Monday, May 20, 2013

Pennsylvania Superior Court Sides With Claimant in "Sign Down" UIM Case

In its recent decision in the case of Weilacher v. State Farm, No. 124 WDA 2012 (Pa.Super. 2013)(Musmanno, Wecht, and Colville, J.J.)(Opinion by Musmanno, J.), the Pennsylvania Superior Court sided with a Plaintiff-insured on a question of whether the carrier should have obtained sign down forms for UM/UIM coverages after the insured had increased the liability limits under the policy.
In this case, the Weilachers were insured by a policy issued by “State Farm Fire & Casualty Company.” They had initially rejected both UM and UIM coverage pursuant to Section 1731.  The liability limits at policy inception were $25,000/$50,000. At some point the Weileachers added UM coverage in an amount equal to the liability coverage. 
A policy was then transferred to “State Farm Mutual Automobile Insurance Company” and a “new” policy issued with a different policy number.  All coverages were the same.  No additional underwriting forms were obtained. 
The Weilachers then added UIM coverage in amount equal to the liability coverage.  The policy stayed as is for a couple of years. 
In 2009 the Weilecher’s increased the liability coverage only to $500,000/$500,000.  This was done electronically.  The UM/UIM coverage remained at $25,000/$50,000.  No sign down forms were obtained; further, there was no other underwriting documentation obtained at that time.
Mrs. Weilacher was thereafter injured in an accident.  The insureds claimed that their UIM coverage should be $1 million ($500,000 x 2 – the amount of the liability coverage, stacked).  State Farm disagreed and tendered the $50,000 in “undisputed coverage.”
The insured then instituted a declaratory judgment action in Allegheny County.  State Farm attempted to remove it to federal court, but the case was remanded pursuant to Sumy v. State Auto as the dispute involved only questions of state law.
The parties then entered into a stipulation of facts and filed cross-motions for summary judgment.  The insured’s position was that State Farm was required to obtain a “sign down” when the liability limits were increased as there had previously been no sign down; and thus this case was distinguishable from Blood v. Old Guard.  State Farm’s position was that Blood was controlling and that the change in liability coverage only did not trigger any obligation to obtain a new sign down form.
Judge DelaVecchio the Court of Common Pleas of Allegheny County granted State Farm’s motion and denied the insureds’ motion.  An appeal was taken to Superior Court. 
Judge Musmano authored the Superior Court's opinion reversing the trial court and holding that State Farm was obligated to provide $1 million in UIM coverage after finding that this matter was factually distinguishable from Blood. 
The Superior Court apparently felt that, in Blood, there had been an election of lower UIM coverage at some point in the pendency of the policy.  As such, the insureds in that case had demonstrated an affirmative intention to select UIM coverage less than the liability coverage.  This was found not to be the case with the Weilechers. 
The Superior Court also held that there was, in fact, a remedy for failure to comply with Section 1734.  The trial court had agreed with State Farm that Salazar v. Allstate applied and that, even if there was a violation of Section 1734, there was no remedy. 
The Superior Court held that Salazar was distinguishable and that the remedy was reformation of the policy to provide UIM coverage in an amount equal to the liability coverage.  The court also held that it was of no moment that the Weilecher’s had paid lower premiums for reduced UIM coverage, citing Erie v. Larrimore.
Anyone wishing to review the Superior Court's opinion in Weilecher v. State Farm may click this LINK.

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