On April 30, 2010, the Pennsylvania Superior Court clarified the application of UIM exhaustion clauses, requiring exhaustion or set off of all policy limits available to a tortfeasor, including excess or umbrella coverage, before payment of UIM benefits. D’Adamo v. Erie, 2010 Pa. Super. 77. The D’Adamo court rejected plaintiff’s argument that Erie’s exhaustion clause was contrary to the PaMVFRL because it required exhaustion of all policies available to a tortfeasor, not just auto policies. The D’Adamo Court limited the effect of the Kester v. Erie, 582 A.2d 17 (Pa. Super. 1990) decision, drawing a distinction between exhaustion clauses that required exhaustion of all policy limits of all tortfeasors from clauses merely requiring exhaustion of all policy limits of a particular tortfeasor, finding that the more limited exhaustion clause did not violate the PaMVFRL or public policy.
UIM carriers can now calculate a credit for all policy limits available to a tortfeasor, including excess policies.
For more information on this decision, or any other aspect of the Pennsylvania Motor Vehicle Financial Responsibility Law, do not hestitate to contact me.
John A. Livingood, Jr.