‘Household Exclusion’: Class Action Alleges Travelers Unlawfully Denied Inter-Policy Stacking of Underinsured Motorist Coverage

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A proposed class action lawsuit claims Travelers Property Casualty Company of America has violated Pennsylvania law by failing to grant stacked underinsured motorist benefits to members of insureds’ households by way of an exclusion clause buried into policyholders’ contracts.

According to the case, Travelers has denied benefits for stacked insurance—i.e., insurance coverage provided under more than one policy—to members of insureds’ households even though the policyholders never knowingly waived this type of coverage.

Per the complaint, Travelers included in the plaintiffs’ insurance policies a household exclusion that the case says unlawfully purports to waive stacked insurance coverage without policyholders’ knowing or valid consent.

“The household exclusion is a disguised and hidden waiver of stacking of inter-policy underinsured motorist coverage to which [the plaintiffs] never agreed or consented,” the complaint states, alleging violations of the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL).

The two plaintiffs—the wife of a motorcyclist who was killed by a drunk driver and a man who suffered “serious and permanent” injuries in an unrelated motorcycle accident—claim the damages sustained in each of the incidents at the center of the case were covered under multiple insurance policies. In both incidents, the at-fault drivers the plaintiffs say are responsible for the accidents were underinsured motorists whose insurance benefits were not enough to cover the damages sustained.

Per the complaint, the plaintiffs each filed claims for primary underinsured motorist coverage under their respective Progressive and GEICO policies. The coverage limits for both policies were insufficient to compensate the individuals for the damages arising from the motor vehicle crashes, the case says.

The first plaintiff says she also filed a claim under her Travelers policy, which provides $200,000.00 in stacked underinsured motorist coverage for her household. The suit notes, though, that the plaintiff’s husband’s motorcycle involved in the accident was not insured under the Travelers policy.

According to the case, Travelers denied the plaintiff’s claim based on the household exclusion included in her policy that purportedly rejects coverage for bodily injury sustained by the insured or a resident relative in an accident involving a motor vehicle “not insured for Underinsured Motorist Coverage under this policy.”

The second plaintiff, who lived with his father at the time of his accident, says his claim for underinsured motorist benefits under his father’s Travelers policy was similarly denied due to the purported household exclusion provision.

Per the complaint, the household exclusion within the plaintiffs’ Travelers policies unlawfully eliminates the coverage stacking benefits to which the plaintiffs were entitled. The MVFRL provides that uninsured and underinsured motorist coverages “are to be stacked unless waived by the named insured,” the lawsuit relays.

According to the suit, the policyholders in the plaintiffs’ households did not “knowingly, intelligently, and/or validly” waive inter-policy stacking given they never signed a Rejection of Stacked Underinsured Coverage Limits form for the Travelers policies. Travelers’ denials of their claims were therefore “illegal and violative of the MVFRL” since the plaintiffs’ policies did, in fact, include inter-policy stacking, the case alleges.

The lawsuit looks to represent the following proposed class:

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