Third Circuit Rejects Policyholder Claims Where Pennsylvania’s UIM Coverage Rejection Requirements Are Satisfied
Uninsured and underinsured motorist (“UIM”) coverage is not mandatory in Pennsylvania and insureds have the option of rejecting such coverage by signing an approved form. In Keeler v. Esurance Insurance Services, Inc., the Court of Appeals for the Third Circuit recently addressed whether a waiver of UIM coverage by insureds was void to permit them to maintain claims against their motorcycle insurer. Plaintiff Nathan Keeler suffered serious injuries when his motorcycle collided with an SUV which had pulled out of an intersection. The SUV driver’s insurer settled for the bodily injury limit of $300,000 but Keeler claimed injuries in excess of that amount and sought to recover UIM benefits from their insurer Esurance. The claim was denied on the basis that plaintiff had signed a rejection form waiving UIM coverage and had consistently not paid premiums for such coverage. Plaintiffs sued various Esurance entities, claiming breach of contract and bad faith denial of insurance coverage. They sought damages exceeding $75,000 and Esurance removed the case to the United States District Court for the Western District of Pennsylvania. Esurance moved for summary judgment, arguing that it properly denied the claim for UIM benefits based upon plaintiffs’ signed waiver. Plaintiffs cross-moved on the grounds that the waiver was void because Esurance failed to print it in a “prominent type and location” as per Pennsylvania law. They also claimed that because Esurance’s renewal notices did not mention UIM protection, also required by Pennsylvania law, that the waiver was void. The District Court disagreed and held that the UIM rejection form was valid and that there was no civil remedy for defective renewal notice under Pennsylvania law. The Third Circuit affirmed, holding that the UIM rejection form satisfied the prominent-type-and-location requirement under Pennsylvania law. The court observed that the form was included on a separate document from the policy itself, was organized by subject matter, with the waiver in its own section in a readable sized font with a bold, underlined title in all capital letters, with a signature line that was signed by plaintiff. The court also held that while Esurance violated Pennsylvania’s renewal form prominence requirement, Pennsylvania law does not provide for a civil remedy for such deficiencies. Thus, Esurance’s violation did not affect the validity of the UIM waiver. The Keeler decision highlights the importance of insurer compliance with Pennsylvania’s UIM rejection form requirements and supports a denial of UIM coverage where the requirements are met, and insureds waive such coverage. Thank you to Haley Matthes for her contribution to this post. Please contact Andrew Gibbs with any questions.
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