Court Opinion

ID: 9350852
Source: CourtListenerOpinion
Date Created: 2022-12-28 19:07:12.598232+00
Date Added: 2024-06-11T16:57:47.956132
License: Public Domain

J-A22002-22

                                   2022 PA Super 221

    ERIE INSURANCE EXCHANGE                    :   IN THE SUPERIOR COURT OF
                                               :        PENNSYLVANIA
                                               :
                v.                             :
                                               :
                                               :
    ELIZABETH BACKMEIER,                       :
    INDIVIDUALLY AND IN HER                    :
    CAPACITY AS THE EXECUTRIX OF               :   No. 323 WDA 2022
    THE ESTATE OF ANDREW J.                    :
    BACKMEIER                                  :
                                               :
                       Appellant               :

               Appeal from the Judgment Entered March 7, 2022
    In the Court of Common Pleas of Erie County Civil Division at No(s): No.
                                 11590-2021

BEFORE:      OLSON, J., DUBOW, J., and COLINS, J.*

OPINION BY OLSON, J:.                          FILED: DECEMBER 28, 2022

        Appellant, Elizabeth Backmeier, individually and in her capacity as the

executrix of the Estate of Andrew J. Backmeier, appeals from a March 7, 2022

declaratory judgment entered in the Court of Common Pleas of Erie County.

The judgment awarded $100,000.00 in favor of Appellant, and against Erie

Insurance Exchange (“Erie Insurance”), after the trial court granted Erie

Insurance’s motion for judgment on the pleadings and denied Appellant’s

cross-motion for judgment on the pleadings. We affirm.

        The trial court summarized the factual history as follows:

        The facts of this case are undisputed. On September 25, 2020,
        [Appellant’s son,] Andrew Backmeier, was riding his bicycle when
        he was struck[ and killed] by the [underinsured motorist’s]
        vehicle.   [Appellant] sought recovery through her insurance

____________________________________________

*   Retired Senior Judge assigned to the Superior Court.
J-A22002-22

      carrier[, Erie Insurance,] for underinsured motorist [(“UIM”)]
      coverage [] provided by her two insurance policies[.] The two
      [insurance] policies each provided $100,000[.00] in UIM benefits
      per [person], $300,000[.00] per occurrence, unstacked.
      [Appellant] executed stacking waivers on both policies. Both
      [insurance] policies contained a "Limit of Protection" provision
      which capped total recovery under all household policies at the
      highest limit available under any single policy. [Erie Insurance]
      tendered a total of $100,000[.00] of UIM coverage ($50,000[.00]
      from each policy) pursuant to the "Limit of Protection" clause[.]

Trial Court Opinion, 3/7/22, at 1.

      On July 21, 2021, Erie Insurance filed a complaint for declaratory

judgment against Appellant, asking the trial court to declare, inter alia, that

Appellant’s total recovery of UIM benefits under the applicable insurance

policies should be set at $100,000.00. Erie Insurance’s Complaint, 7/21/21,

at 6. On September 21, 2021, Appellant filed an answer to the complaint, as

well as a counterclaim for declaratory judgment, asking the trial court to

declare that the total recovery of UIM benefits due under the applicable

insurance policies should be set at $200,000.00. Appellant’s Answer, New

Matter, and Counterclaim, 9/21/21, at unnumbered page 5. Erie Insurance

filed a reply to Appellant’s counterclaim on October 8, 2021, which raised, as

new matter, the assertion that, inter alia, Appellant’s counterclaim failed to

state a claim upon which relief could be granted pursuant to the terms of the

two applicable insurance policies.   Erie Insurance’s Reply and New Matter,

10/8/21, at 6-8. Appellant filed a reply to Erie Insurance’s new matter on

October 26, 2021.

                                     -2-
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      On November 22, 2021, Erie Insurance filed a motion for judgment on

the pleadings, as well as a brief in support thereof. On January 7, 2022, the

trial court granted Erie Insurance’s motion for judgment on the pleadings. In

its order, the trial court noted that Appellant did not file a response to Erie

Insurance’s motion for judgment on the pleadings. Trial Court Order, 1/7/22.

On January 13, 2022, Appellant filed a motion for reconsideration of the trial

court’s January 7, 2022 order, asserting that the parties stipulated Appellant

had until January 23, 2022, to file a response to Erie Insurance’s motion for

judgment on the pleadings and that the trial court granted said motion

prematurely without providing Appellant the opportunity to file a response by

the agreed upon date. Appellant’s Motion for Reconsideration, 1/7/22. On

January   13,   2022,   the   trial   court   granted   Appellant’s   motion   for

reconsideration and vacated its January 7, 2022 order.        Trial Court Order,

1/13/22. On January 21, 2022, Appellant filed (1) a motion for leave to file

an amended answer, new matter, and counterclaim to Erie Insurance’s

complaint, having attached thereto a copy of the proposed answer; (2) a

cross-motion for judgment on the pleadings; and (3) a response in opposition

to Erie Insurance’s motion for judgment on the pleadings. On January 28,

2022, the trial court granted Appellant’s motion to file an amended answer,

new matter, and counterclaim, which Appellant filed that same day.             On

February 2, 2022, Erie Insurance filed a response, as well as a brief, in

opposition to Appellant’s cross-motion for judgment on the pleadings.

Appellant filed a supplemental brief in opposition to Erie Insurance’s motion

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for judgment on the pleadings on February 14, 2022. On February 17, 2022,

Erie Insurance filed a response to Appellant’s amended answer, new matter,

and counterclaim, and Appellant filed a reply to Erie Insurance’s response on

February 23, 2022.        Finally, on February 24, 2022, Erie Insurance filed a

supplemental brief in opposition to Appellant’s cross-motion for judgment on

the pleadings. On March 7, 2022, the trial court entered declaratory judgment

in the amount of $100,000.00 in favor of Appellant and against Erie Insurance.

The $100,000.00 award reflected the trial court’s determination that Erie

Insurance was entitled to judgment on the pleadings and the trial court’s

further determination that Appellant’s cross-motion for judgment on the

pleadings should be denied. This appeal followed.1

        Appellant raises the following issues for our review:

        [1.]   Whether [Appellant] is entitled to collect the $100,000[.00]
               UIM coverage limit [under] both of her Erie Insurance auto
               [insurance] policies, for a[n aggregate] total of
               $200,000[.00], because the "limit of protection" clause in
               her [insurance] policies is unenforceable because it
               impermissibly provides only "gap" coverage rather than the
               "excess" coverage required by the [Motor Vehicle Financial
               Responsibility    Law      (“MVFRL”),        75    Pa.C.S.A.
               §§ 1701-1799.7,] as interpreted by [our] Supreme Court in
               Generette v. Donegal Mut. Ins. Co.[, 957 A.2d 1180 (Pa.
               2008)]?

        [2.]   Whether [Appellant] is entitled to collect the $100,000[.00]
               UIM coverage limit [under] both of her Erie Insurance auto
               [insurance] policies, for a[n aggregate] total of
               $200,000[.00], because she may "stack" the coverages

____________________________________________

1   Both Appellant and the trial court complied with Pa.R.A.P. 1925.

                                           -4-
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            because the stacking waivers she executed do not preclude
            inter-policy stacking under the circumstances of this case?

Appellant’s Brief at 4 (extraneous capitalization omitted).

      Appellant’s issues challenge a trial court order that granted judgment

on the pleadings in favor of Erie Insurance and that denied Appellant’s

cross-motion for judgment on the pleadings.       Our standard and scope of

review when considering an order that disposes of a motion for judgment on

the pleadings is well-settled.

      Entry of judgment on the pleadings is permitted under
      Pennsylvania Rule of Civil Procedure 1034, which provides that
      “after the pleadings are closed, but within such time as not to
      unreasonably delay trial, any party may move for judgment on
      the pleadings.” Pa.R.C[iv].P. 1034(a). A motion for judgment on
      the pleadings is similar to a demurrer. It may be entered when
      there are no disputed issues of fact and the moving party is
      entitled to judgment as a matter of law.

      Appellate review of an order granting a motion for judgment on
      the pleadings is plenary. The appellate court will apply the same
      standard employed by the trial court. A trial court must confine
      its consideration to the pleadings and relevant documents. The
      court must accept as true all well[-]pleaded statements of fact,
      admissions, and any documents properly attached to the
      pleadings presented by the party against whom the motion is filed,
      considering only those facts which were specifically admitted.

      We will affirm the grant of such a motion only when the moving
      party's right to succeed is certain and the case is so free from
      doubt that the trial would clearly be a fruitless exercise.

Southwestern Energy Prod. Co. v. Forest Res., LLC, 83 A.3d 177, 185

(Pa. Super. 2013), appeal denied, 96 A.3d 1029 (Pa. 2014).

      Based on the nature of Appellant’s issues, we will address them simul

ut unum. Before beginning our review, however, we first examine the terms

                                     -5-
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of Appellant’s insurance policies.2            Appellant’s insurance policy number

Q01 XXXX622 (“the 622 Policy”) lists on its Declaration page coverage for two

“vehicles,” a 2008 Mazda CX-9 all-wheel-drive motor vehicle and a 2000

homemade (“HMDE”) trailer.           See The 622 Policy Declaration, at 1.    The

Declaration further shows Appellant had UIM coverage on the Mazda motor

vehicle as follows: “Bodily Injury $100,000[.00] per person / $300,000[.00]

per accident - Unstacked[.]” Id. at 2. Appellant did not have UIM coverage

for the HMDE trailer. Id. The 622 Policy defines the term “auto” as:

       Any land “motor vehicle” with at least four wheels except a:

       1. vehicle designed for use principally off public roads;

       2. vehicle operated on rails or crawler treads;

       3. vehicle located for use as a residence;

       4. “miscellaneous vehicle.”

See The 622 Policy – General Policy Definitions, at 2.           The term “motor

vehicle” is defined as:

       any vehicle that is self-propelled and is required to be registered
       under the laws of the state in which “you” [(referring to the
       insured, which in this case is Appellant)] reside at the time this
       policy is issued. “Motor vehicle” does not include a vehicle:

       1. Propelled solely by human power;

       2. Propelled by electric power obtained from overhead wires;

       3. Operated on rails or crawler treads;

____________________________________________

2 In reproducing portions of Appellant’s insurance policies, we have omitted
some bold-faced text.

                                           -6-
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      4. Located for use as a residence or premises; or

      5. Which is a lawn and garden tractor or mower or similar vehicle.

Id. The term “miscellaneous vehicle” is defined as “a motorcycle (including a

motorcycle with a sidecar), moped, snowmobile, golf cart, all[-]terrain

vehicle[,] and any similar recreational vehicle. It does not include a lawn and

garden tractor or mower or similar vehicle.” Id. The term “trailer” is defined

as “a vehicle designed to be pulled by a ‘private passenger auto,’ if not being

used for business purposes except with a ‘private passenger auto.’ In the

Liability Protection section of this policy, ‘trailer’ includes a farm wagon or farm

implement while used with a ‘private passenger auto.’” Id. at 3 (extraneous

capitalization omitted) Finally, a “private passenger auto” is defined as:

      a four wheel land “motor vehicle” designed mainly to transport
      people on public roads. It includes station wagons and the
      following types of vehicles, even with dual rear wheels, when not
      used for business purposes, except farming or ranching:

      1. Motor homes;

      2. Pickups; and

      3. Vans.

Id. at 2.

      Under the “Limit of Protection” section of the Uninsured/Underinsured

Motorist Coverage Endorsement, the 622 Policy states, in pertinent part,

      Uninsured/Underinsured Motorists Coverage is not provided for
      any “trailer,” whether or not the “trailer” is attached to another
      motor vehicle or “miscellaneous vehicle.” No separate limit of
      protection for Uninsured/Underinsured Motorists Coverage is
      available for a “trailer,” whether attached or unattached to a
      motor vehicle or “miscellaneous vehicle.” . . .

                                       -7-
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      Stacked Coverage

      If Stacked Uninsured Motorists and/or Stacked Underinsured
      Motorists Coverage is purchased and the injured person is "you"
      or a "relative," "we" will pay no more than the applicable sum of
      the Uninsured or Underinsured Motorists Coverage limits shown
      on the "Declarations."

      If the injured person is other than "you" or a "relative," "we" will
      pay no more than the applicable Uninsured or Underinsured
      Motorists Coverage limits shown on the "Declarations" for the
      "auto" involved in the accident, regardless of the number of
      persons "we" protect, "autos we insure," premiums paid, claims
      made or "autos" involved in the accident. If none of the "autos"
      are involved in the accident, the highest limit of Uninsured or
      Underinsured Motorists Coverage applicable to any one "auto" will
      apply.

      Unstacked Coverage

      If Unstacked Uninsured Motorists and/or Unstacked Underinsured
      Motorists Coverage is purchased, "we" will pay no more than the
      Uninsured or Underinsured Motorists Coverage limits shown on
      the "Declarations" for the "auto" involved in the accident,
      regardless of the number of persons "we" protect, "autos we
      insure," premiums paid, claims made or "autos" involved in the
      accident. If none of the "autos" are involved in the accident, the
      highest limit of Uninsured or Underinsured Motorists Coverage
      applicable to any one "auto" will apply.

      If other similar insurance applies to "autos" not involved in the
      accident, and the insurance provides coverage to "you" or a
      "relative," then recovery will not exceed the highest limit of
      liability for any one "auto" under any one policy providing
      coverage for "you" or a "relative."

See    The    622    Policy - Uninsured/Underinsured     Motorists    Coverage

Endorsement, at 3-4.

      Appellant’s second insurance policy, policy number Q09 XXX1042 (“the

1042 Policy”), lists only a single motor vehicle, a 2003 Chevy Silverado truck,

as “autos covered” on the policy’s Declaration page.     See The 1042 Policy

                                     -8-
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Declaration, at Item 4. The 1042 Policy states that UIM coverage is provided

for bodily injury in the amount of $100,000.00 per person and $300,000.00

per accident “unstacked.” Id. at Item 5. The 1042 Policy includes, inter alia,

a “limits of protection” section in the Uninsured/Underinsured Motorists

Coverage Endorsement similar to the 622 Policy, as discussed supra, including

the following language under the “Unstacked Coverage” section,

      If other similar insurance applies to autos not involved in the
      accident, and the insurance provides coverage to you or a relative,
      then recovery will not exceed the highest limit of liability for any
      one auto under any one policy providing coverage to you or a
      relative.

See   The     1042   Policy – Uninsured/Underinsured      Motorists   Coverage

Endorsement, at 4.

      Both the 622 Policy and the 1042 Policy contain identical waiver of

stacking forms, which state:

      By signing this waiver, I am rejecting stacked limits of
      underinsured motorist coverage under the policy for myself and
      members of my household under which the limits of coverage
      available would be the sum of limits for each motor vehicle insured
      under the policy. Instead, the limits of coverage that I am
      purchasing shall be reduced to the limits stated in the policy. I
      knowingly and voluntarily reject the stacked limits of coverage. I
      understand that my premiums will be reduced if I reject this
      coverage.

See The 622 Policy – Underinsured Coverage Limits Waiver, 1/18/18; see

also The 1042 Policy – Underinsured Coverage Limits Waiver, 9/23/20.

                                     -9-
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The waiver form for the 622 Policy was electronically signed by Appellant on

January 18, 2018.     The waiver form for the 1042 Policy was executed by

Appellant on September 23, 2020.

      With the pertinent terms of Appellant’s insurance policies in mind, we

now turn to Appellant’s claims challenging the entry of judgment on the

pleadings in favor of Erie Insurance. In sum, Appellant asserts that the 622

Policy waiver form was ineffective in waiving inter-policy stacking and,

therefore, she is entitled to UIM coverage in the aggregate amount of

$200,000.00 ($100,000.00 per policy).          Appellant further maintains that

payment of stacked UIM coverage is unrestricted by the limit of protection

clause capping total coverage to “the highest limit of liability for any one ‘auto’

under any one policy” since that provision violates the MVFRL and is

unenforceable. Appellant’s Brief at 11-36. For the reasons discussed below,

we disagree.

      While the purchase of UIM coverage is optional within Pennsylvania, the

MVFRL requires insurance companies, such as Erie Insurance, to offer such

coverage to its policyholders. 75 Pa.C.S.A. § 1731(a) (stating, “Mandatory

offering.--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 [UIM] motorist

coverage[ is] offered therein or supplemental thereto”). The intent of UIM

coverage is to “provide protection for persons who suffer injury arising out of

the maintenance or use of a motor vehicle and are legally entitled to recover

                                      - 10 -
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damages therefor from owners or operators of underinsured motor vehicles.”

75 Pa.C.S.A. § 1731(c).   “UIM coverage is triggered when the tortfeasor’s

liability coverage is not sufficient to cover the injuries [sustained] in an

accident.” Generette, 957 A.2d at 1189. Section 1733 sets forth the priority

of recovery when seeking UIM coverage as follows:

     Where 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.

75 Pa.C.S.A. § 1733(a)(1) and (a)(2).

     The basic concept of stacking is the ability to add the coverages
     available from different vehicles and/or different policies to
     provide a greater amount of coverage available under any one
     vehicle or policy. Additionally, there are two types of stacking,
     inter-policy and intra-policy.

     Intra-policy stacking is when more than one vehicle is insured
     under a single policy of insurance. For example: three cars
     insured under a single policy providing [$15,000.00 per person /
     $30,000.00 per occurrence] UIM benefits. If stacked, an insured
     is entitled to a total of $45,000[.00] in []UIM benefits - three
     vehicles insured at $15,000[.00] each equaling $45,000[.00] in
     total coverage. If unstacked, only $15,000[.00] is available in
     []UIM coverage.

     Inter-policy stacking[] is the addition of coverages for vehicles
     insured under different policies of insurance. For example: the
     same three cars, now separately insured all providing stacked
     [$15,000.00 per person / $30,000.00 per occurrence] UIM
     coverage. [Pursuant to the concept of inter-policy stacking, the]
     injured insured may still collect the $45,000[.00] in total

                                   - 11 -
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      coverage,    the   value   of   each   policy  being   added
      together - $15,000[.00] + $15,000[.00] + $15,000[.00].

McGovern v. Erie Ins. Group, 796 A.2d 343, 344-345 (Pa. Super. 2002)

(citation omitted), appeal denied, 809 A.2d 904 (Pa. 2002).

      Section 1738, which sets forth the concepts of stacking and waiver of

stacking, states,

      § 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.

      (b) Waiver. - Notwithstanding the provisions of subsection (a), a
      named insured may waive coverage providing stacking of
      uninsured or underinsured coverages in which case the limits of
      coverage available under the policy for an insured shall be the
      stated limits for the motor vehicle as to which the injured person
      is an insured.

      (c) More than one vehicle. - Each named insured purchasing
      uninsured or underinsured motorist coverage for more than one
      vehicle under a policy shall be provided the opportunity to waive
      the stacked limits of coverage and instead purchase coverage as
      described in subsection (b). The premiums for an insured who
      exercises such waiver shall be reduced to reflect the different cost
      of such coverage.

      (d) Forms. -

      ...

      (2) The named insured shall be informed that he may exercise the
      waiver of the stacked limits of underinsured motorist coverage by
      signing the following written rejection form:

                    UNDERINSURED COVERAGE LIMITS

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         By signing this waiver, I am rejecting stacked limits of
         underinsured motorist coverage under the policy for myself
         and members of my household under which the limits of
         coverage available would be the sum of limits for each motor
         vehicle insured under the policy. Instead, the limits of
         coverage that I am purchasing shall be reduced to the limits
         stated in the policy. I knowingly and voluntarily reject the
         stacked limits of coverage. I understand that my premiums
         will be reduced if I reject this coverage.

                                   ___________________________
                                    Signature of First Named Insured
                                   ___________________________
                                                                Date

      (e) Signature and date. - The forms described in subsection (d)
      must be signed by the first named insured and dated to be valid.
      Any rejection form that does not comply with this section is void.

75 Pa.C.S.A. § 1738(a) - (e).

      In the instant matter, Appellant asserts that because the 622 Policy

insured “more than one vehicle[,]” she did not knowingly waive inter-policy

stacking and, as such, she is entitled to “stack” the UIM coverage limits of the

622 Policy ($100,000.00) and the 1042 Policy ($100,000.00) for an aggregate

recovery of $200,000.00. Appellant’s Brief at 32-33. Appellant asserts that

“when [a] policyholder[, such as herself,] purchases a policy that insures more

than one vehicle[, as she contends is the case with the 622 Policy,] the

language of the waiver form does not make it clear that the insured is waiving

stacking for more than one policy, as opposed to simply the [insurance] policy

on which they have been asked to sign the waiver, so the insured may

combine, or ‘stack,’ the coverages of both policies.” Id. at 33.

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      Our Supreme Court, in Craley v. State Farm Fire and Cas. Co, 895

A.2d 530 (Pa. 2006), in addressing Section 1738 inter-policy waiver of

stacking, held that a policyholder knowingly waives inter-policy stacking when

(1) the policyholder executes a waiver form which conforms with Section

1738(d), and (2) the insurance policy insures only a single vehicle. Craley,

895 A.2d at 536, 541-542. The Craley Court explained that a policyholder

cannot reasonably believe that he or she waives only intra-policy stacking to

receive a reduced premium where an insurance policy covers a single motor

vehicle. Id. As such, when an insurance policy covers only a single motor

vehicle, the policyholder knowingly waives inter-policy stacking when

executing a waiver form that conforms to Section 1738(d).          Id.   In other

words, when an insurance policy covers only one motor vehicle, there can be

no intra-policy stacking (stacking of UIM coverage on two or more motor

vehicles covered by the same insurance policy) because there is no second

motor vehicle with UIM benefits covered by that single insurance policy upon

which to combine, or “stack,” the UIM coverage from the first motor vehicle

with UIM benefits. Therefore, when a policyholder executes a Section 1738(d)

waiver form for an insurance policy where there is no possibility of intra-policy

stacking, it logically flows that the policyholder knowingly waives inter-policy

stacking in exchange for a reduced premium. Id. at 542 (stating, “[a]bsent

the applicability of intra-policy waiver, the only interpretation fairly available

to [the policyholder] was that his premium-reducing waiver applied to

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inter-policy stacking”); see also Erie Ins. Exch. v. Petrie, 242 A.3d 915,

920 (Pa. Super. 2020).

       The Craley Court left unresolved, however, whether a policyholder can

knowingly waive inter-policy stacking by executing a Section 1738(d) waiver

form when the insurance policy covers more than one motor vehicle.3 Craley,

895 A.2d at 542 n.18. The Craley Court explained that where the policyholder

has two or more insurance policies that each include UIM coverage on more

than one motor vehicle, the language mandated by the Section 1738(d)

waiver form – “I am rejecting stacked limits of underinsured motorist

coverage under the policy for myself and members of my household under

which the limits of coverage available would be the sum of limits for each

motor vehicle insured under the policy” – could lead a policyholder to

reasonably assume “that he[, or she,] received a reduced premium for waiver

of the stacking of the limits regarding the vehicles insured by [the single

policy, i.e., intra-policy stacking waiver,] with no knowledge that he[or she,]

was waiving stacking of the applicable limits of [the multiple policies, i.e.,

inter-policy stacking waiver].” Id. at 542. In other words, according to the

Craley Court, when a single insurance policy covers two or more motor

vehicles each having UIM coverage, a policyholder, by executing the Section
____________________________________________

3 It is well-established that Section 1738 permits waiver of intra-policy
stacking when the policyholder executes a valid waiver form that conforms to
Section 1738(d) and the single insurance policy covers two or more motor
vehicles each providing UIM coverage. Craley, 895 A.2d at 539-540; see
also 75 Pa.C.S.A. § 1738.

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1738(d) waiver form, knowingly waives intra-policy stacking, but it is unclear

whether the prescribed waiver form establishes that the policyholder

understood that he or she knowingly waived inter-policy stacking. See id at

542 n.18 (calling upon the legislature or the insurance commissioner for the

Commonwealth of Pennsylvania to clarify whether and how insurers may

secure a valid waiver of inter-policy stacking in such a case).

      Several years later, this Court, in Petrie, supra, addressed the

circumstance whereby a policyholder executed a Section 1738 waiver form for

an insurance policy that covered two or more motor vehicles each having UIM

coverage. The Petrie Court held that, in the instance where the insurance

policy provided UIM coverage for more than one vehicle, the waiver of stacking

form must “explicitly provide for inter-policy” stacking waiver, and it was

incumbent upon the insurance company to supplement the Section 1738(d)

waiver form or “otherwise fulfill its obligation to secure a knowing waiver of

inter-policy stacking.” Petrie, 242 A.3d at 921. In other words, the execution

of a Section 1738(d) waiver form pertaining to an insurance policy that

covered two or more motor vehicles each providing UIM coverage waived only

intra-policy stacking. The waiver form, as prescribed by Section 1738(d), did

not, in that instance, indicate that the policyholder waived inter-policy

stacking.   To waive inter-policy stacking, the Petrie Court held that the

Section 1738(d) waiver form must be supplemented with a statement that

explicitly states the policyholder waives inter-policy stacking.

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       Here, the trial court, in granting Erie Insurance’s motion for judgment

on the pleadings, stated,

       [the 622 policy] provided coverage on one motor[ ]vehicle and
       one trailer[.] Thus [the 622 policy] was not a “multi-vehicle”
       policy. Per the terms of [the 622 policy], UIM coverage was
       applicable to the motor[ ]vehicle only. Thus, the stacking waivers
       executed on both of [Appellant’s] policies effectively waived
       stacking of the UIM coverage.

Trial Court Opinion, 3/7/22, at 3.

       As discussed supra, the 622 Policy provided insurance coverage on a

motor vehicle (2008 Mazda CX-9) and a homemade trailer.4 In particular, the

622 Policy provided UIM coverage on only the motor vehicle, and the “Limit

of Protection” section of the Uninsured/Underinsured Motorist Coverage

____________________________________________

4 Section 1702 of the MVFRL does not define the terms “vehicle,” “motor
vehicle,” or “trailer.” 75 Pa.C.S.A. § 1702. Section 102 of the Vehicle Code,
however, defines “motor vehicle” as “a vehicle which is self-propelled” and
defines “trailer” as “a vehicle designed to be towed by a motor vehicle.” 75
Pa.C.S.A. § 102. Thus, we find the Section 102 definitions of the Vehicle Code
appliable to the MVFRL because the MVFRL does not provide definitions of
these terms.

Under these Section 102 definitions, it is apparent that the term “vehicle”
includes both a “motor vehicle” and a “trailer” but the terms “motor vehicle”
and “trailer” are mutually exclusive as a “motor vehicle” is self-propelled and
a “trailer” must be towed and, therefore, is not self-propelled.

In the instant case, the definitions of “motor vehicle” and “trailer” contained
within Appellant’s insurance policies track the definitions offered by Section
102 of the Vehicle Code. Therefore, while Appellant’s 2008 Mazda CX-9 and
trailer both qualify as a “vehicle,” the 2008 Mazda CX-9 also qualifies as a
“motor vehicle” while the homemade trailer qualifies only as a “trailer.”
Consequently, we shall refer to the two “vehicles” as a “motor vehicle” and
“trailer,” respectively.

                                          - 17 -
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Endorsement explicitly stated that “[UIM coverage] is not provided for any

‘trailer’ whether or not the ‘trailer’ is attached to another motor vehicle or

‘miscellaneous vehicle.’”5 Applying the definitions included within the relevant

statutory provisions and the insurance policies at issue in this case, we

conclude that Appellant understood she paid a premium for insurance

coverage that included UIM benefits on only one motor vehicle.

       The    waiver    form    executed       by   Appellant   conformed   with   the

requirements of Section 1738(d). Although Erie Insurance did not supplement

the waiver form by including language explicitly waiving inter-policy stacking,

Appellant waived inter-policy stacking under the circumstances of the case

sub judice because the 622 Policy provided UIM coverage on a single motor

vehicle.     The 622 Policy did not provide UIM coverage on multiple motor

vehicles and, thus, was not a “multi-motor vehicle” insurance policy.

Therefore, under the facts of this case, the Section 1738(d) waiver of stacking

form could not be understood by a policyholder to waive intra-policy stacking

since multiple motor vehicles capable of allowing stacking of UIM coverage

were not covered under the 622 Policy. As such, when Appellant executed

____________________________________________

5 The exclusion of the trailer from UIM coverage is permitted by Section 1731
of the MVFRL, which states, in pertinent part, that “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 [UIM coverage is] offered therein or
supplemental thereto[.]” 75 Pa.C.S.A. § 1731(a) (emphasis added). Thus
Section 1731(a) does not require UIM coverage to be offered on a trailer
because a trailer does not qualify as a motor vehicle, as discussed supra.

                                          - 18 -
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the Section 1738(d) waiver form in the case sub judice, Appellant knowingly

waived inter-policy stacking in exchange for her reduced premiums, since

intra-policy stacking was not an option.

      In addition, Appellant waived inter-policy stacking on the 1042 Policy

because (1) the insurance policy covered only a single motor vehicle, and (2)

the waiver form conformed with Section 1738(d). Craley, 895 A.2d at 536,

541-542. Similarly, Appellant waived inter-policy stacking on the 622 Policy

because (1) the policy covered only a single motor vehicle, and (2) the waiver

form conformed with Section 1738(d). Id. Therefore, we concur with the

trial court, and the record supports, that Appellant waived stacking under both

of her insurance policies.

      Appellant also challenges the trial court’s order granting declaratory

judgment in favor of Appellant in the amount of $100,000.00 on the ground

that the limit of protection clause in her insurance policies violates the MVFRL

and, as such, is unenforceable as a means of limiting her UIM coverage to

$100,000.00. Appellant’s Brief at 11-24. Appellant asserts that the limit of

protection clause violates the MVFRL because the clause converts her UIM

coverage into “gap” coverage rather than “excess” coverage, as required by

the MVFRL. Id. at 14.

      It is well-established that the definition of “underinsured motor

vehicle” – [a] motor vehicle for which the limits of available liability insurance

and self-insurance are insufficient to pay losses and damages – requires

“excess” UIM coverage and not “gap” UIM coverage. Allwein v. Donegal

                                     - 19 -
J-A22002-22

Mut. Ins. Co., 671 A.2d 744, 747-750 (Pa. Super. 1996), appeal denied, 685

A.2d 541 (Pa. 1996); see also Generette, 957 A.2d at 1191 (agreeing that,

“the MVFRL’s definition of an underinsured motorist requires the provision of

excess rather than gap [UIM] coverage because the definition is framed in

terms of the total of the [injured insured’s] losses rather than the [injured

insured’s] own insurance coverage limits”); 75 Pa.C.S.A. § 1702 (defining

“underinsured motor vehicle”).    Our Supreme Court in Generette, supra,

explained the concepts of “excess” UIM coverage and “gap” UIM coverage as

follows:

      [“Excess”] UIM coverage[] aims to maximize the potential for full
      compensation to the injured insured.             Thus, excess UIM
      [coverage] gives to the injured insured a fund that supplements
      the fund provided by the tortfeasor's liability coverage, up to the
      injured insured's UIM policy limits or until he[, or she,] is
      compensated for his[, or her,] losses. [“Gap”] UIM coverage[]
      aims to place the injured insured in the same position he[, or she,]
      would have occupied had the tortfeasor carried liability coverage
      in an amount that matches the injured insured's UIM coverage.
      Thus, gap UIM coverage gives to the injured insured a fund that
      fills in any gap between the tortfeasor's liability coverage and the
      injured insured's UIM policy limit. [By way of an example
      illustrating the distinction between excess and gap UIM coverages,
      s]uppose that an injured insured is legally entitled to damages of
      $100,000[.00 and] that the tortfeasor's liability insurance is
      $20,000[.00] and that the injured insured's UIM coverage limit is
      $50,000[.00]. Under excess UIM coverage, the injured insured's
      total recovery is $70,000[.00], with UIM coverage of $50,000[.00]
      being paid in addition to the amount the [injured] insured receives
      under [the tortfeasor’s] liability coverage, $20,000[.00]. Under
      gap UIM coverage, the injured insured's total recovery is
      $50,000[.00], with the first $20,000[.00] coming from the
      tortfeasor's liability coverage and the remaining $30,000[.00],
      coming from the injured insured's UIM coverage, to fill in the gap
      between the tortfeasor's liability coverage and the injured
      insured's UIM coverage.

                                     - 20 -
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Generette, 957 A.2d at 1186 n.12, citing Pennsylvania Nat’l Mut. Cas. Co.

v. Black, 916 A.2d 569, 583 (Pa. 2007) (Cappy, C.J. dissenting).

      An injured insured may seek UIM coverage for his or her expenses

related to injuries or damages caused by a third-party tortfeasor when the

injured insured’s expenses exceed a third-party tortfeasor’s insurance

coverage for such losses. Section 1733 sets forth the priority for recovery of

UIM benefits as follows:

                       § 1733. Priority of recovery

      (a) General rule. - Where 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.

      (b) Multiple sources of equal priority. - The insurer against
      whom a claim is asserted first under the priorities set forth in
      subsection (a) shall process and pay the claim as if wholly
      responsible.    The insurer is thereafter entitled to recover
      contribution pro rata from any other insurer for the benefits paid
      and the costs of processing the claim.

75 Pa.C.S.A. § 1733(a) and (b).     UIM coverage under a policy covering a

motor vehicle occupied by the injured party at the time of the accident is

commonly referred to as “first priority UIM coverage.”      See 75 Pa.C.S.A.

§ 1733(a)(1). Correspondingly, UIM coverage under a policy covering a motor

vehicle not involved in the accident to which the injured party qualifies as an

                                    - 21 -
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insured is commonly referred to a “second priority UIM coverage.” See 75

Pa.C.S.A. § 1733(a)(2).

      With an understanding of prioritization of recovery, we turn to our

Supreme Court’s decision in Generette, supra, in which Generette was a

third-party guest in a motor vehicle when it was struck by another motor

vehicle driven by a tortfeasor.   Generette, 957 A.2d at 1182.      Generette

recovered for her damages first from the tortfeasor’s insurance policy and

then under a first priority UIM coverage policy that insured the motor vehicle

she occupied at the time of the accident. Id. Because her damages exceeded

the amount she recovered from both the tortfeasor’s insurance policy and the

first priority UIM coverage policy, Generette sought recovery under her own

insurance policy, which insured a single motor vehicle to which she waived

stacking of UIM coverage. Id. at 1182-1183 and n.3. Generette’s insurance

policy, in this instance, provided second priority UIM coverage because the

insurance policy insured a motor vehicle that was not involved in the accident

with the tortfeasor and Generette was an insured under the policy.         75

Pa.C.S.A. § 1733(a)(2).    Generette’s second priority UIM coverage policy

contained a limit of protection clause that reduced the amount of second

priority UIM coverage by the amount she received from the first priority UIM

coverage policy. Generette, 957 A.2d at 1183 n4. The Generette Court

concluded that a limit of protection clause that reduced second priority UIM

coverage by the amount recovered under the first priority UIM coverage policy

created gap, rather than excess, coverage in violation of the MVFRL excess

                                    - 22 -
J-A22002-22

coverage requirement.    Id. at 1192.   In so holding, the Generette Court

expanded the definition of “excess coverage,” as set forth in Allwein, supra,

by requiring that second priority UIM coverage be in excess of both the

tortfeasor’s liability coverage, as well as first priority UIM coverage, rather

than simply requiring that the aggregate, available UIM coverage be in excess

of the tortfeasor’s liability coverage. See id.; see also Allwein, 671 A.2d at

747-750.

      The Generette holding, however, is distinguishable from the case sub

judice. Generette, supra, involved a limit of protection clause that violated

the MVFRL’s excess coverage requirement because the limiting clause reduced

the amount of second priority UIM coverage by the amount of first priority

UIM coverage received. The case sub judice involves whether the limit of

protection clause found in both of Appellant’s insurance policies (which under

the circumstances presented here are two second priority UIM coverage

polices) can limit the amount of second priority UIM benefits Appellant

recovers to the highest amount of coverage provided by any single second

priority UIM coverage policy where Appellant effectively waived inter-policy

stacking.

      Recently, our Supreme Court in Donovan v. State Farm Mut. Auto.

Ins. Co., 256 A.3d 1145 (Pa. 2021) addressed a situation where Donavan,

while operating his motorcycle, was struck by a tortfeasor’s motor vehicle.

Donovan, 256 A.3d at 1147. Donovan first recovered for his damages under

the tortfeasor’s insurance policy and then under his own insurance policy that

                                    - 23 -
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insured his motorcycle, i.e., first priority UIM coverage. Id. Donavan then

sought to recover under his mother’s insurance policy where he qualified as

an “insured” because he was a resident relative.6       Id.   Donavan’s mother

signed a Section 1738(d) waiver form, but the Donovan Court determined

that she did not knowingly waive inter-policy stacking. Id. at 1147, 1157,

relying on Craley, supra.

       The mother’s insurance policy also included a “coordination of benefits”

provision applicable upon a waiver of stacking, similar to the limit of protection

clause in the case sub judice. Id. at 1160-1161. The coordination of benefits

provision set the maximum recovery paid from all polices combined as the

single highest appliable UIM coverage limit provided by any one insurance

policy.7 Id. The Donovan Court stated that such a coordination of benefits

provision “implemented” a valid “waiver of inter-policy UIM stacking as it

dictate[d] that the combined coverage is limited by the highest limit of any

single policy rather than providing for the addition of coverage.”         Id. at

1160-1161.      Because Donovan’s mother did not validly waive inter-policy

____________________________________________

6Donovan’s mother’s insurance policy covered three motor vehicles but did
not cover Donovan’s motorcycle. Donovan, 256 A.3d at 1147.

7 The coordination of benefits provision that applied to unstacked UIM
coverage in Donovan, supra, stated, “the maximum amount that may be
paid from all such polices [(referring to policies underwritten by State Farm
Insurance companies that provided for UIM coverage to Donavan as an
insured)] combined is the single highest applicable limit provided by any one
of the policies. We may choose one or more policies from which to make
payment.” Donovan, 256 A.3d at 1148.

                                          - 24 -
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stacking via a Section 1738(d) waiver form, however, the Donovan Court

held that the coordination of benefits provision applicable to an unstacked

policy could not “operate as a de facto waiver of inter-policy stacking.”

Donovan, 256 A.3d at 1161. In other words, an insurance carrier cannot rely

on such a coordination of benefits provision to effectively assert waiver of

inter-policy stacking.   Inter-policy stacking can only be waived when the

policyholder knowingly waives inter-policy stacking by executing a Section

1738(d) waiver form and the insurance policy covers only one motor vehicle

with UIM coverage, or when the policyholder executes a supplemental

statement, in conjunction with a Section 1738(d) waiver form, that explicitly

waives inter-policy stacking when the insurance policy covers two or more

motor vehicles with UIM coverage.

      The Donovan Court further held that the coordination of benefits

provision did not prevent Donovan’s recovery under the second priority

coverage policy because the provision was only appliable upon waiver of

stacking and, in Donovan’s case, inter-policy stacking (i.e., the stacking of the

mother’s UIM coverage on top of the UIM coverage provided by Donovan’s

policy) had not been validly waived. Id. In reaching its holding, the Donovan

Court declined to address whether the coordination of benefits provision

violated “the MVFRL’s provision for excess rather than gap [UIM] coverage”

because the issue “was not encompassed in the issues granted review.” Id.

at 1161 n.23. Thus, the issue raised in the case sub judice – whether a limit

of protection clause capping second priority UIM coverage to the highest limit

                                     - 25 -
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of liability of any single second priority UIM coverage policy violates the

MVFRL’s excess coverage requirement – remains unresolved and, thus,

presents an issue of first impression for this Court.8

       We are mindful that when interpreting insurance policies, “we must

apply general principles of contract interpretation, as, at base, an insurance

policy is nothing more than a contract between an insurer and an insured.”

Gallagher v. Geico Indem. Co., 201 A.3d 131, 137 (Pa. 2019).

       In so doing, we must ascertain the intent of the parties as
       manifested by the terms used in the written insurance policy. Just
       as in statutory construction, when the language of the policy is
       clear and unambiguous, a court is required to give effect to that
       language.     Importantly, however, provisions of insurance
       contracts are invalid and unenforceable if they conflict with
       statutory mandates because contracts cannot alter existing laws.

Id. (citations, quotation marks, and brackets omitted); see also Allwein,

671 A.2d at 752 (stating, “[a]s 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

____________________________________________

8 We are cognizant that this issue was addressed recently by the Federal
District Court for the Eastern District of Pennsylvania in Meyers v. Travelers
Ins. Co., ___ F.Supp.3d ___, 2022 WL 1028705 (E.D. Pa. filed Apr. 6, 2022)
(slip copy). Although this Court is not bound by the decisions of federal district
courts, we find persuasive the rationale set forth in Meyers, supra. See
Northern Forests II, Inc. v. Keta Realty Co., 130 A.3d 19, 36 (Pa. Super.
2015) (stating, “[a]lthough we are not bound by the holdings of federal district
courts, [this Court] may utilize the reasoning in these decisions to the extent
we find them persuasive”).

                                          - 26 -
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statute, and are invalid, since contracts cannot change existing statutory

laws”).

      To reiterate, the MVFRL requires excess UIM coverage. As the Allwein

Court noted, excess UIM coverage is “limited only by the [injured insured’s]

damages or the policy limits, whichever is smaller.” Allwein, 671 A.2d at

747. In enacting the MVFRL, the Legislature intended to reduce consumer

costs of motor vehicle insurance while affording an injured party “the greatest

possible coverage” for damages sustained.       Id. at 750.    In construing the

MVFRL and contractual provisions of an insurance policy that are not in

contravention of the statute, we are mindful that the insured is entitled to

receive the maximum benefits for which he or she has paid premiums, and

the insurer is required to provide coverage to the extent the insured

contractually agreed to and paid for such coverage under the terms of the

insurance policy. See Craley, 895 A.2d at 542; see also Generette, 201

A.3d at 138 (stating, “[o]ne of the insurance industries’ age-old rubrics . . . is

that an insured should receive the coverage for which he[, or she,] has paid”).

      As discussed supra, Section 1733(a) sets forth the order of priority by

which an injured insured may seek UIM benefits. As caselaw has held, an

insurance policy limit of protection clause may not reduce first priority UIM

coverage by the amount received from the tortfeasor’s insurance policy.

Allwein, 61 A.2d at 746, 758. Similarly, an insurance policy limit of protection

clause may not reduce second priority UIM coverage by the amount received

from either the tortfeasor’s insurance policy or the first priority UIM coverage

                                     - 27 -
J-A22002-22

policy, or a combination of both. Generette, 957 A.2d at 1191-1192. Neither

Allwein, supra, nor Generette, supra, are on all fours with the case sub

judice, which asks whether a limit of protection clause may reduce or limit the

amount of second priority UIM coverage when more than one second priority

UIM coverage policy is applicable. For the following reasons, we find that,

under the circumstances of the case sub judice, such a limit of protection

clause does not violate the MVFRL’s excess coverage requirement when

stacking has knowingly and effectively been waived. See Meyers, supra.

      First, we note that Section 1733 is silent on whether limitations may be

placed on the total recovery received from policies of equal priority when

stacking has been waived. See 75 Pa.C.S.A. § 1733. Section 1733 is also

silent on the distinction between stacked and unstacked UIM coverage. Id.

Rather, Section 1733 simply sets forth the prioritization for recovery of UIM

benefits. Therefore, we turn to Section 1738 which deals specifically with the

concepts of stacked and unstacked UIM coverage.

      Because the case sub judice deals with a situation in which there has

been a valid waiver of inter-policy stacking, we examine Section 1738(b),

which deals with unstacked UIM coverage. Section 1738(b) states that when

an injured insured waives stacking of UIM coverage, “the limits of coverage

available under the policy for an insured shall be the stated limits for the

motor vehicle as to which the injured person is an insured.” 75 Pa.C.S.A.

§ 1738(b) (emphasis added).        As directed by Section 1738(b), when

determining the limits of UIM coverage of a policy in which stacking has been

                                    - 28 -
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waived, we must examine the “stated limits” contained within the insurance

policy, including the stated coverage found on the Declaration page, as well

as any limit of protection clauses found within the insurance policy. In the

case sub judice, the insurance policies include limit of protection clauses

appliable when stacking has been waived as follows:

      If other similar insurance applies to “autos” not involved in the
      accident [(i.e., second priority UIM coverage polices pursuant to
      Section 1733(a)(2))], and the insurance provides coverage to
      “you” or a “relative,” then recovery will not exceed the highest
      limit of liability for any one “auto” under any one policy providing
      coverage for “you” or a “relative.”

See    The    622    Policy - Uninsured/Underinsured       Motorists    Coverage

Endorsement, at 4; see also The 1042 Policy – Uninsured/Underinsured

Motorists Coverage Endorsement, at 4.

      A plain reading of these limit of protection clauses caps the UIM

coverage provided by one or more second priority UIM coverage policies to

the “highest limit of liability” for any one motor vehicle insured under any one

second priority UIM coverage policy. In other words, the coverage limits of

all second priority UIM coverage policies cannot be aggregated or “stacked”

one upon the other, which is precisely how the concept of unstacked UIM

coverage operates. To hold otherwise would permit a policyholder to waive

stacking to receive a reduced premium and then permit stacking or

aggregation of second priority UIM coverage. Thus, under the circumstances

of the case sub judice, a limit of protection clause that caps second priority

UIM coverage to the highest limit of liability of any single motor vehicle insured

                                     - 29 -
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under any one second priority UIM coverage policy merely implements the

concept of waiver of stacking and does not create gap coverage in

contravention of the MVFRL.9

       Judgment affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 12/28/2022

____________________________________________

9 We find support for our decision that such a limit of protection clause does
not violate the MVFRL’s requirement of excess coverage in Justice Wecht’s
dissent in Gallaher, supra, where he stated,

       Section 1738 governs an insured's binary choice to accept or
       reject stacking. It says nothing at all about insurance policy
       exclusions that limit, as a threshold matter, the scope of []UIM
       coverage. If the General Assembly had intended - either in
       Section 1738 or elsewhere - to bar insurance policy exclusions
       that limit the scope of []UIM coverage, it could (and presumably
       would) have done so explicitly. Indeed, the General Assembly did
       just that when it wished to prohibit other kinds of exclusions. See,
       e.g., 75 Pa.C.S.[A.] § 1724(b) ([stating,] “[p]rovisions of an
       insurance policy which exclude insurance benefits if the insured
       causes a vehicular accident while under the influence of drugs or
       intoxicating beverages at the time of the accident are void[”]).

Gallagher, 201 A.3d at 142-143 (Wecht, J. dissenting).

                                          - 30 -