Smith, R. v. Erie Insurance Exchange

Opinion

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P. 65.37

ROBIN W. SMITH AND DONA SMITH, : IN THE SUPERIOR COURT OF HIS WIFE : PENNSYLVANIA :

Appellants :

:

:

v. :

:

: No. 1127 WDA 2025

ERIE INSURANCE EXCHANGE :

Appeal from the Order Entered August 15, 2025 In the Court of Common Pleas of Westmoreland County Civil Division at No(s): 4581 of 2024

BEFORE: McLAUGHLIN, J., KING, J., and BENDER, P.J.E. MEMORANDUM BY McLAUGHLIN, J.: FILED: SEPTEMBER 3, 2026 Robin W. Smith and Dona Smith, his wife, (collectively, “Appellants”)

appeal from the trial court’s order sustaining Erie Insurance Exchange’s (“Erie”) preliminary objection in the nature of a demurrer and dismissing Appellants’ complaint. Appellants challenge the denial of underinsured motorist (“UIM”) coverage through application of the regular use exclusion contained in Appellants’ personal automobile insurance policy. We affirm.

The trial court accurately summarized the facts as follows:

On December 19, 2024, [Appellants] filed a Complaint against [Erie] raising an Underinsured Motorist Claim for a motor vehicle accident that occurred on February 13, 2018 on Route 56 in Center Township, Indiana County. [Mr.] Smith was operating a 2000 Freightliner triaxle dump truck in the course and scope of his employment when he was involved in an accident with a vehicle driven by Lisa Cooper. [Mr.] Smith alleged that he sustained personal injuries in the accident. In his claim against Ms. Cooper’s liability carrier, [Mr. Smith] received the liability limit

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of $100,000. [Mr. Smith] also received $35,000 in his claim against the underinsured motorist policy insuring the truck he was occupying at the time of the collision [(“Employer’s Policy”)].

However, [Appellants] allege that damages were sustained in excess of those amounts, resulting in underinsured motorist benefits. As a result, [Appellants] submitted a UIM claim to [Erie]

pursuant to a policy purchased by the [Appellants] covering their family vehicles [(“Erie Policy”)]. [Erie] denied the claim based on the [r]egular [u]se [e]xclusion contained in the [Erie Policy].

[Appellants] then initiated the within action, claiming that they are entitled to relief because they purchased underinsured motorist coverage in accordance with the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL) in the amount of $25,000 per person, with stacking, for the three vehicles included in the coverage provided by the policy, and pursuant to 75 Pa.C.S.A. § 1738.

On January 10, 2025, [Erie] filed preliminary objections to [Appellants’] Complaint in the nature of a demurrer. [Erie] argued that no recovery is possible on [Appellants’] claim because of the application of the [r]egular [u]se e]xclusion in [Appellants’ Erie Policy]. That provision states:

“UIM coverage does not apply to: Bodily injury to ‘you’ or a ‘resident’ using a non-owned ‘motor vehicle’ or a ‘non-

owned’ miscellaneous vehicle which is regularly used by ‘you’ or a ‘resident’ but not insured for Uninsured or Underinsured Motorists Coverage under this policy.”

Neither party denies that the vehicle driven at the time of the accident was owned by [Mr. Smith’s] employer, and neither party denies that the dump truck falls within the definition of motor vehicle in the policy. Therefore, the only issue before this [c]ourt when ruling on [Erie’s] preliminary objection, was whether the [r]egular [u]se [e]xclusion in the [Erie Policy] was enforceable against [Appellants].

Trial Court Opinion, filed 11/7/25, 1-2.

On August 15, 2025, the trial court sustained Erie’s objection and dismissed Appellants’ Complaint with prejudice. This appeal followed.

Appellants raise the following issue:

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Whether the preliminary objections of Erie Insurance Exchange were improperly granted by the trial court when the regular use exclusion is invalid because it excludes underinsured motorist coverage and stacked underinsured motorist coverage without a knowing signed waiver thereof in violation of the express terms of Section 1738 of the [MVFRL]?

Appellants’ Br. at 6.

Appellants argue that the regular use exclusion violates Section 1738 of the MVFRL. Id. at 16. They point out that they paid additional premiums for UIM coverage to obtain “stacked” UIM coverage, and they did not waive UIM coverage. Id. at 10. Appellants argue that Section 1738 of the MVFRL “provides that insureds are entitled to the sum of the limits for each motor vehicle - entitling Appellants to ‘stack’ UIM coverage.” Id. They contend that Erie’s regular use exclusion “is an attempt by the insurance industry to circumvent clear statutory language through contrary policy provisions” and “allows Erie to exclude UIM coverage through a disguised waiver of stacked UIM coverage.” Id. at 10, 15. Appellants conclude that since they have not been fully compensated for their losses, Erie is obligated to pay them the full extent of the UIM coverage listed on their policy of $75,000. Id. at 10.

Our standard of review from an order sustaining a preliminary objection in the nature of a demurrer is as follows:

[O]ur standard of review of an order of the trial court overruling or granting preliminary objections is to determine whether the trial court committed an error of law. When considering the appropriateness of a ruling on preliminary objections, the appellate court must apply the same standard as the trial court.

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Preliminary objections in the nature of a demurrer test the legal sufficiency of the complaint. When considering preliminary objections, all material facts set forth in the challenged pleadings are admitted as true, as well as all inferences reasonably deducible therefrom. Preliminary objections which seek the dismissal of a cause of action should be sustained only in cases in which it is clear and free from doubt that the pleader will be unable to prove facts legally sufficient to establish the right to relief.

Estate of Denmark ex rel. Hurst v. Williams, 117 A.3d 300, 305 (Pa.Super. 2015) (citation omitted).

The MVFRL “is comprehensive legislation governing the rights and obligations of the insurance company and the insured under liability insurance policies covering motor vehicles.” Jones v. Erie Ins. Exch., 318 A.3d 960, 961 n.1 (Pa.Super. 2024) (citation omitted). The “provisions of the MVFRL pertaining to the required scope of coverage and content of automobile insurance policies, and benefits payable thereunder, impose mandatory obligations applicable to all automobile insurance providers” in Pennsylvania. Id. (citation omitted).

“When insurance policy provisions conflict with the MVFRL, the policy provisions are invalid and unenforceable.” Erie Ins. Exch. v. Baluch, 330 A.3d 825, 828 (Pa.Super. 2025). “UIM coverage is a key part of the MVFRL.” Id. “UIM coverage serves to promote the recovery of damages for innocent victims of accidents with . . . underinsured drivers.” Id. (citation omitted). Under the MVFRL, an “underinsured motor vehicle” is “[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.A. § 1702.

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Related to UIM coverage is the concept of stacking. Baluch, 330 A.3d at 828. “The concept of stacking relates to the ability to add coverages from other vehicles and/or different policies to provide a greater amount of coverage available under any one vehicle or policy.” Everhart v. PMA Ins. Grp., 938 A.2d 301, 302 (Pa. 2007). Section 1738 of the MVFRL provides, in relevant part:

§ 1738. Stacking of uninsured and underinsured benefits and option to waive

(a) Limit for each vehicle.--When more than one vehicle is insured under one or more policies providing uninsured or underinsured motorist coverage, the stated limit for uninsured or underinsured coverage shall apply separately to each vehicle so insured. The limits of coverages available under this subchapter for an insured shall be the sum of the limits for each motor vehicle as to which the injured person is an insured.

75 Pa.C.S.A. § 1738(a).

Appellants’ policy with Erie contained a regular use exclusion. A regular use exclusion “removes from an insured’s UM/UIM coverage accidents occurring while the insured occupies a vehicle that the insured has regular access to and/or use of but which is not covered under insured’s policy.” Erie Ins. Exch. v. Russo, 343 A.3d 291, 293 n.1 (Pa.Super. 2025).

Erie argues that the regular use exclusion precludes Appellants from recovering UIM benefits under the Erie Policy. Erie points out that Appellants do not challenge the regularity of use and access to the employer’s vehicles or the fact that the regular use exclusion actually applies to the instant factual circumstances, but rather claim that the regular use exclusion, as a whole,

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violates the UIM inter-policy stacking requirements under Section 1738 of the MVFRL. Erie’s Br. at 4. Erie further points out that Appellants did not plead or claim to be an “insured” under the Employer’s Policy as defined by the MVFRL. Id. at 5. Erie argues that prior court decisions have rejected Appellants’ exact claim. We agree.

In Rush v. Erie Ins. Exch., 308 A.3d 780, 802 (Pa. 2024), our Supreme Court reviewed its prior holdings in Burstein v. Prudential Prop. & Cas. Ins. Co., 809 A.2d 204 (Pa. 2002), and Williams v. GEICO Gov’t Emps. Ins. Co., 32 A.3d 1195 (Pa. 2011), and held that the regular use exclusion does not violate the MVFRL. Thus, the trial court here committed no error in concluding that the regular use exclusion was valid and consistent with the MVFRL.

More recently, this Court rejected an identical challenge to the regular use exception under Section 1738 involving stacking in Erie Ins. Exch. v. Russo. There, the claimant was involved in an accident while occupying his employer’s vehicle in his course and scope of employment. Russo, 343 A.3d at 293. The claimant received the maximum UIM benefits from his employer’s policy insuring the work vehicle. Id. Because of the seriousness of his injuries, the claimant sought additional UIM benefits from his own personal automobile insurance policy issued by Erie Insurance Exchange that contained a regular use exclusion. Id. The regular use exclusion contained the same language as the one in the instant case. Id. Also, as in the present case, the claimant paid for stacked UIM benefits on his personal policy. Id. at 294. The claimant was

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not listed on his employer’s policy as a named insured, nor was the employer’s vehicle listed on claimant’s personal policy. Id. at 293-94. The trial court granted Erie Insurance Exchange’s motion for judgment on the pleadings and found that there was no UIM coverage available to the claimant on his personal auto policy under Erie Insurance Exchange in connection with the motor vehicle accident. Id. at 294. The claimant appealed.

This Court affirmed the order granting Erie Insurance Exchange’s motion for judgment on the pleadings. We stated that it was critical to determine whether the claimant was an insured under his employer’s policy because “under the MVFRL, only one who is an insured under both policies implicated in a stacking situation may engage in inter-policy stacking of UM/UIM insurance.” Id. at 297. We reasoned that “if [the claimant] was not an insured under his employer’s [] policy, then he is ineligible for inter-policy stacking under Section 1738,” which “would render moot the dependent question of whether the regular use exclusion in his personal auto policy under Erie [Insurance Exchange] worked an unlawful, de-facto waiver of a Section 1738 right to stack in this case.” Id.

We found that the claimant was not an insured under his employer’s policy for purposes of Section 1738. Id. at 298. We observed that the employer’s policy did not designate the claimant, or any class of persons, such as “employees,” to which the claimant would possibly belong, as an insured of the policy. Id. at 297 n.6. We stated, “Simply receiving UIM coverage for injuries sustained as an occupant in a first priority vehicle does not make one

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‘an insured’ under the vehicle’s policy who is then entitled to stack one’s personal auto policy UIM coverage.” Id. at 298. Accordingly, we found that the claimant was not entitled to stack his Erie Insurance Exchange UIM coverage atop his employer’s UIM coverage he received. Id.

Here, like the claimant in Russo, Appellants were not named insureds on Employer’s Policy, nor do they claim to be. Therefore, they were not entitled to stack their Erie Policy coverage with their Employer’s Policy coverage. The regular use exception was thus applicable, and Appellants were properly denied coverage from Erie.

Order affirmed.

DATE: 9/3/2026