Winter 2018

Personal Injury Protection (“PIP”) Can Be Legally Excluded

The claimant owned a personal vehicle and a taxicab. There were two separate auto policies issued by different insurance companies covering the two vehicles. There was a liability policy covering the claimant’s taxi, but this did not include any Personal Injury Protection (“PIP”) coverage. Maryland law requires every auto policy issued in the State to have a minimum of $2,500.00 PIP coverage (this can be waived by the insured as to certain specified persons). However, pursuant to Maryland insurance law, by definition, a taxi [and also a bus] is not a “vehicle” for purposes of requiring PIP (this is also the same for otherwise mandatory Uninsured Motorist (“UM”)/Under Insured Motorist (“UIM”) coverage). The policy covering claimant’s personal vehicle included PIP coverage as required by Maryland law. However, this also provided that PIP was excluded for an insured who is injured “while occupying a motor vehicle owned by you . . . and which is not insured under the liability coverage of this policy” (the “owned but not insured exclusion”).

Maryland insurance law does provide that an insurer can properly exclude PIP benefits for “any injury that occurs while the named insured . . . is occupying an uninsured motor vehicle owned by the named insured.” However, in contrast (and some potential conflict, as became apparent in this matter), another part of Maryland insurance law provides “the insurer through whom PIP benefits are generally available shall pay PIP benefits to an individual insured under the policy who is injured in a motor vehicle accident … while occupying a motor vehicle for which [PIP coverage is] not in effect” – effectively providing that PIP coverage follows the person and not necessarily the vehicle.

The claimant was injured in a motor vehicle accident while driving his taxicab. He applied for PIP benefits through the insurer of his personal auto that had PIP coverage. The claim was denied based on the exclusion. The claimant filed a complaint with the Maryland Insurance Administration (MIA), who ruled in favor of the claimant and imposed a penalty against the personal auto insurer. The MIA found the claimant was not “occupying” a “motor vehicle” because a taxi by definition is not a “motor vehicle,” and so the exclusion did not apply. The MIA further interpreted “uninsured” to mean the vehicle had to have no insurance at all for the exclusion of PIP to be valid. In turn, because the taxi in this case had some insurance, just not PIP, then the exclusion did not apply.

The insurer sought judicial review in circuit court, which reversed the MIA’s ruling. The MIA then appealed to the Court of Special Appeals, who affirmed the ruling of the circuit court, finding that the insurer properly denied the claimant’s application for PIP benefits based on the exclusion. The Court of Special Appeals found that “taxi” not coming within the definition of “motor vehicle” was simply to provide that certain otherwise mandatory coverages (such as PIP) were not required. However, this had no effect on other provisions of the insurance article referring to “motor vehicles,” which would include taxis. The Court of Special Appeals also interpreted “uninsured” in this particular section of the statute to refer specifically to having no PIP insurance – and whether or not there was any other insurance on the vehicle was irrelevant as to the exclusion being effective. The Court looked to a similar provision of Maryland insurance law allowing for an “owned but uninsured” exclusion in the context of UM/UIM coverage. It is clear that the “uninsured” reference in that statutory language specifically states that there is no UM/UIM coverage on any policy covering the occupied vehicle.

Bear in mind that the facts and circumstances of this matter are quite unusual. Not only was there confusion that a taxi is not a motor vehicle for certain insurance purposes, the fact the claimant owned both vehicles was a key issue in the ultimate determination.