United States: Household Vehicle Exclusion Lives On When Insured Validly Waives Inter-Policy Stacking

In this case, the insured, Gramaglia-Parent, was involved in an accident while occupying a vehicle owned by her husband which was insured on its own policy of insurance. She submitted an underinsured motorist (UIM) claim under her own personal auto policy, issued by Travelers, which did not insure the vehicle in which she was occupying. Travelers denied the claim based upon an exclusion in the policy that encompassed both a household vehicle exclusion and a regular use exclusion. Litigation ensued.

Travelers subsequently filed a Motion for Summary Judgment on the breach of contract/coverage claim. Travelers argued that coverage for UIM benefits did not extend to Gramaglia-Parent's claim because, at the time of the accident, she was occupying a vehicle owned by a household member but which was not insured by the Travelers Policy, and thus the household vehicle exclusion applied. Travelers further argued that since the vehicle was available for her regular use, the regular use exclusion also applied.

Gramaglia-Parent argued that the household vehicle exclusion was invalid after the Pennsylvania Supreme Court decision of Gallagher v. GEICO. She further argued that the stacking waiver she had signed at the inception of the Travelers Policy was invalid because it included language (in addition to the statutorily-mandated language) which rendered the waiver ambiguous and, as such, she could not have made a knowing waiver of stacking.

The Eastern District first determined that the stacking waiver signed by Gramaglia-Parent was valid and that the additional language, while perhaps itself ambiguous, did not render the entire stacking waiver void. Distinguishing this case from both Gallagher  and Donovan  (which had been issued after the parties had submitted their principal briefs in this case), the Eastern District held that, since Gramaglia-Parent had executed a valid stacking waiver on a single-vehicle policy—and had never added a vehicle in a manner requiring execution of a new stacking waiver—she could not seek to stack inter-policy benefits. As such, the household vehicle exclusion remained valid and applied to preclude her claim.

As the application of the household vehicle exclusion was dispositive of the motion, the court did not reach whether the regular use exclusion applied to this claim.

Since Gallagher, some insureds have argued that the household vehicle exclusion was entirely dead. This case demonstrates that the household vehicle exclusion is very much alive—albeit under a specific set of circumstances.

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