In Crook v. Erie Insurance Exchange, No. 2014-00867-TT (C.P. Chester Co. June 14, 2024 Binder, J.), the Court recently overruled various Preliminary Objections filed by an insurance company. The case is of import in the unsettled “Post-Koken” landscape where courts, not arbitrators decide Uninsured Motorist (“UM”) and Underinsured Motorist (“UIM”) issues.
Plaintiffs Dennis Crook and Frangipani Martin were injured in an automobile accident. Plaintiff Crook was driving his vehicle with Plaintiff Martin as a passenger. Mr. Crook's vehicle was struck by a vehicle driven by Defendant Hall. It was averred that Ms. Hall and her vehicle were uninsured. Mr. Crook and his wife, Plaintiff Siti Crook, are covered by an insurance policy written by an insurance company. Plaintiff Frangipani Martin is covered by an insurance policy written by a second insurance company. The Amended Complaint alleged counts against both insurance companies for failure to pay the UM benefits stated in the respective policies.
Defendant Westfield argued that the claim against the second level UIM carrier was premature given that it was not clear as to whether or not Plaintiff Martin’s alleged damages would be fully covered by the first level of UM coverage because Plaintiff Martin’s damages had not been determined at this point.
75 Pa.C.S. § 1733 states [w]here multiple policies apply, payment shall be made in the following order of priority: (1) A policy covering a motor vehicle occupied by the injured person at the time of the accident. (2) A policy covering a motor vehicle not involved in the accident with respect to which the injured person is an insured.
As Plaintiff Crook's policy (the Erie policy) covered the vehicle occupied by Plaintiff Martin at the time of the incident, Defendant argued that Erie was responsible for the "first layer of coverage." Defendant further asserted: "Here there is no indication that Plaintiffs' damages exceed the coverage provided by Erie." The Erie policy has first priority and Defendant Westfield's policy has second priority for Plaintiff Martin.
Defendant Westfield reasoned that it was not clear if the Plaintiff’s passengers alleged damages would be fully covered by the first level of UM coverage. The Court stressed, as Plaintiff’s Passenger's damages have not been determined at this point, it is premature to state that second level UIM carrier defendant will have no liability. The case cited by the second level UIM carrier, Nationwide Ins. Co. v. Schneider, 599 Pa. 131, 960 A.2d 442 (Pa. 2008), holds that, no exhaustion of the first priority insurance policy is required to pursue a claim but, as the second level UIM carrier argued, a credit for limits must be given to the secondary provider.
The Common Pleas Court of Chester County emphasized that, while the second level of UM carrier was entitled to a credit for the policy limits under the first level UIM coverage, the Plaintiff’s passengers were not required to exhaust the first level of UM coverage before pursuing the secondary coverage available from the second level UM carrier.