Supreme Court to Look Again at GEICO v. Ayers

Gallagher v. GEICO Indemnity, No. 87 WAL 2018 (Pa. Aug. 8 2017) granted an appeal to address  the household exclusion and stacking when multiple policies, including a motorcycle policy, are issued by the same insurance company.

Specifically the Court agreed to address the following issues as stated by the Petitioner:

(1) Whether the “household vehicle exclusion” violates Section 1738 of the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL) where GEICO issued all household policies and unilaterally decided to issue two separate policies, when the insured desired stacking, elected stacking, paid additional premiums for stacking and never knowingly waived stacking of underinsured motorist benefits?


(2) Whether the “household vehicle exclusion” impermissibly narrows or conflicts with the statutory mandates of the Pennsylvania Motor Vehicle Financial Responsibility Law and the evidence of record is that GEICO was fully aware of the risks of insuring a motorcycle in the same household as other family vehicles but unilaterally decided to write a separate motorcycle policy?


In the underlying case, the Superior Court affirmed a trial court order granting Defendant GEICO Indemnity’s Motion for Summary Judgment holding that the Plaintiff was not entitled to underinsured motorist benefits according to the household exclusion in his automobile insurance policy when Plaintiff was involved in an accident on a motorcycle and sought benefits under his automobile policy.

The household exclusion is designed to preclude the payment of UM/UIM benefits to a claimant injured while occupying a motor vehicle owned by someone in the claimant’s household, but not insured for UM/UIM coverage under the policy from which he seeks benefits. In the instant case, Plaintiff paid for stacked coverage on two GEICO policies, one policy for his motorcycle and one policy for two motor vehicles. GEICO decided to write two policies.  GEICO denied coverage when Plaintiff was involved in a motor vehicle accident with his motorcycle and sought underinsured motorist benefits under his automobile insurance policy. Plaintiff argued that the household exclusion is a de facto waiver of stacking between his motorcycle and automobile policies.

In affirming the trial court’s ruling, the Superior Court relied on Gov’t Emps. Ins. Co. v. Ayers, 18 A.3d 1093 (Pa. 2011) and Erie Insurance Exchange v. Baker, 972 A.2d 507 (Pa. 2009).  The Court noted that the instant case had almost identical facts as Ayers, in which Plaintiff sought benefits from a policy which insured two trucks when he was involved in a motorcycle accident. The Ayers Court relied on the plain language of the insurance contract in upholding the household exclusion. Similarly, the policy language in Baker is almost identical to the policy language in the case at bar.  However, the Court noted that the Justices  were split evenly regarding the issue of inter-policy stacking in Ayers, that Baker did not produce a majority, and that the Supreme Court should address the issue further.

Jennifer L. LeVan

Office: Bethlehem
Phone: (610) 954-6873
Practice Areas: Commercial Litigation, First Party PIP / MPC, Fraud / SIU, General Liability, Premises Liability, Third Party, UM/UIM