Thursday, December 10, 2009

Pennsylvania Superior Court Issues UIM Benefits Sign Down Decision

In an Opinion handed down a few days ago in the case of Erie Insurance Exchange v. Larrimore, 2009 WL 4604657, 2009 Pa.Super. 236, 536 EDA 2009 (Pa.Super. Dec. 8, 2009, Freedberg, J.), the Pennsylvania Superior Court held that the execution of an insurance application form did not constitute a valid request for reduced underinsured (UIM) motorist benefits coverage. The Superior Court affirmed the Carbon County trial court decision/opinion by Judge Roger Nanovic in favor of the insured.

In addition to the above Westlaw citation, the 24 page Opinion can also be viewed online at

In Larrimore, the Erie insured originally filled out an application for a policy offering $300,000 in liability coverage but only $15,000 in UIM coverage stacked on two cars. The Erie insured was later involved in an auto accident and, when the UIM claim was instituted, the insured asserted that Erie has not secured the agreement for reduced UIM benefits under the policy in the proper manner provided under Pennsylvania law.

Erie filed a declaratory judgment action seeking a decision that the insured was only entitled to the $15,000 in UIM coverage. However, while the carrier was able to produce the Section 1791 "IMPORTANT NOTICE" form, it was unable to produce any sign down forms with regards to the insured's alleged selection of reduced UIM coverage at an amount below the liability coverage.

While there is no specified Section 1734 sign down form provided under the law, the law mandates that certain information may be contained therein. The Court rejected Erie's assertion that the insured's signature on the insurance application and the Section 1791 form was sufficient to cover the requirement of obtaining the appropriate selection of lower coverages by the insured. Also rejected was Erie's argument the insured's payment of the premium over the many years leading up to the accident essentially evidenced the insured's acceptance of the coverages under the policy. The court also rejected Erie's argument that, even if the carrier was in the wrong, there was no remedy provided for the insured under Pennsylvania law.

In ruling in favor of the insured, the Superior Court affirmed that where there is no proper written request for lower limits produced that conforms with the requirements of Section 1734, the UIM coverage should instead be in the amount equal to the liability coverage under the policy, i.e. $300,000. Since the policy offered stacking on the two cars under the policy, the coverage was found to be $600,000.

I thank Attorney Christine S. Lezinski, of the Scranton firm of Lenahan & Dempsey for bringing this recent decision to my attention.

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