On August 4, 2022, in Koch v. Progressive, 2022 PA Super 131 (Aug. 4, 2022), the Pennsylvania Superior Court upheld the continuing validity of underinsured motorist (“UIM”) rejection waivers pursuant to 75 Pa. C.S. § 1731 despite subsequent policy changes and inquiries into coverage availability.
In Koch, the insureds were fatally injured in a 2015 motorcycle accident. They sought UIM benefits from, inter alia, the motorcycle policy issued by Progressive. Progressive denied coverage due to the claimants rejecting UIM benefits on the policy via a statutorily prescribed 75 Pa. C.S. § 1731 UIM rejection waiver. The claimants’ estate challenged the validity of the UIM rejection waivers, arguing that since the execution of the waiver, 1) the policy underwent a number of changes, including addition and removal of various vehicles, that required a new waiver; and 2) that the waiver was defective by virtue of the insurer’s representative subsequently urging the claimants to purchase uninsured motorist coverage without advising or consulting the claimants as to the benefits of UIM coverage. The trial Court determined that the insurer’s failure to fully advise the claimants of the benefits of UIM coverage whilst seeking their purchase of uninsured motorist benefits rendered their statutory waiver void.
In reversing the trial court, the Court reviewed the language of 75 Pa. C.S. § 1731, finding UM/UIM coverage to be a mandatory offering on all motor vehicle liability insurance policies unless the insured signed written rejection forms with certain language to knowingly and voluntarily reject coverage. The Superior Court explained, however, that consistent with the prior decision in Smith v. Hartford Ins. Co., 849 A.2d 277, 281 (Pa. Super. 2004), once UIM benefits are rejected via waiver, the waiver remains valid for the life of the policy. The Court further noted that 75 Pa. C.S. § 1791 decreed that “no other notice or rejection shall be required” once the proper offer and statutory rejection of UIM benefits exists. Turning to the record, the court observed that UIM coverage was rejected for the life of the policy, with the insurer sending the claimants notices of said rejection with each renewal. Additionally, each declarations page issued to the insured likewise advised that no UIM benefits on the policy existed. Summarizing the decision in Smith, the Superior Court found the UIM rejection waivers remain valid unless affirmatively changed by the insured. No such affirmative request was made by the claimants and the Court upheld the waivers accordingly. The Court likewise rejected any argument that subsequent policy changes required new waivers by specifically distinguishing the Supreme Court decision in Barnard v. Travelers Home and Marine Insurance Co., 216 A.3d 1045 (Pa. 2019). The Superior Court explained that Barnard dealt with “stacking” rejection waivers pursuant to 75 Pa. C.S. § 1738 and found that the statutory language thereof contains a “purchase” requirement, which re-triggers insurer obligations with each new purchase of new insurance, either via addition of new vehicles or increases in policy coverage limits. The Court noted the absence of a “purchase” requirement under 75 Pa. C.S. § 1731. Thus, the Court rejected any notion that insurers are required to re-comply with the UIM rejection waiver requirement in 75 Pa. C.S. § 1731 once the waivers are executed at inception.
The Koch decision can be found at the link below. For additional questions, please contact Glen Shikunov, Esq. and/or Scott Tredwell, Esq.
https://www.pacourts.us/assets/opinions/Superior/out/J-A14036-22o%20-%20105230874193453380.pdf?cb=1