In a recent decision in Keeler et. al. v. Esurance Insurance Services, Inc., No. 21-2449, 2022 WL 10319919 (3d Cir. Oct. 18, 2022), the Third Circuit Court of Appeals considered the technical requirements for proper notice of rejection of underinsured motorist benefits (“UIM”) in auto insurance policies in Pennsylvania.
In Keeler, the Plaintiff was injured in a motor vehicle accident and sought UIM benefits from a household policy issued by the Defendant. The household policy contained a UIM rejection waiver executed by the first named insured. The Defendant thus denied the benefits sought. The Plaintiff challenged the validity of the UIM rejection waiver pursuant to 75 Pa.C.S. § 1731. First, the Plaintiff argued that in order to validly reject benefits, the statute required that the waiver language be printed in a “prominent type and location” on its own sheet of paper. Further, the Plaintiff alleged that the auto policy declarations with each renewal did not provide the statutorily required notice that the benefits were rejected and not included in the policy.
The court reviewed the UIM rejection waivers, which were notably placed on the same page as other UIM elections associated with lower limits of coverage and the election to purchase or reject stacking. Nevertheless, the Third Circuit explained that the waiver meets the “prominent type and location” requirement because it is located on its own document apart from the policy itself as well as information concerning other benefits. Citing to the Supreme Court decision in Winslow-Quattlebaum v. Md. Ins. Grp., 752 A.2d 878 (Pa. 2000), the Third Circuit rejected arguments that the presence of other UIM-related contents on the same page as the waiver in and of itself invalidates the waiver. It further rejected any proposition that the waiver required inclusion of different font colors or sizes in order to effectively communicate the desired effect.
Turning to Plaintiff’s second argument, the court initially noted that the Defendant conceded that the renewal notices were defective. Namely, none of the renewal declarations affirmatively advised the insureds that the policy did not contain UIM coverage as required per 75 Pa.C.S. § 1731(c.1). But the court rejected the notion that this technical violation voided the waiver itself. Instead, the court explained that no remedy for such technical violations exists where the waiver itself is otherwise valid. Thus, the Court relegated 75 Pa.C.S. § 1731(c.1) violations to the Insurance Department as a regulatory issue and upheld the UIM rejection waivers to deny coverage, accordingly.
The Keeler decision can be found here.
For additional questions, please contact Glen Shikunov, Esq. and/or Scott Tredwell, Esq.
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