In a recent decision in Erie Ins. Exch. v. Eachus, 2023 Pa. Super 264 (Dec. 12, 2023)(approved for publication, no reporter citation yet available), the Superior Court of Pennsylvania considered the question of whether a first named insured’s underinsured motorist benefits (“UIM”) “sign down” waivers, which elected lower UIM limits on an auto insurance policy, remain valid where no subsequent waivers are executed at the time of policy issuance.
In Eachus, the claimant executed an insurance application and a UIM “sign down” waiver electing lower UIM limits consistent with 75 Pa.C.S. § 1734. He also executed a 75 Pa.C.S. § 1791 “Important Notice” form. After an accident, the insurer tendered the limits available on the face of the policy. The claimant challenged the validity of the “sign down” waiver by arguing that his waiver was executed alongside an application for a policy that had yet to be issued. He therefore maintained that the insurer was required to obtain a second “sign down” waiver when the actual policy was written and delivered per the language of 75 Pa.C.S. § 1731 and 75 Pa.C.S. § 1734. The trial Court granted summary judgment to the insurer, finding that there was no other policy that the waiver could have applied to and that any writing by an insured satisfies the 75 Pa.C.S. § 1734 requirement.
The Superior Court agreed. It began by analyzing the policy history and the elections executed, explaining that the insurer already paid what was available on the face of the policy. The Court thereafter went through the standards for valid lower limit elections under the MVFRL and 75 Pa.C.S. § 1734, explaining that the Supreme Court of Pennsylvania in Orsag v. Farmers New Century Ins., 15 A.3d 896 (Pa. 2011) held that any writing satisfies the requirement and is valid for the life of the policy. Turning to the claimant’s elections, the Court explained that the claimant not only executed the valid writing that elected lower limits, but also executed an “Important Notice” form and continued to pay reduced premiums for the life of the policy thereby evidencing his desire for a lower amount of coverage.
The Court disagreed that the binder holds its own necessary lower limit election requirements, explaining that after on the spot coverage via binder is issued, if the policy underwriting is confirmed, the policy begins from the date the binder was issued and in turn incorporates the documents executed alongside the binder, including the sign down waiver. The trial court’s judgment was thus affirmed.
The Eachus decision can be found here.
For additional questions, please contact Glen Shikunov, Esq. and/or Scott Tredwell, Esq.
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