Maryland Court of Special Appeals Rules Policy Exclusion Valid to Deny PIP Benefits

Personal injury protection (PIP) coverage is offered by automobile insurance companies to cover additional medical costs and other expenses for personal injuries caused in car accidents, regardless of who was at fault for the accident. The Maryland Court of Special Appeals recently examined the availability of PIP coverage in Maryland Ins. Admin. v. State Farm Mut. Auto. Ins. Co. (Md. Ct. Spec. App. Mar. 15, 2016). At issue in the case was whether an exclusion in an automobile policy prevented an insured from receiving PIP coverage. The insured complained to the Maryland Insurance Administration (MIA) after being denied for PIP benefits, and the MIA imposed a penalty on the insurance company by ordering payment of PIP benefits with statutory interest. The decision was reversed by the circuit court, and subsequently appealed to the Court of Special Appeals.

The claimant was the owner of two vehicles, one of which was insured with the defendant insurance company under a policy that included PIP coverage. The other vehicle was driven as a taxicab and insured by a different insurance company under a policy that did not contain PIP coverage. The claimant was driving the taxicab when he was rear-ended by another automobile, causing personal injuries. The claimant filed for benefits with the defendant based on the policy covering the vehicle he was not driving. That policy contained a provision that excluded PIP coverage if the insured was in a vehicle he owned that was not insured under the policy. On appeal, MIA argued that Maryland law required the defendant to pay PIP benefits to its insured, regardless of the policy.

Maryland law requires insurers to provide coverage for the medical, hospital, and disability benefits for its insureds when they are injured in a motor vehicle accident, including an accident that involves an uninsured motor vehicle. The law, however, does allow insurers to exclude coverage for injuries that occur in uninsured vehicles owned by its insured. Since a taxicab is not within the statutory definition of motor vehicle, it is not required to carry PIP coverage as primary insurance for its occupants.

The Court of Special Appeals explained that because PIP coverage follows an insured, the claimant’s driving a taxicab is not a valid basis for an insurance company to deny PIP benefits. However, a policy exclusion is a different matter. The court noted that the purpose of the owned but insured provision is to prevent a family that owns several vehicles from insuring only one or two of them and then claiming uninsured or underinsured benefits, even though no premium was paid for coverage of the other vehicles. Therefore, the court found, the exclusion at issue was valid and the defendant could properly deny PIP benefits to the claimant.

If you have been hurt in a car accident, you may be able to pursue compensation for your injuries from a negligent driver or insurance company. The personal injury attorneys at Foran & Foran provide dedicated legal representation to victims of motorcycle collisions, slip and falls, medical malpractice, auto accidents, and more. To discuss your case with one of our experienced attorneys, contact us at (301) 441-2022 or online to schedule your consultation.

More Blog Posts:

Maryland Court Rules in Favor of Insureds, Awards Underinsured Motorist Coverage in Moped and Motor Scooter Cases, Maryland Personal Injury Blog, published December 14, 2015

Maryland Court of Appeals Upholds “Gap” Insurance Policy in Pedestrian Accident Case, Maryland Personal Injury Blog, published October 31, 2015


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