On March 18, 2025, the Appeals Court issued its decision in Privilege Underwriters Reciprocal Exchange v. Hilinski, No. 24-P-55. This case involved a dispute over insurance coverage following a severe injury sustained by Callie Hilinski, the teenage daughter of Lisa and Scott Hilinski, in a golf cart accident. The court addressed two primary issues: the validity of a family member exclusion in an excess liability policy and the applicability of underinsured motorist (UIM) coverage under the same policy. The court affirmed the lower court's ruling on the family member exclusion, holding that it did not violate Massachusetts public policy. However, the court reversed the decision regarding UIM coverage, finding that the follow-form provision in the excess policy was ambiguous and did not clearly incorporate limitations from the underlying auto policy.
In 2018, Callie Hilinski, the teenage daughter of Lisa and Scott Hilinski, suffered a severe knee injury while riding as a passenger in a golf cart owned by Scott and driven by Callie's friend, Audrey Connelly. The accident resulted in significant medical expenses and long-term implications for Callie's mobility. At the time of the accident, the Hilinskis held both an auto policy and an excess policy from Privilege Underwriters Reciprocal Exchange ("Privilege"). The auto policy provided $250,000 in bodily injury coverage and $250,000 in UIM coverage. In addition, the excess policy provided $10,000,000 in excess liability coverage and $1,000,000 in excess UIM coverage.
Following the accident, the Hilinskis submitted a claim to Privilege. Privilege offered $250,000, the bodily injury liability limit under the auto policy, to settle Callie's claims but denied any excess liability coverage and UIM coverage under either policy. Privilege then sought a declaratory judgment to confirm that there was no such coverage. In response, the Hilinskis counterclaimed for declaratory relief, breach of contract, and violations of Massachusetts General Laws c. 93A and c. 176D, arguing that they were entitled to additional coverage under the terms of their policies.
The court first addressed whether the exclusion for injured family members in the excess policy violated Massachusetts public policy. The exclusion in question denied coverage for personal injuries to the policyholder or any insured family member. The court affirmed the lower court's ruling that the exclusion did not violate public policy, emphasizing that it is the responsibility of the Legislature and the Commissioner of Insurance to determine the validity of such exclusions. The court referenced previous Massachusetts case law, including Hahn v. Berkshire Mut. Ins. Co., which upheld similar exclusions in homeowners' insurance policies. The court found no compelling reason to deviate from this precedent, noting that the exclusion was not arbitrary, unfair, or unconscionably one-sided. The court also observed that allowing such exclusions helps keep insurance premiums affordable by limiting the insurer's exposure to intrafamily claims.
The court then examined whether the follow-form provision in the excess policy limited UIM coverage by incorporating exclusions from the underlying auto policy. The follow-form provision in the excess policy stated that Privilege would cover damages to the extent they were covered by the underlying insurance and not excluded by the excess policy. However, the court found this provision to be ambiguous and confusing, particularly regarding its application to UIM coverage. The court highlighted that the follow-form provision did not clearly and unambiguously incorporate UIM coverage limitations or exclusions from the auto policy.
The court noted that the language of the follow-form provision was susceptible to multiple interpretations and did not provide a clear directive on whether UIM coverage limitations from the auto policy applied to the excess policy. Given this ambiguity, the court resolved the issue in favor of the insured, the Hilinskis, following the principle that any ambiguity in an insurance policy must be construed against the insurer. Consequently, the court concluded that Callie was entitled to UIM coverage under the excess policy, as the follow-form provision did not explicitly limit such coverage.
The Appeals Court affirmed the lower court's ruling that the family member exclusion in the excess policy did not violate Massachusetts public policy. The court emphasized that it is within the purview of the Legislature and the Commissioner of Insurance to regulate such exclusions. However, the court reversed the decision denying UIM coverage under the excess policy, finding the follow-form provision ambiguous and not clearly incorporating limitations from the underlying auto policy. The court ordered that the Hilinskis are entitled to UIM coverage under the excess policy for Callie's injuries. This decision underscores the importance of clear and unambiguous language in insurance policies and reinforces the principle that ambiguities in such policies are to be resolved in favor of the insured.
This case sets a significant precedent for future disputes involving insurance policy interpretations, particularly regarding follow-form provisions and family member exclusions. Insurers will need to ensure that their policy language is clear and unambiguous to avoid unfavorable rulings. The decision also highlights the judiciary's role in protecting insured parties from ambiguous policy terms and reinforces the necessity for legislative and regulatory bodies to address and clarify insurance policy standards. Moving forward, this ruling may prompt insurers to revise their policy language and could influence legislative action to provide clearer guidelines on permissible exclusions and coverage limitations.