$1,000,000 Typo Not Binding as to Coverage Limit

The Superior Court of Pennsylvania recently affirmed a trial court’s order granting summary judgment in favor of an insurer on breach of contract and bad faith claims in an underinsured motorist dispute, after agreeing with the insurer that the named insured, plaintiffs’ employer, had made “written requests” for UIM coverage in an amount less than the liability limit under Section 1734 of Pennsylvania’s Motor Vehicle Financial Responsibility Law.  See Beach, K. & T. v. The Navigators Ins. Co., 2020 WL 5494530 (Pa. Super. Ct. Sept. 11, 2020).

In Beach, the insureds were driving in a vehicle owned by their employer when they were involved in an accident.  After they settled with the tortfeasor’s insurer, they sought UIM coverage under their employer’s automobile insurance policy.  At the time that the employer purchased the insurance, the employer requested liability coverage in the amount of $1,000,000 and UIM coverage in the amount of $35,000.  The employer’s controller signed a document confirming the selection of $35,000 in UIM coverage.  A year later, at the time of policy renewal, the employer again requested UIM coverage in the amount of $35,000.  However, the renewal declarations page that the insurer issued contained several errors and typos, including identification of $1,000,000 in UIM coverage.  The employer’s insurance broker immediately wrote to the insurer to correct the errors, and the insurer immediately issued a corrective endorsement to the erroneous declarations page which showed UIM coverage in the amount of $35,000.  The endorsement was issued on January 14, 2009, before the insureds’ April 22, 2009 accident.  Nevertheless, the insureds argued that they were entitled to $1,000,000 in UIM coverage because the insurer was required to obtain a new written request for lower limits from the employer after the insurer incorrectly identified the UIM limit as $1,000,000 on the declaration page, and the email from the broker was insufficient to meet this requirement.  In response, the insurer tendered the $35,000 UIM policy limits.

With respect to the coverage issue, the Superior Court found that “the ‘written’ request requirement of Section 1734 has not been held to be such an arduous standard by the Courts of this Commonwealth.”  The Superior Court found that the requests for UIM coverage in the amount of $35,000 at the time of the policy application, renewal and correction of the declarations page all satisfied the requirement for a “written request” because they “demonstrated an explicit intent by [the employer] to purchase coverage in amounts less than the bodily injury limits, as well as mutual understanding and agreement by [the insurer] when it issued the original policy and the corrective endorsement.”

As for the bad faith claim, the Superior Court held that there was no dispute that the insurer had a reasonable basis for denying the insureds’ claim for coverage beyond $35,000 because it was determined that the UIM policy limit was $35,000.

While the insureds argued that the trial court had improperly considered the affidavit of former counsel for the insurer in considering the motion for a summary based upon the Nanty-Glo rule which prohibits the consideration of such affidavits, even if contradicted, because “credibility of the testimony is still a matter for the factfinder,” the Superior Court rejected this argument.  The Superior Court found that the trial court did not rely solely on the affidavit in reaching its opinion and that the documentary evidence, including the parties’ joint statement of undisputed material facts, supported the trial court’s finding that the insurer acted in good faith.