Motorists Ins. Companies v. Emig

• Decision Date: 27 July 1995
• Citation: 664 A.2d 559,444 Pa.Super. 524
• Parties: MOTORISTS INSURANCE COMPANIES, Appellant v. Michelle S. EMIG, a/k/a Michelle S. Lance.
• Court: Pennsylvania Superior Court

Page 559

664 A.2d 559

444 Pa.Super. 524

MOTORISTS INSURANCE COMPANIES, Appellant v. Michelle S. EMIG, a/k/a Michelle S. Lance.

Superior Court of Pennsylvania.

Argued April 24, 1995.

Filed July 27, 1995.

[444 Pa.Super. 526] Jeffrey Millin, Meadville, for appellant.

Mary K. Karn, Erie, for appellee.

Before KELLY, FORD ELLIOTT and BROSKY, JJ.

BROSKY, Judge.

This appeal is from the Order entered in an action in declaratory judgment declaring the underinsurance coverage on a policy of automobile insurance issued to appellee by appellant to be fifty thousand dollars ($50,000.00) per person and one hundred thousand dollars ($100,000.00) per occurrence.

Appellant, Motorists Insurance Companies, raises two issues on appeal. The first suggests that the trial court failed to apply the proper burden of proof that the statutory "Important Notice" of Section 1791 of the Motor Vehicle Responsibility Law ("the MVFRL"), 75 Pa.C.S.A. §§ 1701 et seq., was satisfied concerning notice of available insurance benefits. The second issue queries whether appellee's signature on the policy change request form, which form indicated lower uninsurance/underinsurance ("UM/UIM") coverages, together with receipt of the statutory "Important Notice", constituted a waiver of UM/UIM coverages equal to the bodily liability limits of the policy. We affirm.

The pertinent facts underlying this cause of action are as follows:

Appellee was involved in an automobile accident on February 6, 1991. This accident is the genesis of the matter now before us. At the time of the underlying accident and prior thereto, appellee was insured by appellant under a policy of automobile insurance. In her initial application of February 28, 1990, appellant requested and ultimately received bodily injury liability coverage of fifty thousand dollars ($50,000.00)/one hundred thousand dollars ($100,000.00) [50/100]. As part of her initial application, she also requested and received reduced UM/UIM coverages in the amount of fifteen thousand dollars ($15,000.00)/thirty thousand dollars ($30,000.00) [15/30] as permitted by Section 1734 of the MVFRL. Pennsylvania law requires insurers who issue motor vehicle liability policies in this Commonwealth to offer its customers UM/UIM coverages in amounts equal to the bodily injury liability limits of the customers' policies. See 75 Pa.C.S.A. § 1791(6). Because of this mandate, appellee was required to execute a "waiver/acknowledgement" as part of her initial application of her right to receive UM/UIM coverages equal to the amount of the body liability limits of her policy. This she did. Appellee also signed her name at the end of the application, itself.

Prior to the renewal of the policy, which expired on August 28, 1990, appellee was involved in an automobile accident not the one here at issue. As a result, she was advised by her then counsel to raise her UM/UIM limits because they were too low. She complied with this suggestion by requesting UM/UIM limits of 50/100. Upon renewal of the policy, she received a declarations page evidencing renewal of the policy and showing the increased UM/UIM coverages equal to her bodily injury liability limits, i.e., 50/100.

On December 15, 1990, appellee purchased a Plymouth Acclaim, coverage for which she wished to add to her then current policy of insurance with appellant. On January 31, 1991, appellee met with Leon Sommers, appellant's agent. The purpose of this meeting was to add coverage for her newly purchased Plymouth Acclaim and to determine how she could reduce her policy premiums since coverage would now include the Plymouth. As a result of her discussion with Mr. Sommers, appellee executed a casualty policy change request form. As part of this change request, it is undisputed that appellee included the name of her new husband as an additional driver of the insured vehicles and the new Plymouth as a covered motor vehicle. It is also not disputed that appellee requested a first party medical expense benefit of five thousand dollars ($5,000.00) and executed a separate form for this added benefit. Additionally, to reduce her premium, the parties agree that appellee rejected stacking of UM/UIM coverages. To implement this rejection, she signed a separate waiver form.

On February 6, 1991, appellee was involved in the automobile accident which gave rise to the matter now before us. She settled her claim in the amount of the limits of the tortfeaser's policy. Appellee then applied for UIM benefits under her own policy with appellant in the amount of fifty thousand dollars ($50,000.00). She was informed by appellant that the limit of her UIM coverage was fifteen thousand dollars ($15,000.00), instead. As a result of the dispute over the amount of UIM coverage which appellee's policy affords, appellant instituted this declaratory judgment action. After a hearing, the trial court found that the policy in force at the time of the February 6, 1991 accident provided UIM coverage of 50/100 instead of 15/30, as claimed by appellant. This appeal followed.

I.

As stated before, Section 1791 of the MVFRL requires an insurer doing business in Pennsylvania to furnish the policy applicant with a copy of the "Important Notice". This notice must advise the applicant of the types and amounts of coverages which are required to be offered to him/her. This notice must also inform the applicant that he/she may purchase or reject these coverages. The applicant must also be made aware that he/she may purchase coverages in higher or lower amounts than those set forth in the Notice of available benefits and limits

"Important Notice". Section 1791 provides in pertinent part as follows:

It shall be presumed that the insured has been advised of the benefits and limits available under this chapter provided the following notice in bold print of at least ten-point type is given to the applicant at the time of application for original coverage, and no other notice or rejection shall be required:

IMPORTANT NOTICE

Insurance companies operating in the Commonwealth of Pennsylvania are required by law to make available for purchase the following benefits for you....

* * * * * *

(6) Uninsured, underinsured and bodily injury liability coverage up to at least $100,000, because of injury to one person in any one accident and up to at least $300,000 because of injury to two or more persons in any one accident....

Additionally, insurers may offer higher benefit levels than those enumerated above as well as additional benefits. However, an insured may elect to purchase lower benefit levels than those enumerated above.

Your signature on this notice or your payment of any renewal premium evidences your actual knowledge and understanding of the availability of these benefits and limits as well as the benefits and limits you have selected.

75 Pa.C.S.A. § 1791.

Appellant is correct that the "Important Notice" required by Section 1791 operates as a conclusive presumption when the insurer strictly follows the mandate of that Section. Insurance Company of the State of Pennsylvania v. Miller, 426 Pa.Super. 519, 627 A.2d 797 (1993); Botsko v. Donegal Mutual Ins. Co., 423 Pa.Super. 41, 620 A.2d 30 (1993), appeal denied,536 Pa. 624, 637 A.2d 284 (1994). Appellant maintains that it has strictly followed the mandate of Section 1791, and appellee does not deny that she received the "Important Notice" when she signed the policy change request form. As a result, appellant contends, appellee's signature on the policy change request form and her receipt of the statutory "Important Notice" operate as a conclusive presumption that she actually knew and understood that her UIM coverage limit was 15/30 instead of 50/100.

We believe that the conclusive presumption of Section 1791 with respect to any reduction of coverages of appellee's UM/UIM limits cannot be applied here since the record does not evidence a prerequisite compliance with Section 1734. Our reasoning follows in the discussion of issue number two, below.

II.

Section 1734, to which we have previously alluded, provides:

Request for lower limits of coverage

A named insured may request in writing the issuance of coverages under section 1731 (relating to availability, scope and amount of coverage) in amounts equal to or less than the limits of liability for bodily injury.

(Emphasis supplied). The coverages referred to with respect to Section 1731 are UM/UIM coverages. Section 1731 reads in pertinent part:

Availability, scope and amount of coverage

(a) Mandatory offering.--No motor vehicle liability insurance policy shall be delivered or issued for delivery in this Commonwealth, with respect to any motor vehicle registered or principally garaged in this Commonwealth, unless uninsured motorist and underinsured motorist coverages are offered therein or supplemental thereto in amounts as provided in section 1734 (relating to request for lower limits of coverage)....

75 Pa.C.S.A. § 1731(a).

Section 1731(b) then defines UM coverage and sets forth the language to be used in the form which an insurer must have an insured sign if the latter wishes to reject this coverage. Subsection (c) defines UIM coverage and similarly provides language to be used in the rejection form for this coverage, as well. Subsection (c.1) details the specific procedure to be followed when an insured wishes to reject either or both coverages and explains the effect of such rejection(s). No similar forms or procedure for reduction of UM/UIM coverages, which is the focus of our concern here, are provided. Nevertheless, the legislature, in its wisdom, has provided for such contingency by its enactment of Section 1734.

In its prediction of how our supreme court would interpret Section 1734, the United States Court of Appeals for the Third Circuit in Nationwide Insurance Co. v. Resseguie, 980 F.2d 226 (3d Cir.1992), held that Section 1734 mandates that a request to reduce UIM coverage be in writing by the...