Recently, two decisions from the U.S. District Court’s Western District addressed the issue of Underinsured Motorist Coverage Rejections when there are subsequently added vehicles.
In the case of Allstate v. Gierlach, No. 2:13-cv-699 (W.D. Pa. Sept. 10, 2015), the Court granted summary judgment to Allstate in a declaratory judgment action upholding the rejection of UIM coverage. Gierlach rejected UIM coverage when he initiated the Allstate policy. Subsequently, a second vehicle was added to the policy. However, Allstate did not obtain a new Sec. 1731 UIM rejection from the insured. Thereafter, the resident son of Gierlach died in an automobile accident. Gierlach asserted that he was entitled to UIM coverage because Allstate failed to secure a new UIM waiver form when the second vehicle was added to the policy. The Court, relying on the Pennsylvania Superior Court opinion in Smith v. Hartford, 849 A.2d 277, 280-81 (Pa.Super. 2004), noted that the plain language of Sections 1731 and 1791 of the PA Motor Vehicle Law confirmed the legislature’s intent that proper 1731 Rejections for UM and UIM coverages remain in effect without affirmative action on the part of the insureds. Thus, a decision to reject UIM coverage will carry forward until affirmatively changed by the insureds. The court held that because the insured properly rejected UIM under the policy, the addition of cars to the policy would not be considered a “subsequent purchase of UIM coverage.” A new rejection was not required. Accordingly, the insured’s prior valid UIM rejection remained in effect when a new car was added to the policy.
Similarly, in Cahall v. Ohio Casualty Insurance Company, Civil Action No. 14-1246 (W.D. Pa. July 20, 2015), the Court granted the insurer’s motion for summary judgment based on a similar Sec. 1731 rejection of underinsured motorist benefits. The Cahalls were involved in a motor vehicle collision with another driver. The Cahalls settled with the driver and then brought a UIM claim against Ohio Casualty. The claim was denied because a proper UIM rejection was signed the time he policy was issued. After the purchase of the policy, the insureds replaced both of the original vehicles and also added a third vehicle. The Cahalls did not execute a new rejection of UIM coverage. The insurer asserted that UIM benefits were properly rejected. The insureds took the position that the carrier was required to “provide them with another opportunity to reject UIM coverage and stacking.”
The Cahall Court, again citing Smith v. Hartford, held that the addition of a vehicle to an existing automobile insurance policy, or replacing vehicles, does not create an obligation to obtain a second rejection of coverage. The insured’s original waiver of UIM benefits remained effective. Thus, the insurer properly denied underinsured motorist coverage to the insureds and the Court granted summary judgment in favor of Ohio Casualty Insurance Company.