The Western District of Pennsylvania recently granted an insurer’s motion for summary judgment and dismissed claims for breach of contract and bad faith after finding that the insured had clearly and unambiguously rejected underinsured motorist (“UIM”) coverage in accordance with Pennsylvania’s Motor Vehicle Financial Responsibility Law (“MVFRL”). See Keeler v. Esurance Insurance Services, Inc., 2021 WL 3417500 (W.D. Pa. Jul. 12, 2021).
In Keeler, the insureds presented a claim for UIM benefits to their insurer after the insured sustained serious injuries when the motorcycle he was operating was struck by a vehicle. The insurer denied coverage, claiming that the insured waived UIM coverage when he first obtained his policy and did not add UIM coverage with any subsequent renewal. The insureds brought suit against their insurer for breach of contract and bad faith, and the parties filed cross-motions for summary judgment.
The insureds argued that the insurer’s UIM rejection form does not comply with the MVFRL because the statutorily required language was not printed in a prominent font or location in their policy. Thus, they argued that the rejection form is void and UIM coverage must be provided. The Court disagreed, finding that the insurer’s rejection was not ambiguous. In so finding, the Court noted that the statutorily required language, while written in the same type as the rest of the language in the policy, was preceded by a bold, uppercase, underlined heading with a separate signature line for each UIM-related coverage option. Thus, the Court held that the form “eliminates any doubt” that the insured knowingly rejected UIM coverage. Under these circumstances, the Court held that reformation of the contract to provide UIM coverage is not warranted, and the insured’s breach of contract claim fails as a matter of law.
Separately, the insureds argued that the insurer’s annual policy renewal forms omit a required reminder that the policy does not provide UIM coverage. Because of this lapse, the insureds argued that UIM coverage must be provided. The Court acknowledged that the policy renewal form did not comply with the MVFRL because it did not provide notice that UIM coverage was not provided under the policy. The Court, however, held that reformation of the policy to provide UIM coverage was precluded because no remedy exists for violating this particular provision of the MVFRL. The Court noted that it has long been recognized in Pennsylvania that the absence of a remedy for renewal form violations is a bar to recovery.
As for the bad faith claim, the Court entered judgment in the insurer’s favor after finding that the insurer acted reasonably and in good faith given the insured’s affirmative rejection of UIM coverage.