Court Opinion

ID: 9748337
Source: CourtListenerOpinion
Date Created: 2023-08-27 16:00:19.574549+00
Date Added: 2024-06-11T07:25:34.546075
License: Public Domain

OPINION

Chief Justice ZAPPALA.
This matter comes before this Court on a Petition for Certification of Questions of Law from the United States Court of Appeals for the Third Circuit.1 We granted the Petition, which certifies two distinct questions for our review: (1) whether the definition of “insured” in the automobile *85insurance policy of Prudential Property and Casualty Insurance Company impermissibly narrows and conflicts with the statutory definition of “insured” as contained in Section 1702 of Pennsylvania’s Motor Vehicle Financial Responsibility Law (MVFRL), 75 Pa.C.S. §§ 1701-1799.7; and (2) whether the “other household vehicle” exclusion contained in the Prudential policy is void as against the public policy of the MVFRL.
On August 26, 1996, Adam Colbert was involved in an automobile accident while driving his car, which he had insured with both uninsured (UM) and underinsured (UIM) motorist coverage under a policy with State Farm Insurance Company. At the time of the accident, Adam resided with his parents, Gary and Christine Colbert, who owned three automobiles, all of which were insured with both UM and UIM coverage under a single policy with Prudential. The Prudential policy did not cover Adam’s vehicle in any respect; indeed, as discussed infra, it was expressly excluded from coverage.
Adam Colbert ultimately settled his claim against the driver who caused the accident and received the maximum amount under the tortfeasor’s liability coverage. In addition, Adam recovered the maximum amount of UIM coverage recoverable under his policy with State Farm. Adam then made another claim for additional UIM benefits under his parents’ policy with Prudential. Prudential denied coverage on two separate grounds: (1) Adam was not an “insured” under the Prudential policy; and (2) the Prudential policy, in its “other household vehicle” exclusion, expressly excluded coverage of a named insured or household resident for accidents occurring while the insured or household resident was using another owned vehicle not insured under the Prudential policy.
Prudential filed a declaratory judgment action against Adam and his parents in the United States District Court for the Western District of Pennsylvania. The parties filed cross-motions for summary judgment. On October 12, 1998, the district court granted Prudential’s motion and denied the Colberts’ motion, finding that Adam was not an “insured” under the terms of the Prudential policy and that Adam was excluded from coverage by the “other household vehicle” *86exclusion. See R. 6a-18a. The Colberts appealed to the United States Court of Appeals for the Third Circuit, which certified the above-referenced questions of Pennsylvania law to this Court.
The first question certified for our review is whether the definition of “insured” in Prudential’s automobile insurance policy with Gary and Christine Colbert impermissibly narrows and conflicts with the statutory definition of “insured” as set forth in the MVFRL. Section 1702 of the MVFRL defines an “insured” as:
“Insured.” Any of the following:
(1) An individual identified by name as an insured in a policy of motor vehicle liability insurance.
(2) If residing in the household of the named insured:
(i) a spouse or other relative of the named insured; or
(ii) a minor in the custody of either the named insured or relative of the named insured.
75 Pa.C.S. § 1702. Adam Colbert was not a named insured on the Prudential policy. Nonetheless, it is undisputed that he falls within the second, more broad definition of insured: he resided in the household of his parents, the named insureds, at the time of the accident.
Adam Colbert does not, however, satisfy Prudential’s narrower definition of “insured,” which requires that resident relatives be driving an automobile insured under the Prudential policy at the time of the accident:
WHO IS INSURED
IN YOUR CAR (INCLUDES A SUBSTITUTE CAR)
You and a resident relative are insured while using your car or a substitute car covered under this part.
Other people are insured while using your car or a substitute car covered under this part if you give them permission to use it. They must use the car in the way you intended.
R. 127a (emphasis omitted). Thus, Adam Colbert could only qualify as an insured under the Prudential policy if he was driving a car covered by the Prudential policy, or a substitute *87car. Adam, however, was driving his car, which was not covered by the Prudential policy and did not qualify as a substitute car.2 Thus, under the terms of the Prudential policy, Adam was not an “insured” during the accident.
Generally, courts must give plain meaning to a clear and unambiguous contract provision unless to do so would be contrary to a clearly expressed public policy. Eichelman v. Nationwide Ins. Co., 551 Pa. 558, 711 A.2d 1006, 1008 (1998) (citing Antanovich v. Allstate Ins. Co., 507 Pa. 68, 488 A.2d 571, 575 (1985)). The plain language of the definition of “insured” within the Prudential policy clearly and unambiguously disqualifies Adam Colbert as an “insured,” as he was driving his car during the accident. The Colberts, however, argue that “[w]here, as here, the legislature has been unequivocal in providing certain classes of individuals with the status of ‘insured’, any contractual efforts to alter that status must be viewed as contrary to law.” Appellants’ Br. at 16. In support of their argument, the Colberts rely on the Superior Court’s en banc decision in Allwein v. Donegal Mutual Insurance Co., 448 Pa.Super. 364, 671 A.2d 744 (1996). In Allwein, the automobile insurance policy under consideration provided “gap underinsurance” coverage, under which a tortfeasor’s vehicle was not considered “underinsured” if the tortfeasor’s liability limits were greater than or equal to the insured’s UIM benefits.
The Superior Court held that the policy’s “gap underinsurance” provision violated the MVFRL. Specifically, the court considered that the MVFRL defines underinsured coverage in terms of the damages sustained by the plaintiff. Id. at 748-49. Section 1702 of the MVFRL defines an “underinsured motor vehicle” as: “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. § 1702. The policy, on the other hand, determined its UIM coverage based on the *88defendant’s liability coverage. In operation, “the victim of a negligent driver whose liability insurance is not adequate to indemnify the victim for losses and damages would receive no underinsurance from his or her own policy if the tortfeasor’s liability insurance were greater than or equal to the victim’s underinsurance benefit.” Allwein, 671 A.2d at 747 (emphasis in original). The court reasoned that insurance contract provisions cannot conflict with statutory requirements:
As a general rule, stipulations in a contract of insurance in conflict with, or repugnant to, statutory provisions which are applicable to, and consequently form a part of, the contract, must yield to the statute, and are invalid, since contracts cannot change existing statutory laws.
George J. Couch, Couch on Insurance 2d (Rev.ed) § 13.7 at 827 (1984). While we agree with appellant that “[n]either the courts nor the board of arbitration have a license to rewrite a contract,” (Appellant’s brief at 3), we also agree with Couch, swpra, that insurers do not have a license to rewrite statutes.
Id. at 752; see also Miller v. Allstate Ins. Co., 763 A.2d 401 (Pa.Super.2000) (holding that, where policy terms conflict with MVFRL, court cannot give effect to contractual provision, even if those terms are clear and unambiguous). Thus, the court concluded that the policy and its end result are “directly at odds with the statutory language, which defines an underinsured vehicle as one for which the tortfeasor’s liability limits are less than the victim’s losses and damages.” Id. at 748 (emphasis in original).
Here, the MVFRL defines the term “insured” as including, inter alia, named insureds and any resident relatives of named insureds. The Prudential policy definition of “insured,” however, purports to narrow the broad classification provided by the MVFRL by deeming resident relatives, such as Adam Colbert, to be “insured” only when they are using a vehicle specifically insured under the Prudential policy. As a result, the policy’s more restrictive definition of “insured” is in conflict with the MVFRL. Nothing in the MVFRL permits Prudential or any other insurer to diminish the MVFRL’s *89definition of “insured” and thereby provide coverage of a lesser scope than the MVFRL requires. Indeed, “stipulations in a contract of insurance in conflict with, or repugnant to, statutory provisions which are applicable to, and consequently form a part of, the contract, must yield to the statute, and are invalid, since contracts cannot change existing statutory laws.” Allwein, 671 A.2d at 752 (quoting Couch on Insurance 2d, supra, § 13.7 at 827). Thus, the Prudential definition of “insured” must yield, even though it is clear and unambiguous. Accordingly, in answer to the first certified question, we hold that the restrictive definition of “insured” within the Prudential policy impermissibly narrows and conflicts with the plain language of the MVFRL.3
The second question posed by the Third Circuit is whether the “other household vehicle” exclusion contained in the Prudential policy is void as against the public policy of the MVFRL, as applied to Adam Colbert. The Prudential “other household vehicle” exclusion, under which Prudential independently denied UIM benefits, provides:
OTHER HOUSEHOLD VEHICLES
We will not pay for bodily injury to anyone occupying or struck by a motor vehicle owned or leased by you or a household resident which is not covered under this policy, or if the liability coverage of that vehicle is used to pay any portion of an insured’s bodily injury liability claim.
R. 127a (emphasis omitted). This type of exclusion is commonly known as a “family car exclusion,” as it excludes coverage for an otherwise insured individual when that person *90is occupying a separately owned vehicle that is not insured under the subject policy.
As stated supra, courts must give plain meaning to a clear and unambiguous contract provision unless to do so would be contrary to a clearly expressed public policy. Eichelman, 551 Pa. 558, 711 A.2d 1006. There is no dispute that, as a matter of contract interpretation, the “other household vehicle” policy exclusion would justify Prudential in denying coverage for Adam Colbert’s collision. Thus, although we hold that Adam was an “insured” under Prudential’s policy pursuant to Section 1702 of the MVFR.L, see supra, he must nonetheless demonstrate that the “other household vehicle” exclusion is unenforceable as violative of clearly expressed public policy.
This Court’s cautious approach in examining whether a contract provision violates the often formless face of public policy is well established. As we recently reiterated in Burstein v. Prudential Property and Casualty Insurance Co., 809 A.2d 204 (Pa.2002),
Public policy is to be ascertained by reference to the laws and legal precedents and not from general considerations of supposed public interest. As the term “public policy” is vague, there must be found definite indications in the law of the sovereignty to justify the invalidation of a contract as contrary to that policy.... Only dominant public policy would justify such action. In the absence of a plain indication of that policy through long governmental practice or statutory enactments, or of violations of obvious ethical or moral standards, the Court should not assume to declare contracts ... contrary to public policy. The courts must be content to await legislative action.
Id. at 207 (quoting Eichelman v. Nationwide Ins. Co., 551 Pa. 558, 711 A.2d 1006, 1008 (1998)); see also Hall v. Amica Mut. Ins. Co., 538 Pa. 337, 648 A.2d 755, 760 (1994) (quoting Muschany v. United States, 324 U.S. 49, 66-67, 65 S.Ct. 442, 89 L.Ed. 744 (1945)). Moreover, the application of public policy concerns in determining the validity of an insurance exclusion is dependent upon the factual circumstances present*91ed in each case. Paylor v. Hartford Ins. Co., 536 Pa. 583, 640 A.2d 1234,1240 (1994).
Our recent decision in Burstein addressed the application of public policy to coverage exclusions.4 In Burstein, a speeding motorcyclist struck the insureds as they were driving a non-owned, employer-provided vehicle. The insureds collected the maximum amount payable under the motorcyclist’s insurance policy, but were not fully compensated for their injuries. After discovering that the employer-provided vehicle was not insured with UIM coverage, the insureds attempted to recover UIM coverage from a policy that covered three vehicles that they owned, none of which were involved in the collision. The insurance company denied the claim because the policy specifically excluded regularly used, non-owned cars, such as the employer-provided vehicle that the insureds had driven on a *92regular basis. Burstein, 809 A.2d at 205. The insureds sued the insurance company and claimed that the regularly used, non-owned car exclusion was unenforceable because it violated public policy. Both the trial court and the Superior Court agreed, holding that the exclusion was void as against public policy. See Burstein v. Prudential Prop. & Cas. Ins. Co., 742 A.2d 684 (Pa.Super.1999) (plurality opinion).
On appeal, this Court reversed. Burstein, 809 A.2d 204. We examined the insureds’ public policy claim in the context of the MVFRL, and once more recited the “dominant and overarching public policy” of the MVFRL:
[t]he repeal of the No-Fault Act and the enactment of the MVFRL reflected a legislative concern for the spiralling consumer cost of automobile insurance and the resultant increase in the number of uninsured motorists driving on public highways. The legislative concern for the increasing cost of insurance is the public policy that is to be advanced by statutory interpretation of the MVFRL. This reflects the General Assembly’s departure from the principle of “maximum feasible restoration” embodied in the now defunct No-Fault Act.
Id. at 207 (quoting Paylor v. Hartford Ins. Co., 536 Pa. 583, 640 A.2d 1234, 1235 (1994)) (footnote omitted).
Having recognized the conservative public policy of the MVFRL, we explained its function and operation relative to insurance policy exclusions:
In light of the primary public policy concern for the increasing costs of automobile insurance, it is arduous to invalidate an otherwise valid insurance contract exclusion on account of that public policy. This policy concern, however, will not validate any and every coverage exclusion; rather, it functions to protect insurers against forced underwriting of unknown risks that insureds have neither disclosed nor paid to insure. Thus, operationally, insureds are prevented from receiving gratis coverage, and insurers are not com*93pelled to subsidize unknown and uncompensated risks by increasing insurance rates comprehensively.
Id. at 208 (emphasis added).
We then returned to the insureds’ contention that the regularly used, non-owned car exclusion was unenforceable because it violated public policy, and observed that the insureds had neither obtained UIM coverage for the employer-provided vehicle nor disclosed their regular use of the vehicle to their insurance company. Id. As a result, we concluded that “voiding the exclusion would frustrate the public policy concern for the increasing costs of automobile insurance, as the insurer would be compelled to underwrite unknown risks that it has not been compensated to insure.” Id. We reasoned that:
Most significantly, if this Court were to void the exclusion, insureds would be empowered to regularly drive an infinite number of non-owned vehicles, and receive gratis UIM coverage on all of those vehicles if they merely purchase UIM coverage on one owned vehicle. The same would be true even if the insureds never disclose any of the regularly used, non-owned vehicles to the insurers, as is the case here. Consequently, insurers would be forced to increase the cost of insurance, which is precisely what the public policy behind the MVFRL strives to prevent. Such result is untenable.
Id. (emphasis added). Accordingly, this Court held that “the regularly used, non-owned car exclusion and its contractual restraint on UIM portability comport with the underlying policies of the MVFRL.” Id. at 210.
The facts of this case differ from the facts of Burstein in two respects. First, Adam Colbert owned the vehicle in which he was injured. The reasoning of Burstein, however, was not predicated upon ownership of the vehicle in which the claimant was injured; rather, it focused upon whether the insurer was compelled to underwrite unknown risks that it has not been compensated to insure. See id. at 208. Second, Adam purchased UIM coverage for his vehicle from State Farm Insur*94anee Company, and was also an insured on his parents’ insurance policy from Prudential. Thus, each of the Colberts’ vehicles were covered by insurance, whereas the employer-provided vehicle in Burstein did not carry UIM coverage. While this factual circumstance differs from Burstein at first glance, it still yields the same result that we proscribed in Burstein: gratis coverage on a vehicle that the insurer never knew existed.
It is undisputed that Adam Colbert purchased UIM coverage on his vehicle from State Farm and actually received the maximum amount payable under that coverage. Thus, Adam received the UIM coverage for which he paid. Nonetheless, Adam also attempted to recover UIM benefits from his parents’ insurance policy with Prudential. Neither Adam nor his parents paid Prudential to insure his car; indeed, the “other household vehicle exclusion” in Prudential’s policy expressly excluded such vehicles from coverage. Likewise, there is nothing to suggest that Adam or his parents ever disclosed Adam’s vehicle to Prudential. Under these facts, voiding the “other household vehicle exclusion” would force Prudential into the same predicament as was the insurer in Burstein: it would be compelled to underwrite unknown risks that the insureds neither disclosed nor paid to insure. In addition, Adam would stand to receive gratis coverage or, more accurately, double coverage.
Moreover, voiding the “other household vehicle” exclusion would empower insureds to collect UIM benefits multiplied by the number of insurance policies on which they could qualify as an insured, even though they only paid for UIM coverage on one policy. As a result, insureds would receive benefits far in excess of the amount of coverage for which they paid, as would be the case here were we to void the exclusion. The same would be true even if the insureds never disclose any of the other household vehicles to the insurers. Consequently, insurers would be forced to increase the cost of insurance, which is precisely what the public policy behind the MVFRL strives to prevent. As we rejected this result in Burstein, we must reject it here.
*95Accordingly, in response to the second question posed by the United States Court of Appeals for the Third Circuit, we hold that the “other household vehicle” exclusion, as applied to Adam Colbert, is consistent with the underlying public policy of the MVFRL.
Having answered the certified questions, we refer the matter back to the United States Court of Appeals for the Third Circuit.
Justice SAYLOR concurs in the result.
Justice CASTILLE files a concurring and dissenting opinion in which Justice NEWMAN joins.

. We held our decision in this case pending Burstein v. Prudential Properly and Casualty Insurance Co., 809 A.2d 204 (Pa.2002), reversing Burstein v. Prudential Property and Casualty Insurance Co., 742 A.2d 684 (Pa.Super. 1999) (plurality opinion), as the parties had provided extensive argument concerning the effect of the Superior Court's decision in Burstein.

. The policy’s definition of "substitute car” specifically stales that: "This car cannot be owned by you or a household resident.” R. 126a (emphasis omitted). As Adam, a household resident, owned his vehicle, it cannot qualify as a "substitute car” under the Prudential policy.

. The Colberts also assert that 75 Pa.C.S. § 1733, which provides a statutory priority ol recovery when multiple policies apply, evinces the Legislature's intent that an individual may receive benefits under a policy of insurance covering a vehicle other than the one involved in the accident, so long as he is a paid insured under the secondary policy. Appellants' Br. at 17-18. However, as-this Court noted in Burstein v. Prudential Property and Casualty Insurance Co., "[w]hile Section 1733 contemplates that UM and UIM coverage may be portable in some instances, it does not suggest that UM or UIM coverage would extend where the coverage has been specifically excluded, as is the case here.” 809 A.2d 204, 209 n. 7 (Pa.2002) (emphasis added).

. The dissent states that Burstein "is not the only, or even the most pertinent, judicial teaching on the question presented here. In my view, a succession of earlier rulings on the validity of family car exclusions, ignored by the majority, are instructive.” Dissenting Op. at 755 (discussing Eichelman v. Nationwide Ins. Co., 551 Pa. 558, 711 A.2d 1006 (1998); Windrim v. Nationwide Ins. Co., 537 Pa. 129, 641 A.2d 1154 (1994); Paylor v. Hartford Ins. Co., 536 Pa. 583, 640 A.2d 1234 (1994)).
The dissent, however, finds each of these cases distinguishable from the case sub judice. Regarding Eichelman, it states that: "As this Court recognized in Eichelman, an insured should not be permitted to demand coverage for a risk for which coverage was not elected or premiums paid. That concern is not implicated in this case.” Id. at 759. Likewise, the dissent distinguishes Windrim, stating that: "The concern that voiding the exclusion in Windrim would provide a disincentive to purchase insurance coverage on family vehicles expressed by the Court in Windrim does not exist in the instant case.” Id. at 758. Finally, concerning Paylor, it states that: "[T]he plaintiff in Paylor in effect was attempting to convert inexpensive underinsured motorist coverage purchased on automobile policies into additional—and more costly—liability coverage for a separately-insured mobile home. ... In contrast to the [plaintiff in Paylor ], appellants in this case cannot be said to have been attempting to convert their inexpensive underinsurance coverage into additional, and more expensive, liability coverage.” Id. at 757.
Thus, it seems that even the dissent agrees that neither Paylor, Windrim, nor Eichelman addressed the factual concerns present in this case. Indeed, we do not ignore the decisions that the dissent discusses. Rather, we find that our analysis in Burstein controls the facts of this case, as the factual result that we proscribed in Burstein is duplicated here: gratis coverage on a vehicle that the insurer never knew existed. See infra at 754-55.