Issues Regarding Section 1734 Sign Down Form For Lower UIM Coverage

Several issues of note were addressed in the Post-Koken case of Gibson v. State Farm Fire and Casualty Company, No. 18-4919 (E.D. Pa. Feb 18, 2020 Rice, M.J.). The decision addresseded the validity of a Section 1734 sign down form following the entry of an excess verdict after a Post-Koken trial seeking UIM benefits.

In this case, the application for coverage was executed on April 22, 2016 and the boxes to select reduced UIM coverage were checked.

However, the application contained language confirming that the coverage was not binding until all forms were executed.

The subject motor vehicle accident occurred on May 5, 2016, which was less than a month after the policy was purchased.  The forms to select the lower UIM coverage were not signed by the insured until 19 days after the accident.  By signing those forms, the insured had acknowledge her selection of $300,000 in UIM coverage despite a right to elect $750,000 in UIM coverage.

The Plaintiff argued that the UIM coverage at the time of the accident was equal to the liability coverage because the required form was not signed until after the accident. The carrier argued that that the mandates of Section 1734 were met as the original application constituted a “request in writing” and that the signature on the coverage selection form “confirmed” the selection.

The Court, through a federal district magistrate, found that State Farm's own documents had a built-in ambiguity. State Farm’s own documents stated that the coverage selection was “required.” Therefore, the insured needed more information before the sign down was to be deemed effective.  As such,, the insured receive the higher coverage because the form was not sign until after the accident in question.

Anyone wishing to review this decision may click this LINK.

I send thanks to Attorney Scott Cooper of the Harrisburg, PA office of Schmidt Kramer for bringing this decision to my attention.