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VOLUME 10 August 2005 | ||||||
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DEVELOPMENTS IN UM/UIM LAW IN PENNSYLVANIA By Christopher J. Poulos, Esq.
REJECTION OF UM/UIM COVERAGE: The Pennsylvania Superior Court recently ruled in Smith v. The Hartford Ins. Co. that a rejection of UM/UIM coverage carries forward for the lifetime of the policy unless affirmatively changed, and it is not altered by a change in liability limits. In Smith, plaintiff’s husband purchased automobile insurance and a few months later, executed a waiver of UIM coverage pursuant to Section 1731 of the MVFRL. Some time later, plaintiff’s husband increased the liability coverage on the policy. The policy remained in effect for several years and was in effect when plaintiff was injured in an automobile accident with an alleged underinsured motorist. Plaintiff asserted a right to UIM coverage despite the prior rejection of UIM coverage. The trial court concluded that the increase in liability coverage resulted in a new policy being issued and that a new UIM waiver was required to hold that plaintiff waived UIM. In reversing the trial court, the Superior Court noted that the trial court’s decision was contrary to Section 1791 of the MVFRL which provides that once the applicant has purchased the policy and been informed of the choices available, no other notice or rejection shall be required.
WAIVER OF STACKING OF UM/UIM: In Sackett v. Nationwide Mutual Insurance Company, the Superior Court expanded on the Smith decision and held that a waiver of stacked UM/UIM coverage, once properly executed, continues to bind the insureds even after the addition of new vehicles to the policy, and that a new waiver need not be obtained by the insurer at the time the new vehicle is added. In Sackett, the plaintiffs purchased an automobile policy with Nationwide in August 1998 insuring two vehicles with UIM limits of $100,000 per person. Plaintiffs were also provided with a waiver form pursuant to Section 1738 of the MVFRL and they decided to reject stacked limits of UM/UIM with respect to those two vehicles. In July, 2000, plaintiffs added a third vehicle to the policy, but no new stacking waiver was provided or executed. Nationwide issued unstacked UIM coverage to this vehicle as well. After adding the new vehicle, Victor Sackett was involved in a motor vehicle accident with an allegedly underinsured motor vehicle. Mr. Sackett ultimately sought UIM benefits from Nationwide and claimed he was entitled to stacking as he was not provided with a new waiver of stacking form when the third vehicle was added. Nationwide denied that plaintiffs were entitled to stacking and plaintiffs filed a Declaratory Judgment action. The trial court entered an Order granting a motion for summary judgment in favor of Nationwide to which plaintiffs appealed. The Superior Court affirmed the trial court’s Order holding that plaintiffs were not entitled to stacking as Nationwide was not required to offer or obtain new stacking waivers when a new vehicle was added.
ARBITRATION OF UIM CLAIMS: In Amber-Messick v. Progressive Insurance , Judge Rufe of the U.S. District Court for the Eastern District of Pennsylvania, when forced to predict Pennsylvania law as the case was before her on diversity jurisdiction, ruled that automobile insurance policies do not need to contain provisions requiring binding arbitration of UIM motorist claims. In Amber-Messick, the applicable policy provision stated that the insured and insurer must “mutually agree” to arbitrate. Plaintiff argued that a July, 2001 order from the Pennsylvania Insurance Department as well as case law mandated that all UIM policies provide for binding arbitration. Judge Rufe rejected this argument noting that the July, 2001 order and case law only indicated that public policy favored arbitration and that the Pennsylvania Insurance Department has the authority to disapprove UIM policies that do not provide for binding arbitration of UM/UIM limits. |
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