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Jay Blood’s father wanted a more affordable automobile insurance premium when he reduced the policy’s liability limit weeks before his son was injured while riding in a friend’s car. For that reason, it’s counterintuitive to argue Blood’s father intended to increase his uninsured motorist/underinsured motorist coverage, an attorney for Old Guard Insurance Co. argued before the state Supreme Court in Blood v. Old Guard Insurance Co. Old Guard is appealing an en banc Superior Court ruling that insurers are required to obtain new UM/UIM sign-down forms every time a policyholder changes liability limits. Blood’s parents initiated a policy with Old Guard in 1985 with a $500,000 liability limit but opted for a $35,000 per vehicle UM/UIM limit. With three vehicles, the UM/UIM coverage yielded a stacked limit of $105,000. In 2000, Blood’s parents changed the policy’s liability limit to $300,000 to reduce the premium, but did not complete a sign-down form opting for lower UM/UIM limits. When Blood was injured in August 2000, the driver’s insurance company tendered its $25,000 policy limit. Blood sought $900,000 in UIM coverage, the total of $300,000 stacked on three vehicles, from Old Guard under his parents’ policy. Old Guard rejected the claim, paying him $105,000 instead, representing the limits of the $35,000 UIM coverage for each of the vehicles on his parents’ policy. “I don’t believe there was any reason they had to undergo another sign-down for the UM/UIM coverage,” Jeffrey A. Ramaley, of Zimmer Kunz in Pittsburgh, told the justices in a brief argument Monday. Arguments were held in Pittsburgh. Scott B. Cooper, of Schmidt Kramer in Harrisburg, told the justices the question is one of law and not the policyholder’s intent. “In this case, plain and simple, the Bloods did sign a request going from $500,000 to $35,000, but they never did a sign down from $300,000 to $35,000,” Cooper said. “If you don’t have the rejection, then it is void and you’re reforming the policy.” The Pennsylvania Motor Vehicle Financial Responsibility Law says that in the absence of a completed “in writing” selection of lower UM/UIM coverage, the under insured motorist coverage must be equal to the liability limit, Cooper told the court. Also arguing for Blood, Michael J. Koehler, of Nicholas Perot Smith Koehler & Wall in Erie, said the offer of lower UM/UIM coverage is required regardless of whether the liability limits increase or decrease. Without the offer and a signed selection of lower UIM coverage the limit matches the liability limit. “If my client is so stupid he doesn’t know what he’s doing, he’s still entitled to the coverage. If my client’s a lawyer and he knows exactly what he’s doing, he doesn’t have to sign anything,” Koehler said. Questioning attorneys for the Bloods, the justices focused on the nature of the question before them and the language of the MVFRL upon which Blood relies. Turning around Old Guard’s argument regarding the policyholder’s intent, Cooper and Koehler both told the justices they believe the question has to be one of law. It is counterintuitive to say Blood’s father intended to increase UM/UIM coverage when his goal was to reduce the family’s premium, Cooper said. Chief Justice Ralph J. Cappy asked whether the MVFRL contains an identifiable phrase that requires a sign-down form. Cooper said that under Section 1791, the insurance company is required to provide “important notice” of the policyholder’s UM/UIM options. Under Section 1734, the insurer is required to obtain a “written notice” of the policyholder’s intent to opt for lower UM/UIM coverage. In the absence of the “written notice” the UM/UIM limit is presumed to be equal to the liability limit, Cooper said. “In your position, if I increase my liability to $500,000, I have automatically bought $500,000 in UM/UIM coverage,” Cappy said. Cooper replied that Cappy was correct. After Old Guard contested Blood’s claim, he filed a declaratory judgment action in Crawford County Court of Common Pleas, where the judge found the Bloods’ reduction of liability limits did not create a new insurance policy and did not require a new “important notice” or the completion of sign-down forms. He appealed to Superior Court, where a 2-1 majority reversed the trial court, finding the reduction in liability limits did require a written selection of lower UIM coverage to maintain the coverage at $35,000 per vehicle. Old Guard successfully petitioned for re-argument before an en banc panel raising questions of whether the company was obligated to comply with its coverage selection form and whether the company violated the MVFRL. The Superior Court again found in favor of Blood, drawing in its opinion on Smith v. The Hartford Insurance Co. to distinguish the effect of a change in liability limits on a previous selection of lower UIM coverage from the effect on a previous outright rejection of UIM coverage. Judge Joan Orie Melvin filed a dissenting opinion. When an insured changes his liability limits, it doesn’t effect a rejection of UIM coverage because the notice that such coverage is available has already been given. However, even when there is a previous valid selection of lower UIM coverage, the insured must execute a new written election for lower UIM coverage when he changes his liability limits. Because the selection form the Bloods signed when they changed their liability coverage did not reflect a selection of UIM coverage, the court found the statutory presumption that UIM limits equal to the liability limit was in effect, according to the company’s petition. Among the reasons for its appeal, Old Guard states the Superior Court’s decision is inconsistent with the MVFRL and case law interpreting it. In Kimball v. Cigna Insurance Co., the Superior Court held a new written request for a reduction in UM/UIM coverage was not required when a second named insured was added to a policy. The court ruled similarly in Breuninger v. Pennland Insurance Co., with regard to the transfer of a policy from one carrier to another. In Nationwide Mutual Insurance Co. v. Heintz, the Superior Court held an insurance policy couldn’t be reformed to increase coverage on the basis of a technicality when the insured has negotiated and enjoyed the benefit of reduced premiums as a result of reduced coverage, Old Guard’s petition states. Old Guard also contends the court’s decision is inconsistent with public policy underlying the MVFRL and creates an absurd result. The company argued the Superior Court’s conclusion that a written election for UM/UIM coverage is required ignores the fact that the Bloods’ intention was to reduce their premium. To construe the law to allow the insured to obtain more coverage for a lower premium is absurd and violates rules of statutory construction, the company argued. Old Guard also argued the relief requested cannot be granted because the MVFRL does not establish a remedy for the insurer’s failure to secure a second written request for lower limits.

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