In Blood v. Old Guard Insurance Company, when the Bloods originally applied for insurance in 1986, they elected bodily injury liability limits of $500,000 per accident and, in writing, elected UM/UIM limits of $35,000 per accident. In 2000, desiring to decrease the amount of their insurance premium, the Bloods requested that the bodily injury liability limits be reduced from $500,000 to $300,000. A change request form was used to effectuate the reduction in liability limits. The change request form included a check mark next to the figure of $300,000 for liability limits. The same form listed options for six different levels of UM coverage and six different levels of UIM coverage. There were no check marks next to any of the UM/UIM coverage limit options.
The Bloods’ son was seriously injured in a motor vehicle accident and asserted a claim for underinsured motorist benefits against Old Guard. The policy as written at the time of the accident provided $35,000 in stacked underinsured motorist coverage for three vehicles. Old Guard paid the son $105,000 which it believed was the maximum limit of underinsured motorist coverage available for the claim.
The son filed a declaratory judgment action seeking a declaration that Old Guard was required to provide underinsured motorist limits equal to the bodily injury limits of $300,000 and that with stacking the limit of underinsured motorist coverage available was $900,000.
In an 8-1 decision, the en banc panel of the Superior Court agreed with the plaintiff and found that because the Bloods did not make a written request for lower UM/UIM limits at the time that they reduced their liability limits, Old Guard was required to afford UIM coverage equal to the liability coverage of the policy.
The good news for insurers is that the decision seems to be limited to the facts of the case. The opinion suggests that a different result may have been reached if the request for reduced liability limits was made orally or if the written form did not contain a section for selection of UM/UIM limits by stating:
In summary, the “Pennsylvania Auto Insurance Coverage Selection Form” signed by the Bloods on June 16, 2000, contains an explicit option for selecting lower UIM benefits. No such selection was made, nor was this option crossed off or otherwise rendered inoperative. Consequently, the statutory presumption of UIM policy limits equivalent to the bodily injury liability limits was in effect. Old Guard, as the drafter of the document, was in a position to make it clear whether the Bloods were choosing a lower UIM coverage limit. Having failed to protect itself, this Court is not empowered to reform the contract to reflect Old Guard’s contention.
If you would like to read a copy of the opinion, please click here. You may also request a copy from my secretary, Denise Alosi, at 215-665-3321. If you have any questions about the case or any other automobile insurance law issues, please feel free to call me.
Very truly yours,
Michael Saltzburg
For further information, please contact Michael Saltzburg, Esquire.
Telephone: 215-665-3340
E-mail: saltzburg@bbs-law.com
