On September 16, 2011, Tanesha Carter was injured when Marvin Edmonds crashed into the car Carter was driving.  Marvin Edmonds’ motor vehicle insurance policy was insufficient to cover Carter’s damages, and so Carter elected to use underinsured motorist (UIM) coverage from an automobile insurance policy with Peerless Indemnity Insurance Company.

However, as discovery began, it became clear that Carter did not own the vehicle involved in the accident but rather, was a passenger in a third party’s vehicle at the time of the accident. In addition, the Peerless policy under which Carter sought UIM coverage did not belong to Carter. Instead, it belonged to Carter’s mother and her mother’s husband.

In light of this new information, Peerless filed a motion for summary judgment. Although Peerless admitted that Carter was a listed as a “driver” on her mother’s policy, Peerless argued that the policy only provided coverage to resident family members. Peerless asserted that Carter could not prove she lived with her mother at the time of the accident. As such, Peerless concluded that Carter was not entitled to UIM coverage.

Carter countered by arguing that she was protected by the reasonable belief doctrine. She reasonably believed that coverage would be extended to her as a listed driver on the policy and, therefore, she would be entitled to coverage.  However, the trial court concluded the reasonable expectation doctrine did not apply because Carter could not prove she constituted an “insured” as the term was utilized in the clear and unambiguous language of the policy.

On appeal, the Superior Court agreed with the trial court, finding that “[a]n insured may not complain that his or her reasonable expectations were frustrated by policy provisions and limitations which are clear and unambiguous.” See Pempkowski v. State Farm Mut. Auto Ins. Co., 678 A.2d 398, 401 (Pa. Super. 1996).  As such, the Court affirmed the trial court’s ruling.

In sum, in interpreting insurance contracts and predicting the outcome of insurance litigation, we rely heavily on the idea that insurance contracts are contracts of adhesion and as such, any ambiguities must comport with the insured’s reasonable expectations of coverage. However, this case is an important reminder that summary judgment is still appropriate – even with an insurance contract – when the language in an insurance policy is clear and unambiguous.  Thanks to Erica Woebse for her contribution to this post.  Please email Brian Gibbons with any questions.