Insurance Policy Interpretation: The 'Household Exclusion' To the Rescue!
Clennie Murphy, III, et al. v. Government Employees Insurance Company, No. 55, September Term, 2025. Opinion by Gould, J.
On August 19, 2021, Mrs.
Barbara Alexander Murphy and Mr. Clennie Hughes Murphy, Jr., her husband and
passenger, decided to go for a drive. The specific details of this motor
vehicle collision are set aside but suffice it to say that Mrs. Murphy was the
cause of this motor vehicle collision and Mr. Murphy’s death. Mr. Murphy was
survived by Mrs. Murphy and their four adult children, (hereafter ‘the Murphy offspring’),
all of whom were adults and none of whom lived in the Murphy household at this
point in their respective lives.
Thereafter, the Murphy offspring brought a claim on the automobile
policy against their own mother under Maryland wrongful death statute codified
at Courts & Judicial Proceedings Article §3-901, et seq. The Murphy motor vehicle, along with Mrs.
Murphy, was covered by an insurance policy issued by GEICO, with applicable
liability limits for bodily injury of $300,000 per person/$300,000 per
occurrence. Government Employees
Insurance Company aka ‘GEICO’, denied the Murphy offspring’s claim citing the
‘Household Exclusion’ and taking the position that ‘coverage does not apply
to bodily injury to any insured, or to any relative of an insured residing in
his household in excess of the financial responsibility limits required by
Maryland law.’ Maryland law requires a minimum of liability coverage in the
amount of $30,000.[1]
GEICO argued in the prelitigation stage that they would/could pay thirty
thousand dollars ($30,000) but not three hundred thousand ($300,000). GEICO
reasoned that the Murphy offspring sought damages because of the ‘bodily injury
(aka the death) of Mr. Murphy, their insured.
The Murphy offspring filed a lawsuit in the Circuit Court for Montgomery
County seeking a declaratory judgment ordering that the coverage available
under Murphy’s GEICO insurance policy for their respective wrongful death
claims was not subject to the ‘household exclusion.’ The Murphy offspring argued that THEIR
claims were separate and distinct from any claim their father (or his estate)
might have brought/could bring and that the $300,000 per-person limit
consequently applied.
The trial court sided with GEICO and following the guidance provided by Costello
v. Nationwide Mutual Insurance Co., 143 Md. App. 403 (2002) held that the offspring
claims were “derivative and ar[o]se from the bodily injury of their father[.]” The
trial court judge reasoned because the household exclusion would have applied
to any claim their father could have made, it also applied to the Murphy offspring’s
claims.
The Murphy offspring then appealed the trial court’s ruling to the
Appellate Court of Maryland which held in an unreported opinion that the
household exclusion limited GEICO’s payment obligation to $30,000. The
Appellate Court reasoned that “regardless of whether the Murphy children’s
wrongful death claim is characterized as derivative or independent, the claim
asked that Barbara pay damages for losses that only occurred because of the
bodily injury to an insured, and the household exclusion limits GEICO’s
obligation to pay ‘any claim or suit for damage’ that is based upon ‘bodily
injury to any insured.’”
Following the Appellate Court opinion the Murphy offspring petitioned
the Supreme Court of Maryland for a writ of certiorari, which was granted. The
question presented was: “Does the household exclusion in the Policy apply to
the Adult Children’s claim under the wrongful death statute?” Murphy v.
Gov’t Emps. Ins. Co., 493 Md. 63, 350 A.3d 778 (2026).[2]
The Supreme Court of Maryland, interpreting the GEICO policy as any
other contract, and citing Daley v. United Services Automobile Ass’n,
312 Md. 550, 541 A.2d 632, Costello, inter alia, ruled in favor of
GEICO. The Court referred to its holding in Daley: “because the parents
suffered no separate and distinct bodily injuries of their own, we conclude
that their damages resulted from the ‘bodily injury’ of one person – their
child – thus, their claim against the insurer was subject to the single
per-person limit.”
In order to try to understand why the Murphy offspring brought
this case up the appellate ‘chain’ when Costello and Daley had
fairly identical fact patterns with the same type of ‘wrongful death’ claim(s),
it is useful to go back to Costello. The ‘offspring’ in that case argued
that “although the household exclusion applies to their survival claim on
behalf of their deceased mother because she “resided in the insured’s
household” at the time of her “bodily injury,” the household exclusion does not
apply to their wrongful death claim … since neither Appellant resided in their
father’s house at the time of the accident.” 143 Md. App. at 410. The
‘insurance argument’ in response in all of these cases is (1) the policy
language is unambiguous, and, more to the point, (2) “coverage for all claims,
including derivative claims, flowing from [decedent’s] bodily injury, is
limited to [the statutory minimum].” The Costello Court further reasoned
that “appellants’ claim is not a bodily injury independent of the death of
their mother.” Id. at 411.
In defense of GEICO’s exclusion decision, the Supreme Court of Maryland in
Murphy similarly reasoned that the Murphy offspring’s argument rests on
a misunderstanding of the function served by the defined term “bodily injury”
in the relevant provisions of the Policy:
[T]he term “bodily injury” does not describe the scope or type of
damages available to a claimant, but rather serves as the triggering event for
GEICO’s legal obligation to pay damages in the first place under the “Losses We
Will Pay” clause. That same triggering event is carried over, again using the
term “bodily injury,” to the “Limits of Liability” and household exclusion
provisions. “Because the ‘bodily injury’ that triggers coverage is the death of
Mr. Murphy, an insured, the household exclusion applies according to its terms.
Murphy, No. 55, slip. op. at 8. As reasoned in Costello, the Maryland
appellate courts “are not addressing the right to bring a wrongful death action
…” rather, they consider “whether there is coverage under [the] policy for this
[type of] action.” 143 Md. App. at 415.
- Milton P. Warren, Of Counsel
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