Generette v. Donegal Mut. Ins. Co.

Generette v. Donegal Mut. Ins. Co.

Opinion

 [*508]   [**1182]  MR. JUSTICE BAER

In this case, we consider the interaction between 75 Pa.C.S. § 1733, ¹ governing the priority of recovery of uninsured or underinsured motorist insurance under the Motor Vehicle Financial Responsibility Law ("MVFRL"), and the MVFRL's provision for the waiver of stacking of underinsured motorist coverage, 75 Pa.C.S. § 1738. ² We hold that the Superior Court erred in concluding that the MVFRL provision relating to stacking and waiver applied to the Appellant, who was not an "insured" as defined by the MVFRL. Additionally, we hold that a portion of the "Other Insurance" clause in the Appellant's policy with Donegal Mutual Insurance Company ("Donegal") is  [***2] non-enforceable because it conflicts with the public policy of the MVFRL to provide "excess" rather than "gap" underinsured motorist coverage. For the following reasons, we reverse the grant of summary judgment to Donegal and remand to the trial court for further proceedings.

On April 29, 1997, Josephine Generette ("Appellant") suffered injuries while riding as a guest passenger in a motor vehicle that collided with a third-party tortfeasor's vehicle. Appellant recovered $ 25,000 under the third-party tortfeasor's liability insurance policy. As her injuries exceeded the liability coverage provided by the tortfeasor, Appellant also recovered $ 50,000 from Nationwide Insurance Company, which provided underinsured motorist ("UIM") coverage for the car in which she was a guest passenger, hereinafter "Nationwide-UIM."  [*509]  Appellant sought coverage for her remaining claims under her own policy with Donegal for underinsured motorist coverage, hereinafter "Donegal-UIM." ³ As relevant to the issues at bar, Appellant contracted for $ 35,000 of UIM coverage on the single vehicle insured through her Donegal-UIM policy and  [**1183]  waived her ability to "stack" her  [***3] coverage, as discussed in detail below. The parties stipulate that Appellant received premium reductions for each of the relevant renewal periods due to her waiver of stacking and her choice to reduce her UIM coverage from $ 100,000 to $ 35,000.

Donegal denied coverage for the April 1997 accident based on a provision in the policy entitled "Other Insurance." ⁴ The  [*510]  "Other Insurance" clause was included in her policy to implement the waiver of stacked UIM benefits. It limited recovery of UIM coverage under the Donegal-UIM policy to the amount by which the Donegal-UIM policy's coverage limit exceeded the coverage of the UIM policy at the first priority level. Accordingly, Donegal denied coverage claiming that her $ 35,000 coverage limit on her Donegal-UIM policy did not exceed the $ 50,000 of coverage provided by the Nationwide-UIM policy, the first priority policy.

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