Saturday, October 16, 2010

Judge Minora of Lackawanna County Rules on UIM Coverage Issue

Farmers New Century Ins. Co. v. Lambert, PICS Case No. 10-3232 (Lacka. Co. Oct. 4, 2010 Minora, J.).

This matter involved a declaratory judgment action brought by Farmers New Century Insurance Company seeking a judicial declaration that the carrier need not provide UIM coverage to the injured party because that party did not meet the definition of an insured under the policy.

The underlying facts involved a 2005 motor vehicle accident. The injured party was a passenger in one of the vehicles involved and sustained injuries as a result of the accident. It was undisputed that the injured party did not have any automobile insurance policy of his own and was not an insured under any other policy of insurance.

However, the injured party's mother had a policy with Farmers New Century Insurance Company and the insured attempted to tap into the UIM coverage available under that policy.

This was rejected by the Court on the basis that the undisputed evidence confirmed that the injured party did not reside with his mother on the date of the accident as required by the policy terms to implicate coverage for resident relatives of named insureds.

Judge Minora also rejected the injured party's argument that, because the insurance company had agreed to set up an underinsured arbitration panel, it was estopped from subsequently denying coverage. The Court noted that the fact that carrier agreed to set up an arbitration panel did not constitute a waiver of, or estoppel from, a denial of coverage. Simply put, Judge Minora concluded that the doctrines of waiver and estoppel could not serve to create a contract where none existed.

For these reasons, the Court granted Farmers' motion for summary judgment and entered a declaratory judgment of no coverage in favor of the carrier.

Source: Pennsylvania Law Weekly Case Digests.

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