Court Denies UIM Coverage to Woman, Claiming ‘Family Member’ Status Through Daughter

The plaintiff, who resided with her daughter in the home of her daughter’s paternal grandmother, sought UIM benefits under an auto insurance policy issued to the grandmother. The policy limited UIM coverage to the named insured or “family members,” defined as those related by blood, marriage, or adoption and residing in the same household. Arguing that her daughter’s designation as an “operator” effectively made the daughter a named insured, the plaintiff claimed she qualified as a family member. Both the district court and the Third Circuit rejected this argument, holding that the plaintiff did not meet the policy’s definition of a covered person and was, therefore, ineligible for UIM benefits.

Melanie Miller lived with her daughter, Kayleigh, in the home of Kayleigh’s grandmother (her father’s mother). The grandmother was a named insured on a policy of auto insurance issued by USAA General Indemnity Company while Kayleigh (Miller’s daughter) was listed on the declarations page of that auto policy as an “operator.” The named insured, Kayleigh’s grandmother, and Miller were, by Miller’s own admission, not related by blood, marriage, or adoption. 

After suffering injuries in a motor vehicle accident, Miller sought UIM benefits under the policy issued to the named insured, the grandmother. The policy limited UIM coverage to the named insured or “family member[s]” of the named insured, defining “family member” as a person related to the named insured by blood, marriage, or adoption and primarily residing in the same household as the named insured. 

Before the District Court, and again before the Third Circuit, Miller argued that she qualified as a family member because the policy identified her daughter, Kayleigh, as an “operator” on the declarations page which, she claimed, is tantamount to Kayleigh qualifying as a named insured on the policy. As such, Miller claimed, she qualified as a “family member” since she is related by blood to Kayleigh and lived in the same household. The Third Circuit agreed with the District Court that Kayleigh’s designation as an “operator” did not elevate her status to that of a named insured. Thus, since there was no evidence that Miller was related to the named insured, Kayleigh’s grandmother, by blood, marriage, or adoption, Miller did not qualify for UIM coverage under the policy.

Miller also argued that the limitations in the policy as to who qualifies for UIM coverage conflicts with the MVFRL’s provisions and acts as a disguised waiver of UIM stacking requirements. The Third Circuit disregarded this argument by noting that the issue was not whether the named insured waived UIM benefits, expressly or otherwise, but whether Miller qualifies as a covered person—which she did not.

The Third Circuit also affirmed the district court’s dismissal of Miller’s claim for statutory bad faith on the basis that, since Miller does not qualify as an insured under the terms of the policy, there was no duty of good faith owed to her by USAA General Indemnity Company. 

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