agree brief at we also (Appellant’s that insurers do not have a license to rewrite statutes. supra, Tabor, in- Votedian supra, As the Third Circuit noted that went into effect before the volved contract of insurance Tabor, was enacted in 1984. The MVFRL Legislature prior to 1984 had neither defined contract, at the time the formed their nor articulated a parties public regarding importance clear of underinsurance enactment; through legislation existing the no-fault legislative for underinsurance at all. prior provide to 1984 did not was, however, The intent behind the MVFRL legislative uninsured or under- provide coverage for victims negligent As the Tabor court supra. insured drivers. See discussion noted: MVFRL, must offer underinsured mo-
Under the insurers torist and that is controlled statute by public possible, and to foster the fullest policy meant ‘excess,’ cases, then, are coverage. pre-MVFRL inap- contract posite, may Pennsylva- insurers convert statutory nia’s broad scheme for underinsured motorist merely providing ‘gap’ coverage. into a narrow one original). Id. at 465-66 (emphasis Bateman, mis- Appellant’s upon supra, reliance is likewise Bateman, In and for the same reason. both the placed, *14 claim the giving of and accident rise contract insurance Bateman the MVFRL. The the 1984 enactment of predated of discuss the effect the was not called to upon court thus having before policies, on in insurance provisions MVFRL gap agree itself. We therefore of contract only language it cases are pre-MVFRL that these with the Third Circuit turn, then, that our argument to appellant’s We inapposite. Windrim, that supra, mandates court’s decision supreme clear, gap provi- its unambiguous language enforce of we (PDI 21.) sion. brief at motorist, Windrim, his operating
In uninsured while vehicle, injured alleged in an accident he uninsured was which Windrim caused an unidentified hit-and-run driver. by was the terms to uninsured motorist benefits under sought collect Nationwide, that he was contending his mother’s policy of because was a relative policy his mother’s he insured under policy residing his mother’s household. Nationwide provided in exclusionary pertinent contained an clause which part: does not
This Motorists insurance Uninsured/Underinsured as apply follows: occupy- injury It suffered while apply bodily does not or you hit a vehicle a by by or from motor owned
ing being household, but not insured for Unin- living your relative poli- Motorists under sured Underinsured cy-
Windrim,
130, 641
at 1155.
Nationwide
at
A.2d
When
supra
counterclaimed,
validity
relief on
seeking declaratory
exclusion,
counterclaim,
the trial court dismissed the
The supreme
this court affirmed.
court
panel
and
reversed, however, holding
the exclusion
not violate
that
did
In
holding, public policy
behind the MVFRL.
so
case,
similar Third
Nationwide
upon
court relied
Circuit
(1991). In
Hampton,
Mutual Insurance Co. v.
It is clear in First, on the issue the court the MVFRL was silent before Windrim, in case defines whereas the instant the MVFRL Second, clearly in a ex- “excess” terms. Windrim, in pressed public policy supported exclusion public case behind instantly, policy whereas clearly in general, particular, MVFRL and underinsurance Couch, supra, gap with the As noted in provision. conflicts policy, not in accord provisions public are with [that] “contract advantageous particularly are not to the insured” are Couch, at 827-29. finding invalidity. to a subject Furthermore, true, gap while it as that the appellant argues, in its the Insurance Commis- language approved was sioner, a question we note that there is about “[w]hen a an form any filing effect—if [of —such involv- adjudication has on an of questions Commissioner] enforceability terms in an uninsured ing invariably con- motorist courts almost underinsured of administra filings type elude that the do not constitute the judicial deference to the decision regulation justifies tive which Widiss, at 21. agency.” supra, of an' administrative 32.3 turn, then, that its appellant’s argument gap We public policy Pennsylvania. does not violate the
PUBLIC POLICY can Appellant argues “vague public policy” notions or, contract, not be used to circumvent the of a clear Pennsylvania changed alternatively, public policy that the when the MVFRL was amended 1990. We shall address arguments sequence. these
In relies Hall support argument, appellant upon of its first (1994). Hall, Amica, A.2d 755 In v. Pa. his car was forced off the injured, insured was when road Barbados, country; how “phantom” independent driver ever, uninsured motorist to the policy limited his States, and Puerto Rico possessions, United its territories and 339, 648 A.2d at Hall argued and Canada. Id. at underlying provide the MVFRL public policy was injured by unin protection floor of drivers addition, that, argued sured motorists. In Hall because the exceptions listed three mandat only MVFRL *16 statute, by exception ed the the territorial contravened the construction, principles statutory particu statute under the 344, at larly expressio unius est exclusio alterius. Id. 648 concluded, however, correctly A.2d at 758-59. The Hall court general is more concrete than a desidera “public policy presumably supports legislation in question tum which and 347, part legislature’s thus forms intention.” Id. at 648 A.2d at 760. does not Since the MVFRL address issue of therefore, extra-territorial court to Hall refused abrogate a contractual of the insurance on the provision policy say. of what the did not basis statute and, fact, clearly instant case is distinguishable is analogy by closer to the used the Hall court to describe a
383 be void as would provision a contractual in which situation court noted: The Hall public policy. against uninsured worldwide required explicitly had If the statute insurer that an exception an listed as but motorist to trade subjected in countries exclude such might set the limitation then government, by the U.S. sanctions contravene at issue would policy Arnica forth expressed [‘Exceptions 1 1924 virtue of Pa.C.S. statute all others.’]. to exclude be construed in a statute shall 495, at supra 344, Jeffrey, also 648 A.2d at See Id. at (“Neither contains or the MVFRL the UMCA A.2d at 641 by implication precludes directly which either motorist benefits reducing uninsured insurer from of the same liability portion under the amounts recovered however, statutory case, it is clear In the instant policy.”). Pennsylva- to ascertain relies upon appellee which “gap” versus of “excess” on the issue policy public nia’s court, making The Hall is not silent. the statute coverage; as the such public policy between valid issues the distinction case, goals,” “vague and in the instant the court one before Supreme the United States analysis of following adopted Court: to the laws by reference ascertained
‘Public is to be considerations general not from and legal precedents and policy’ ‘public As the term interest. supposed public in the law of indications found definite there must be vague, of a contract as invalidation justify sovereignty of a plain In the absence policy.... to that contrary statutory ... enactments through of that indication ... contracts to declare not assume ... the Court should ’ policy.... contrary public 760, v. Hall, Muschany quoting A.2d at 442, 451, L.Ed. States, 49, 66-67, 65 S.Ct. 324 U.S. United omitted). (footnotes just (1945) It is citations statutory through [a] of that policy indication “plain such instantly. us that confronts enactment[ ]” indicated, which, already as we have § In addition *17 as “excess” underinsurance defines clearly 384
insurance, place heavy other sections of the MVFRL burden the insurer who claims that an insured has waived upon reject For in order to coverage. example, ¿ rejection coverage, required UIM an insured is to execute statute; comply in the if the insurer does not reproduced form waiver, for proper procedure obtaining with the insured’s (c.1). waiver void. 1731 then the 75 Pa.C.S.A. notify also that an insurer an insured of his requires MVFRL coverage equal to the limits of his right purchase UIM 1791. liability coverage policy. under Pa.C.S.A. lower the insurer must Where an insured elects e knowing intelligent. th election was prove §§ Pa.C.S.A. them interpreting interpreted
Cases
these sections have
fail to
letter of
strictly.
comply
precise
Insurers who
consistently
required
provide
statute have
been
full
See,
coverage.
example, Emig,
underinsured motorist
(neither
signature
policy change request
insured’s
on
form, which indicated an election of lower uninsurance/under-
coverages,
receipt
statutory “Important
nor
coverage equal
Notice” constituted waiver UM/UIM
policy’s bodily liability
request
limits where insured did not
MVFRL);
in writing
required by
lower limits
as
Botsko v.
Co.,
Pa.Super.
Mutual Insurance
Courts in an insurance finding allowing that likewise been consistent protection “waive” insured’s underinsurance company to an very the in a contract subverts inserting “gap” provision See, the of MVFRL. provisions of the strict waiver purpose (since Fisher, at the settle supra proposed example, coverage, the for more than the underinsurance ment was policies provided “gap” the position insurer’s Ober, coverage); of a of equivalent was the denial clearly provision, [Aetna] (“By at 348 means set-off underinsured motorist plaintiff’s to attempting reduce express only would not violate coverage to zero. This unin MVFRL, render plaintiffs dictates of the but would Schemberg, supra at coverage illusory.”); sured/underinsured (offset invalid in was as policy 621-22 automobile Pennsylvania law contrary Pennsylvania public policy where to in provide state at required liability policies that all issued $15,000 coverage). least underinsurance The Third Circuit also addressed the behind Tabor, Tabor, killed in In Tabor was while supra. decedent in an The host’s automobile riding passenger as a automobile. in $250,000 liability damages; Tabor’s estate paid however, apparently were worth a damages Tabor’s losses and result, father, more. who was the great deal As a Tabor’s estate, sought of administrator Tabor’s $300,000 amount stackable underinsurance ben- upon based $100,000 each three automo- efits of available on of the Tabors’ Insurance, insurer, attempted biles. North River The Tabors’ gap provision the Tabors’ similar enforce $300,000 in thereby offsetting instantly, one issue $250,000 to Ta- already paid underinsurance benefits offset, In the Third refusing bor’s estate. allow such opined: Circuit in the set-off expose, provision, facts of case anti-stacking has been condemned in
type unfairness that Tabors, set-off, while provisions. having Due to the $300,000 motorist purchased worth underinsured cover- to only told estate is entitled age, are now that Tabor’s $50,000 affairs, believe, This state of we would coverage. and to its repugnant Legislature be In Supreme Court as well. sum we believe that the Penn- not countenance sylvania Supreme policy provi- Court would would, situation, sions that allow underinsured cover- any age partial recovery to be obviated because of a received from the negligent underinsured.
Id. at 466.8
In its to refute the line of attempt holdings long cases supra, appellant argues they longer cited are no controlling Pennsylvania’s public policy changed because *19 (PDI 26-27.) 1990 when the MVFRL was amended. brief at appellant, § to when the According Legislature amended 1731 of the to allow out of purchasers opt MVFRL insurance to of underinsurance Legislature also amended the public policy behind the MVFRL. do not agree. We 1731(a) MVFRL, 1990, to prior provided:
Section liability policy General rule. —No motor vehicle insurance shall in delivery be delivered or issued for this Common- wealth, any with to motor vehicle or respect registered Commonwealth, principally garaged in this uninsured unless are, motorist and underinsured motorist coverages provided supplemental therein or thereto in amounts to the equal in bodily injury liability coverage except provided as section (relating to for lower or request higher limits coverage). added). 1731(a), §
75 Pa.C.S.A. repealed (emphasis 1731(a) provides: The amended gap 8. While several of the cited federal court refer cases to underinsur- 622, provisions "illusory,” Schemberg, supra ance in contracts as see at Ober, recognize opted we that some states have to allow provisions upon policy allowing injured such based insured only provided public. appel- those benefits he or she has for the See 30-31; lant's brief at PDI amicus brief at We 19-20. need not decide whether, gap in those instances under insurance in which the underin- instead, pays nothing, provisions illusory; sured insurer such are we only Pennsylvania Legislature decide that the manifested its intent that provide by defining insurers "excess” insurance underinsurance in Pennsylvania public "excess” terms. Such a clear manifestation of analysis. ends our Mandatory offering. liability motor vehicle —No in delivery for this or issued shall be delivered Commonwealth, regis- motor vehicle respect any with to Commonwealth, unless garaged principally tered or this coverages motorist and underinsured motorist uninsured as thereto amounts supplemental or are therein offered limits lower (relating request in section 1734 to provided under- motorist and Purchase uninsured coverage). coverages optional. insured motorist 1731(a), 7, 1990, P.L. No. 6 Feb. 75 Pa.C.S.A. added). 1,1990 July (emphasis effective changed underinsur to the MVFRL thus The revisions mandatory ft-om a ance words, In other insurers after 1990 mandatory offering. insureds; they not have must underinsurance their do offer fail We to see how provide underinsurance. nevertheless insurer. change way obligation affects the any solely rests option to waive underinsurance insured, premiums by waiving reduce his or her may who noted, As coverage.9 already any waiver knowing still underinsurance benefits must be reduction intelligent, -with a default to full where statutory compliance insurer cannot with the relevant show Furthermore, noteworthy, and most provisions. *20 definition of underin nothing change amendments did the Pennsyl It thus to see how surance under 1702. difficult changed has with the 1990 amendments public policy vania’s the MVFRL. in Tabor is argues holding that the Third
Appellant Circuit’s the in good law because accident Tabor occurred longer no however, note, in We the MVFRL was amended 1990. before 1731, that observing Tabor cited the that the court amended must include insurance issued in “every rejected coverage’ unless it is ‘underinsured motorist added). Tabor, Tabor at 464 The (emphasis insured.” amendments, prior to an insured 9. Even under the MVFRL the 1990 opt higher than mandated for lower or underinsured limits those could Act, scope coverage. affecting thereby that, MVFRL, court noted “Under the insurers must also offer coverage.” (emphasis underinsured motorist Id. at 465 added). the Tabor original It would thus seem fully behind the MVFRL analysis public policy court’s considered the 1990 amendments. for our view that the support public policy
We find further change victims of accidents did not with the indemnifying Widiss, 1990 amendments in supra: state, In every general public providing there is a interest injured in indemnification to individuals who have been As Minnesota Supreme motor vehicle accidents. Court observed, though requirement even for underinsured motorist insurance was eliminated [in Minnesota] which clarified the to be legislative meaning amendment prior legislative requirement accorded to the for underin- continues to appropri- sured motorist manifest so that an public policy providing ate interest insurance be to make the avail- interpreted should damages able whenever an insured’s exceed the amount of liability an insured driver’s insurance.
Widiss, Clothier, supra, citing 35.4 at Schmidt v. (Minn.S.Ct.1983).10 N.W.2d 256 Finally, appellant’s argument alleged we address that the public policy change in 1990 favored reduction costs over noted, coverage. already just recently full As this court has reiterated the intent behind the MVFRL in legislative Emig, The court found that intent still to “the supra. Emig be Id. at greatest possible coverage.” 664 A.2d 566. 1990 amendments facilitate that drivers goal by allowing those out, who opt cannot afford underinsurance or uninsurance to purchasing liability only. nothing We find amendments, however, history the 1990 indicates a intent legislative change nature of the insurance purchase. insured elects to repealed mandatory notes that even after Widiss Minnesota its *21 statute, offering interpret courts continued to underinsurance as ''ex Widiss, § supra, cess” insurance. See 35.4 165-66 n. however, that the appellant,
Even if we were to agree we savings, main focus of the amended MVFRL is on cost Appellant would still affirm the trial court. admits that public policy precluded “gap” behind the MVFRL before (PDI at 28 coverage Pennsylvania. brief (the § “clearly legisla- 1990 Amendment to shows the ture’s intent to return underinsured motorist back to coverage allowed.”).) pre-1984 days ‘gap’ coverage its when was De- admission, however, no spite appel- we find evidence lant’s brief or the record that its insureds realized a cost savings when the 1990 amendments were enacted because was appellant finally allegedly able to offer them the less expensive if “gap” Surely, underinsurance. such evidence existed, appellant would have it. provided find Legislature
We further evidence that the envisioned no such cost reduction 1990 the of the amendments amendments, part themselves. As of the 1990 the Legislature enacted 1799.7 of the required MVFRL. Section 1799.7 all 1, 1990, filing by May insurers to make a rate that reflected savings generated by the cost the amendments. Included among these cost were from rate savings savings resulting reductions to those insureds who elected the limited tort option, and savings resulting coverage from reductions for those insureds who elected to reduce or eliminate either first party benefits or underinsured or uninsured motorist cover age required prior to the effective date of the 1990 amend 1799.7(b) (h). ments. 75 if Clearly, Pa.C.S.A. and Legislature had a rate intended reduction because underinsur ance had become as a “gap” insurance result of the 1990 amendments, it would have included such a rate reduction in 1799.7(b).
A few observations about inway premiums which are determined further illustrate the weakness of cost appellant’s savings argument. Appellant argues that it is for improper $35,000 appellee to receive underinsured motorist $5, $35,000 pays for while he for of uninsured motorist $21 liability on one (Appel car. $85 26.) however, lant’s brief at Appellant, overlooks the fact that excess, underinsurance coverage always secondary, cov- *22 390 nature; and
erage very pays nothing its the insurer unless exhausted, if only and then until the tortfeasor’s is To it put tortfeasor’s insurance limits. damages exceed the it a coverage always carries with way, another required by the of coverage “deductible” of least amount In the Pennsylvania, law. responsibility state’s financial ability to responsibility” “financial as “[t]he MVFRL defines arising in for account of accidents respond damages liability on use motor in the amount out of the maintenance or of a vehicle acci- $15,000 injury person any to one one because of dent____” result, § As a the underin- 75 1702. Pa.C.S.A. nothing unless and until the tortfeasor’s pays sured insurer $15,000. has paid, minimally, or the tortfeasor insurer for its appropriate premium In order determine underinsurance, then, an insurer will submit to Commis- rate the risk of sioner of Insurance11 a that reflects both $15,000, of insured percentage in excess of and damages 12 As likely are to be “underinsured.” noted drivers who Couch, supra: to a requisite essential contract primary
The undertaking is of a risk loss and the assumption loss. indemnify against the insured such that a number of risks are characteristic of insurance It is losses, which will involve and that such some of accepted, Pennsylvania, many jurisdictions, 11. other the Insurance Com In as Casualty Surety approve changes. rate See and missioner must all 1181-1199, 11, 538, Act, 1947, Regulatory Rate 40 P.S. June P.L. 2001-2009, §§ repealed as with 75 Pa.C.S.A. insofar it is inconsistent 7, 11, 1990, provides 6. 1197 Act Feb. P.L. No. Section Section 31 of hearing judicial only after for review rates set the Commissioner review, On not substitute its before the Commissioner. court will Commissioner, judgment but for that of the will view evidence light party in whose favor the Insurance most favorable found, every giving has to it the benefit of inference Commissioner logically reasonably drawn Insurance which can be therefrom. Johnson, 138, (1967), Dept. affirmed, Pa.Super. Dauph. 87 31 238 v. 211 denied, (1968), (1967), affirmed, Pa. 248 A.2d cert. A.2d 23 432 308 (1969). 781 394 U.S. S.Ct. L.Ed.2d Legislature, being was debated 12. At the time MVFRL report example, a PennDOT indicated verified uninsured "[t]he Ronca, any given percent 4.4 date.” See rate in on supra, Appendix D:3 at all to enable the spread losses are over the risk so as accept slight possible insurer to each risk at a fraction of the liability upon it.
Couch, record before us is supra, 1:3 at 7. Because the that a is inconsistent with premium devoid evidence $5 underinsurance, and the 1990 amendments do excess because intended to support appellant’s argument they were underinsurance, gap transform excess underinsurance into we cost appellant’s savings argument. find no merit to reasons, clearly For all of we find that foregoing *23 on the issue of expresses policy the of this Commonwealth Neither the insurer nor this “gap” coverage. “excess” versus nuga- enactment power statutory court has the to render this tory. denying we affirm the order of the trial court
Accordingly, award. appellant’s petition modify to or correct the arbitration relinquished. Jurisdiction is
POPOVICH, dissenting opinion joined by J. files a CHULLO, TAMILIA, JJ.
ROWLEY, in the Judge, participate President did con- sideration or decision of this case.
POPOVICH, Judge, dissenting.
I join Majority’s cannot the determination to affirm the refusing modify trial court’s order to an arbitration award against Donegal Mutual Insurance Co. in the amount of $15,000.
The facts are not in dispute: by Michael Allwein was killed Lauver, $15,000/$30, a vehicle driven Jeremiah who carried Also, liability coverage. automobile Michael was parents’ policy Donegal, insured under his with which stacking allowed for of underinsured motorist total- $105,000 ling on their All parties agreed three vehicles. $15,000 the experienced by liability loss Allwein exceeded the $105,000 party limits of the at fault and the motorist limits of of liability Donegal. the its contained an “offset”
Donegal’s was that position $105,000 the it to discount the allowed provision which for the accident. $15,000 person legally responsible the paid by to submit agreed Both sides Allwein contention. disputed arbitration, issue to whether restricting matter the the to public policy violated as embodied Donegal’s provision “offset” (MVFRL). Law Responsibility in the Motor Financial Vehicle et The board ruled seq. 75 Pa.C.S.A. arbitration $15,000 Donegal pay and ordered favor Allwein affirmed the on offset. trial court claimed When award, leading was to en banc perfected an appeal arbitrators’ review. forthright: Is Done for review is rather posed issue as embodied public policy violative
gal’s “offset” not, it premised upon I find is conclusion the MVFRL? regulating the insurance scrutiny statutory provisions (emblematic industry Legislative scope intent as . law insurance field coverage) interpreting and case . with, version predecessor present To start 1731(a) it issued mandatory every policy made Section must include “underinsured” this Commonwealth insured; rejected by it to-wit: unless was *24 (a) No liability poli- rule. motor vehicle ..General for in delivery shall or issued this Common- cy be delivered wealth, or respect any registered to motor vehicle with Commonwealth, in this unless uninsured principally garaged coverage provided motorist underinsured motorist are and thereto in to supplemental' equal therein or amounts liability as section bodily injury coverage except provided higher limits of 1734 to lower or (relating request coverage). [Emphasis added] 1731(a). 1984, 26, 11, 12, 3, No. 75 Pa.C.S.A. Act of Feb. P.L. in 1990 allow for the “optional” This was amended to in a and coverage inclusion- of “underinsured” “uninsured” jurisdiction; namely: issued in this (a) liability motor vehicle insur- Mandatory offering.—No or in this delivery ance shall be issued for delivered
393 Commonwealth, regis- vehicle any to motor respect with Commonwealth, unless in this principally garaged tered or coverage are and underinsured motorist uninsured motorist pro- in amounts as thereto supplemental therein offered limits of for lower (relating request vided section 1734 coverage uninsured motorist coverage). Purchase of optional. [Emphasis is motorist underinsured added] 1731(a). 6, 7, 1990, 11, 9,§ Feb. P.L. No. 75 Pa.C.S.A.
Act of 1731(a) from a statutory change I find that the Section of mandatory optional coverage uninsured/underinsured be as de minimus a factor which should not dismissed Rather, of statute. it assessing public policy strengths of Legislature’s position reflects the intention to relax its exception limited inclusion uninsured/underinsured prior to the 1990 to the MVFRL. amendment interest,
Additionally,
provisions
is the fact that “offset”
See,
policies
upheld
e.g.,
underinsured
have been
as valid.
519,
Group,
Pa.Super.
Kovaleski v. Erie Insurance
398
581
585,
(1990);
A.2d
591
v. Fireman’s Insurance Co.
Sparler
Newark,
597,
433,
(1987);
438-39
Pa.Super.
521 A.2d
v.
Corp.,
Votedian General Accident Fire &
Assurance
Life
(1984).
1324,
Further,
Pa.Super.
478 A.2d
our
Co.,
Supreme Court in Hall v. Amica Mutual Insurance
(1994)
Pa.
Although purpose uninsured motorists serves the irresponsible innocent from uninsured protecting victims motorists, of a purpose public does rise the level policy overriding every statutory other consideration construction. Also, in discussing
The “offset” v. American Blind Co. Venetian by Donegal. Standard policy (1983). Co., A.2d Pa. Insurance Empire to increase his Thus, “option” Allwein had uninsured/un- under the liability coverage equal his derinsured Yet, it would injury. an unforeseen to accommodate policy coverage is minimize premiums, haste to 'one’s appear an in- not reward We should for cost reduction. sacrificed $35,000 underinsured “cap” sured who chose him “excess” (with awarding premium payment) a $5 instead of the he could have secured coverage which insurance indemnification. “offset” version of has indicated the Legislature not do what This Court should history of bar, legislative my reading At otherwise. it, has deviat- Majority interpreting case law MVFRL and allow for “offset” of the law to clear intent ed from the as a talisman- “public policy” The use of provisions. Donegal’s validity phrase to tarnish ic “catch all” contrac- express since the misses the mark “offset” fashion, not, contrary to in the clearest terms are tual Hall, According- supra. policy. See jure public de or de facto Donegal’s decision to assail Majority’s in the join I cannot ly, between the agreement contractual limiting coverage by supra. parties. Sparler,
I dissent. respectfully TAMILIA, JJ., dissenting in this joined have
CIRILLO and opinion.