Third Circuit Affirms Insurer’s Waiver of Household Vehicle Exclusion in UIM Benefits Dispute

The defendant, Progressive Specialty Insurance Co., challenged the District Court's orders denying (1) its motion for leave to amend its affirmative defenses, (2) its motion for leave to file a second summary judgment motion, and (3) its motion for a directed verdict. In early 2017, Haley Rodd was involved in a motor vehicle collision while driving her uninsured vehicle. Since the driver of the other car involved in the collision did not have sufficient insurance coverage to compensate Rodd for her injuries, Rodd sought underinsured motorist (UIM) benefits through her parents' insurance policy with Progressive. That policy contained a so-called “household vehicle exclusion,” which bars UIM coverage for “bodily injury sustained by any person while using or occupying ... a motor vehicle that is owned by or available for the regular use of you, a relative, or a rated resident.” At the time of the collision, Rodd was living with her parents, and the vehicle was registered to their address. Therefore, Progressive denied her claim under the household vehicle exclusion. Progressive then determined the household vehicle exclusion may be invalid and agreed to provide Rodd with UIM benefits.

The parties could not agree on the amount of coverage, so Rodd sued Progressive for breach of contract and bad faith. Progressive filed its answer, including affirmative defenses, however, the household vehicle exclusion was not among them. Upon filing for summary judgment, the court denied Progressive’s motion because they failed to assert the household vehicle exclusion as an affirmative defense. Progressive then moved for leave to amend its affirmative defenses, arguing that Gallagher had barred its reliance on the household vehicle exclusion and that Mione changed the law. The District Court disagreed, reasoning that Mione: (1) “reaffirmed” the “application” of the exclusion, and (2) affirmed a ruling of the Superior Court of Pennsylvania that had upheld the validity of the household vehicle exclusion six months before Progressive asserted its affirmative defenses in this case. App. 422-23; Dist. Ct. Dkt. No. 27 (citing Erie Ins. Exch. v. Mione, 253 A.3d 754 (Pa. Super. 2021)).

The Third Circuit upheld the District Court’s decision, opining that Mione did not change the law and was therefore settled at the time Rodd’s suit was brought against Progressive. Progressive therefore could not rely upon the household vehicle exclusion for purposes of summary judgment as it had not been raised in its affirmative defenses.