Monday, April 24, 2023

Pennsylvania Supreme Court Rules No New UIM Waiver Forms Required When a Change Is Made to an Existing Auto Insurance Policy

In the case of Franks v. State Farm Mut. Auto. Ins. Co., No. 42 MAP 2022 (Pa. April 19, 2023) (Op. by Mundy, J.), the court ruled that the removal of a vehicle from a multiple motor vehicle insurance policy, in which stacked coverage had been previously waived through a waiver form executed by the insured, did not require the insurance carrier to secure a renewed expressed waiver of stacked coverage under §1738(c).

At the lower level, the Pennsylvania Superior Court had described the issue in this case as one of first impression.    

By way of background, according to the Pennsylvania Supreme Court's Opinion, the injured parties purchased automobile insurance from State Farm in 2013 for their two (2) vehicles.

The Plaintiffs included underinsured motorist coverage in their policy but completed a form rejecting stacked UIM coverage in compliance with §1738(d)(2) of the Motor Vehicle Financial Responsibility Law (“MVFRL”).

The court noted that, absent any such waiver, stacked coverage would have been the default.

Thereafter, under the history of the insurance policy in question, the Plaintiffs removed one of the original vehicles and added a third vehicle to the policy in 2014. The Plaintiffs again rejected stacked UIM coverage at that point.

The Plaintiffs made another change to the automobile insurance policy in 2015 under which they removed the other of the original insured vehicles and replaced it with a different vehicle. No additional form rejecting stacked UIM coverage was offered or sought to be completed on the occasion of the removal of the last vehicle.

The court emphasized that the ongoing premiums paid by the Plaintiffs reflected the lower rate for non-stacked UIM coverage on the vehicles under the policy.

Thereafter, one of the Plaintiffs was injured in the motor vehicle accident. After pursuing a claim against the tortfeasor, the Plaintiffs pursued a UIM claim against State Farm. The parties disagreed on what the available limits would be.

The Plaintiffs argued that, with the last change to the policy, there was no valid waiver of stacked UIM coverage secured by the carrier and that, as such, the Plaintiffs were entitled to default stacked coverage under Pennsylvania law.

The Superior Court had ruled in favor of the insurance company.

On this appeal, the Supreme Court ruled that the Superior Court did not err when this Superior Court held that the removal of a vehicle from a multiple motor vehicle insurance policy, in which stacked coverage had been previously waived, did not require a renewed express waiver of stacked coverage pursuant to §1738(c).

The basic rationale of the Court was that Section 1738 requires insurance companies to secure a new written waiver of UIM coverage whenever an insurance policy is purchased.  Here, there was a change made to an existing policy.  No new policy was purchased.  As such, there was no requirement under the law for the carrier to secure a new waiver form.    

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

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