Tuesday, August 9, 2022

Pennsylvania Superior Court Finds that Rejection of UIM Coverage At Inception of Policy Carries Through To Time of Accident

In the case of Koch v. Progressive Direct Ins. Co., No. 1302 MDA 2021 (Pa. Super. Aug. 4, 2022 Bender, P.J.E., Stabile, J., and Stevens, P.J.E.), the Pennsylvania Superior Court reversed a trial court’s Order which both denied the carrier’s Motion for Summary Judgment and granted a Plaintiff’s Motion for Summary Judgment on issues regarding the availability of UIM benefits under the circumstances presented.

According to the Opinion, this matter arose out of a motor vehicle accident during which the Plaintiffs were located on a motorcycle. The third party tortfeasor paid the available liability limits of $15,000.00 to each of the two Plaintiffs. 

At the time of the accident, the Plaintiff’s motorcycle had been covered by a policy which provided bodily injury coverage of $100,000.00 each person and $300,000.00 each accident.  However, uninsured and underinsured motorist coverage had previously been rejected on the policy.

The Plaintiffs presented at demand to the carrier for bodily injury and UIM benefits. Progressive refused to pay the requested UIM benefits based upon its assertion that the Plaintiff had signed a valid waiver form rejecting UIM coverage.

When the carrier denied coverage, the Plaintiff filed a breach of contract action in which action it was requested that the trial court make a determination as to the availability of the UIM coverage.

By way of background, the carrier asserted that the Plaintiff originally rejected UIM coverage at the inception of the policy.  At the time the policy was sold, the carrier was then identified as Progressive Halcyon Insurance Company.  Although Progressive Halcyon changed its name to Progressive Direct thereafter, the Plaintiff maintained his policy with this company for various motorcycles. 

Progressive asserted that the Plaintiff’s rejection of UIM coverage at the inception of the policy remained effective and carried forward through the addition and deletion of different motorcycles to the policy as the Plaintiff never affirmatively changed this designation of rejecting UIM coverage.

The Plaintiff presented evidence of a telephone conversation he had with a representative of Progressive Direct about nine months before the accident during which the Plaintiff sought out information on purchasing additional coverage for his motorcycle. However, during that phone conversation only uninsured motorist coverage was discussed and not underinsured motorist coverage. At the end of the phone call, the Plaintiff added uninsured motorist coverage to his motorcycle policy.

At the trial court level, the trial court found that the Progressive representative had misled the Plaintiff during this phone call and created and incongruous uninsured motorist coverage and underinsured motorist coverage selection process when the representative discussed uninsured protection but failed to advise the Plaintiff of the option of underinsured motorist coverage in response to the Plaintiff’s inquiry about purchasing additional coverage.  As such, the trial court concluded that the Plaintiff had not made a “knowing waiver” of UIM coverage. The trial court therefore found that the rejection of UIM form that the Plaintiff had signed years before during the inception of the policy was void under the Motor Vehicle Financial Responsibility Law. As such, the trial court had determined that there was available UIM coverage under the policy that was in place at the time of the accident.

As noted, the Pennsylvania Superior Court reversed on appeal.

On appeal, with regards to the allegation that the Plaintiff was misled, the appellate court noted that the Plaintiff’s Complaint did not seek to find the carrier liable on a tort theory of misrepresentation, but rather was a Complaint based on a claim of breach of contract.

Moreover, the Plaintiff did not allege that the Progressive representative was negligent or had established a fiduciary relationship with the Plaintiff during the telephone call regarding possible increased insurance coverages. As such, the appellate court limited its review as to whether summary judgment was appropriate in the context of a breach of contract claim.

The Superior Court reviewed §1731 of the Motor Vehicle Financial Responsibility Law, which requires carriers to provide the insured with specific information as to the availability of uninsured and underinsured motorist coverage.  That statute also mandates that a rejection of uninsured and/or underinsured motorist coverage must be confirmed in writing with certain stated language in prominent type and location.  Section 1731 requires carriers to secure this written waiver of coverage in order to confirm a knowing and voluntary rejection of each type of coverage by the insured.

Here, in this case, the appellate court noted that the carrier had produced a valid, signed rejection form from the Plaintiff that complied with §1731. The court noted that the record confirmed that, although the carrier changed its name over the years, that name change did not result in the creation of a new company. It was also noted that the Plaintiff’s policy remained the same throughout the years.

It was also emphasized at the appellate level that the carrier had presented evidence that it had consistently sent the Plaintiff policy renewals which repeatedly advised the Plaintiff that the Plaintiff had rejected UIM coverage.

The Superior Court noted that, in interpreting §1731, the appellate courts of Pennsylvania have held that an insured’s affirmative decision to waive UIM coverage is presumed to be in effect throughout the lifetime of that policy until that decision on coverage is “affirmatively changed” by the insured. See Op. at 13.

The appellate court also emphasized that the language of §1731 specifically provides that any person who completes a valid waiver form rejecting uninsured or underinsured coverage under §1731(b)-(c) is “precluded from claiming liability of any person based upon inadequate information.” Id

Furthermore, the Court also noted that, under §1791 of the Motor Vehicle Financial Responsibility Law, once the mandates of §1731 are met in terms of a valid waiver form, no other notice or rejection shall be required. Id.

In the end, the court found that, based upon Pennsylvania case law and the language of §1731, the UIM rejection forms signed by the Plaintiff at the beginning of the policy remained valid such that the Plaintiff was not entitled to UIM coverage at the time of the accident. As such, the trial court’s decision was reversed.

Anyone wishing to review a copy of this decision may click this LINK.

I send thanks to Attorney David R. Friedman of the King of Prussia office of the Forry Ullman law firm for bringing this case to my attention.

Source of image: Photo by Andrea Piacquadio on www.pexels.com.

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