Shrum v. State Farm Fire and Casualty Company

Plaintiff John Shrum sustained injuries in an accident while driving a vehicle owned by his employer. He filed a claim for underinsured motorist (UIM) benefits under his personal auto insurance policy issued by State Farm Fire and Casualty Company. State Farm denied coverage, relying on the policy’s “regular use exclusion,” which barred UIM coverage for injuries occurring while the insured occupied a vehicle not insured under the policy that was regularly used. Shrum sued, arguing the exclusion violated Pennsylvania’s Motor Vehicle Financial Responsibility Law and public policy. The trial court and the Superior Court ruled in favor of State Farm. The Pennsylvania Supreme Court granted appeal. On January 30, 2025, the court upheld the exclusion as valid and enforceable, affirming the summary judgment for the insurer. The court reasoned that the exclusion helps control premium costs and prevents stacking of coverage.

The Pennsylvania Supreme Court ruled that the regular use exclusion is valid and enforceable. It affirmed the lower courts’ decisions granting summary judgment in favor of State Farm, holding that the exclusion does not violate the Motor Vehicle Financial Responsibility Law or public policy.

Whether the “regular use exclusion” in an automobile insurance policy, which denies underinsured motorist coverage for injuries sustained while occupying a regularly used but non-owned vehicle, is void as against public policy under Pennsylvania law.

The ruling reinforces insurers’ ability to enforce regular use exclusions, helping contain premium costs. However, it may leave individuals injured while driving employer-provided or similar regularly used vehicles without expected UIM coverage under their personal policies, prompting consumer advocates to call for legislative review to address potential coverage gaps.