Court Opinion

ID: 9630027
Source: CourtListenerOpinion
Date Created: 2023-08-22 09:57:55.872521+00
Date Added: 2024-06-11T18:04:33.467093
License: Public Domain

POPOVICH, Judge,
dissenting.
I cannot join in the Majority’s determination to affirm the trial court’s order refusing to modify an arbitration award against Donegal Mutual Insurance Co. in the amount of $15,000.
The facts are not in dispute: Michael Allwein was killed by a vehicle driven by Jeremiah Lauver, who carried $15,000/$30, 000 in automobile liability insurance coverage. Also, Michael was insured under his parents’ policy with Donegal, which allowed for stacking of underinsured motorist coverage total-ling $105,000 on their three vehicles. All parties agreed that the loss experienced by Allwein exceeded the $15,000 liability limits of the party at fault and the $105,000 underinsurance motorist limits of liability of the policy with Donegal.
*392Donegal’s position was that its policy contained an “offset” provision which allowed it to discount the $105,000 by the $15,000 paid by the person legally responsible for the accident. Allwein disputed this contention. Both sides agreed to submit the matter to arbitration, restricting the issue to whether Donegal’s “offset” provision violated public policy as embodied in the Motor Vehicle Financial Responsibility Law (MVFRL). 75 Pa.C.S.A. § 1701 et seq. The arbitration board ruled in favor of Allwein and ordered Donegal to pay the $15,000 claimed on the offset. When the trial court affirmed the arbitrators’ award, an appeal was perfected leading to en banc review.
The issue posed for review is rather forthright: Is Donegal’s “offset” provision violative of public policy as embodied in the MVFRL? I find it is not, the conclusion premised upon a scrutiny of the statutory provisions regulating the insurance industry (emblematic of Legislative intent as to the scope of coverage) and case law interpreting the insurance field.
. To start with, the predecessor to the present version of Section 1731(a) made it mandatory that every policy issued in this Commonwealth must include “underinsured” coverage, unless it was rejected by the insured; to-wit:
(a) ..General rule. No motor vehicle liability insurance policy shall be delivered or issued for delivery in this Commonwealth, with respect to any motor vehicle registered or principally garaged in this Commonwealth, unless uninsured motorist and underinsured motorist coverage are provided therein or supplemental' thereto in amounts equal to the bodily injury liability coverage except as provided in section 1734 (relating to request for lower or higher limits of coverage). [Emphasis added]
Act of Feb. 12, 1984, P.L. 26, No. 11, 3, 75 Pa.C.S.A. 1731(a). This provision was amended in 1990 to allow for the “optional” inclusion- of “underinsured” and “uninsured” coverage in a policy issued in this jurisdiction; namely:
(a) Mandatory offering. — No motor vehicle liability insurance policy shall be delivered or issued for delivery in this *393Commonwealth, with respect to any motor vehicle registered or principally garaged in this Commonwealth, unless uninsured motorist and underinsured motorist coverage are offered therein or supplemental thereto in amounts as provided in section 1734 (relating to request for lower limits of coverage). Purchase of uninsured motorist coverage and underinsured motorist coverage is optional. [Emphasis added]
Act of Feb. 7, 1990, P.L. 11, No. 6, § 9, 75 Pa.C.S.A. 1731(a).
I find that the statutory change in Section 1731(a) from a mandatory to optional coverage of uninsured/underinsured is a factor which should not be dismissed as de minimus in assessing the public policy strengths of the statute. Rather, it reflects the Legislature’s intention to relax its position of inclusion of uninsured/underinsured with limited exception prior to the 1990 amendment to the MVFRL.
Additionally, of interest, is the fact that “offset” provisions in underinsured policies have been upheld as valid. See, e.g., Kovaleski v. Erie Insurance Group, 398 Pa.Super. 519, 581 A.2d 585, 591 (1990); Sparler v. Fireman’s Insurance Co. of Newark, 360 Pa.Super. 597, 521 A.2d 433, 438-39 (1987); Votedian v. General Accident Fire & Life Assurance Corp., 330 Pa.Super. 13, 478 A.2d 1324, 1328 (1984). Further, our Supreme Court in Hall v. Amica Mutual Insurance Co., 538 Pa. 337, 648 A.2d 755 (1994) dealt with the force and effect of a territorial limitation on coverage for an insured injured outside the United States. In doing so, the Hall Court remarked that:
Although uninsured motorists coverage serves the purpose of protecting innocent victims from irresponsible uninsured motorists, that purpose does not rise to the level of a public policy overriding every other consideration of statutory construction.
538 Pa. at 347, 648 A.2d at 760-61. Also, in discussing the 1990 amendment to Section 1731(a), the Court wrote:
The fact that a Pennsylvania motorist need not purchase uninsured motorist coverage even within the state of Pennsylvania undermines the argument that public policy in *394favor of protection against uninsured motorists has such force, dominance and universality that insurers must offer worldwide uninsured motorist coverage and cannot include any territorial limitations in an uninsured motorist policy.
Id. at 349, 648 A.2d at 761 n. 2. Likewise, this writer is of the belief that “offset” provisions are not ipso facto against public policy, especially given the shift in position by the Legislature and relaxation of the presence of uninsured/underinsured coverage from mandatory to optional in policies sold in this Commonwealth.
The “offset” provision was prominently set forth in Allwein’s policy by Donegal. Standard Venetian Blind Co. v. American Empire Insurance Co., 503 Pa. 300, 469 A.2d 563, 567 (1983). Thus, Allwein had the “option” to increase his uninsured/underinsured coverage to equal his liability coverage under the policy to accommodate an unforeseen injury. Yet, it would appear that in 'one’s haste to minimize premiums, coverage is sacrificed for cost reduction. We should not reward an insured who chose to “cap” underinsured coverage at $35,000 (with a $5 premium payment) by awarding him “excess” insurance coverage which he could have secured instead of the “offset” version of indemnification.
This Court should not do what the Legislature has indicated otherwise. At bar, my reading of the legislative history of the MVFRL and case law interpreting it, the Majority has deviated from the clear intent of the law to allow for “offset” insurance provisions. The use of “public policy” as a talismanic “catch all” phrase to tarnish the validity of Donegal’s “offset” provision misses the mark since the express contractual policy terms are not, in the clearest fashion, contrary to de facto or de jure public policy. See Hall, supra. Accordingly, I cannot join in the Majority’s decision to assail Donegal’s policy limiting coverage by contractual agreement between the parties. Sparler, supra.
I respectfully dissent.
CIRILLO and TAMILIA, JJ., have joined in this dissenting opinion.