Erie denied coverage for the accident under the CGL policy, which excluded automobile liability, and under the BCL policy because it was not in effect on the date of loss and the coverage only applied to automobiles insured by Erie. The trial court granted Erie\u2019s and Levy\u2019s motions for summary judgment, and appellants appealed on the basis of the reasonable expectations doctrine. That is, whether the trial court had erred in refusing to consider the expectations of the insured, Karalis, and in finding that Karalis did not have an expectation of coverage as a matter of law.<\/p>\n
In evaluating this claim, the Pennsylvania Superior Court considered the plain language of the Erie policies themselves, as well as Mr. Levy\u2019s conduct regarding insurance procurement. Approximately one year prior to the accident, Mr. Levy provided an Erie Business Auto Policy quote, which would have covered the vehicle involved in the accident. Karalis opted to continue its auto insurance coverage with State Farm based on price and emailed Mr. Levy with this decision and rationale.<\/p>\n
The doctrine of reasonable expectations is designed to protect \u201ca non-commercial insured from policy terms which are not readily apparent, and to protect non-commercial insureds from deception by insurance agents.\u201d\u00a0 Hespen, 332 A.3d at *4 (citing Matcon Diamond, Inc. v. Penn Nat. Ins. Co.<\/span>, 815 A.2d 1109, 1114 (Pa. Super. 2003)). Here, Karalis was a commercial insured, and there was no deception. Indeed, the terms of the Erie policies were unambiguous: Mr. Levy provided a BCL quote as requested, and Mr. Karalis never responded to the quote until after the accident occurred; and even if the BCL policy had been in effect, Erie would not have covered the loss, as Karalis had rejected the Erie auto quote (and thus the auto involved in the accident was not insured by Erie). Moreover, the court was unconvinced by Mr. Levy\u2019s note in his computer system about \u201cadding auto\u201d to the commercial policy.<\/p>\n Given the court\u2019s rejection of the doctrine of reasonable expectations, appellant\u2019s claims against Erie, Levy Agency and Mr. Levy lacked support, and the Court affirmed the trial court\u2019s summary judgment rulings.<\/p>\n With respect to the claims against Levy specifically, this case is a reminder of the oft-cited best practice to contemporaneously memorialize customer interactions and communications. Here, Mr. Levy offered auto insurance for Karalis with Erie, which was rejected, and the offer to procure BCL coverage was not accepted until after<\/em> the accident, despite repeated follow-up by Mr. Levy. These communications evidenced Karalis\u2019 intentions regarding auto insurance and did not support a finding of deception.<\/p>\n This case also bolsters the existing case law governing the application of the doctrine of reasonable expectations, reiterating the criteria articulated in Matcon<\/span>, supra<\/em>: \u201cThis Court has noted that, generally, courts cannot invoke the reasonable expectation doctrine to create an ambiguity where the policy itself is unambiguous. Our Supreme Court has identified only two limited exceptions to this principle: (1) protecting non-commercial insureds from policy terms which are not readily apparent; and (2) protecting non-commercial insureds from deception by insurance agents.\u201d<\/p>\n
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