In Pennsylvania, there has been much recent litigation involving the validity and enforceability of  household, family car and regular use exclusions in automobile policies. Often, insurers attempt to rationalize the legitimacy of these exclusions in uninsured and underinsured motorist claims by arguing that the exclusion has a direct correlation to premium payments.  Simply stated, this is not true. Unfortunately, courts unwittingly adopt these arguments, further perpetuating the premium payment myth.

Auto policies provide various coverages, e.g., liability, collision, comprehensive, first-party benefits and uninsured and underinsured motorist coverages. Each coverage is rated separately, with separate premiums listed for each coverage on the Declarations Pages of the policy. The considerations used to set the premiums for each coverage, however, are not the same. For instance, in setting premiums for liability coverage, insurers consider many factors such as limits of coverage, geographic region, types of vehicles, number of drivers, driving record of drivers, etc. Each factor may affect liability coverage premiums.  In rating uninsured and underinsured motorist coverages, however, insurers generally only consider two factors, namely: limits of coverage; and geographic region. Despite these underwriting practices, insurers argue that certain other factors, if known to and considered by insurers, such as other vehicles and drivers in the household, would have a direct effect upon uninsured and underinsured motorist coverage premiums. This argument is used by insurers to support the validity of household, family car and regular use exclusions in uninsured and underinsured motorist cases. However, the knowledge by the insurer of the existence of other drivers or other vehicles in the household does not affect uninsured and underinsured motorist coverage premiums.  This argument is a fallacy.  Nonetheless, insurers continue to argue, in uninsured and underinsured motorist cases, that higher premiums for these uninsured and underinsured motorist coverages would have been charged had the insurer known these facts. No factual record supports these arguments. Thus, without any factual record for these assertions, courts often adopt these arguments as a basis for validating exclusions in uninsured and underinsured motorist claims.