Thank you for sharing!

Your article was successfully shared with the contacts you provided.
The Legal Intelligencer Insurers do not need to send out a new sign-down form for UM/UIM coverage when an insured who already had lower limits of the coverage changes another aspect of his policy, a unanimous state Supreme Court ruled in an issue of first impression. The court ruled in Blood v. Old Guard Insurance Co. that the Motor Vehicle Financial Responsibility Law (MVFRL) does not mandate insurance companies re-comply with the MVFRL’s provisions regarding uninsured/underinsured motorist coverage each time a policy is amended. This decision comes a month after the Supreme Court agreed to reconsider a decision it made in another stacking case, Sackett v. Nationwide Mutual Insurance Co., in which the court ruled in April that insurance companies must have their customers reject stacked underinsured motorist coverage each time they add a vehicle to their policy. Justice Cynthia A. Baldwin was a proponent of having customers restate whether they would stack coverage in Sackett, but authored the opinion in Blood. “This matter is one resolved by application of the unambiguous language of the sections 1731 and 1734, and we find it fatal that [Jay Blood] does not – indeed, cannot – direct this court to a provision in the MVFRL that requires an insurer to re-comply with the relevant sections of the MVFRL under facts such as these,” Baldwin said for the court. Sections 1731 and 1734 state that insurance companies must provide UM/UIM coverage equal to the bodily injury coverage unless otherwise lowered by the insured, according to the opinion. Old Guard Insurance Co. appealed an en banc Superior Court ruling that said 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 the 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. In reversing the Superior Court’s decision, the Supreme Court found this case to be distinguishable from the one relied upon by the lower court when it decided insurance companies needed to obtain new sign-down forms each time a policy was rejected. In the 2004 case Smith v. The Hartford Insurance Co., the court found that when an insured had previously rejected all UM/UIM coverage, the insurance company has to get a new sign-down form when the policy is amended or the highest coverage allowed by statute would apply, Baldwin said in explaining Smith. Baldwin said Blood is different because the Bloods had already selected the $35,000 limit in lower UM/UIM coverage and did not indicate anywhere on the forms when changing liability limits that they wanted to also change the UM/UIM limits. Blood argued before the Supreme Court that the changes made to his liability coverage “triggered” a duty on the part of Old Guard to provide another notice of UM/UIM coverage and obtain another written reduction form if Blood chose to reduce the coverage, according to the opinion. Old Guard had argued that the Bloods’ intention when moving from $500,000 to $300,000 in liability limits was to reduce its payments. It would then make no sense, the company argued, for it to seek increased UM/UIM coverage, according to the opinion. It also said that the Bloods had not paid for such premiums. Even if the court found Old Guard should have issued a new sign-down form, there is no remedy for that error under MVFRL, the company argued. The court agreed. “Even if we were persuaded by [Blood's] argument that Old Guard failed in its statutorily-mandated duties, we further agree with Old Guard that no remedy exists and that the judiciary is not to create one,” Baldwin said. The court said the intention of the Bloods was not an issue, and the case should be decided based on interpretation of the statute, not the Bloods’ intent, according to the opinion. Scott B. Cooper of Schmidt Kramer in Harrisburg represented Blood on appeal. He said that while the court disagreed with him, he was at least happy it made clear that an insurance company must obtain the sign-down form at the issuance of the policy. He was also pleased, he said, that the court agreed that the intent of the Bloods was irrelevant to interpreting the statute. Cooper said he thinks Blood and Sackett are “totally different things” because they deal with different sections of the MVFRL. He said that, if anything, Blood lends further support for Sackett in that it maintains the need for a rejection or sign-down form at issuance of a policy. Michael J. Koehler of Nicholas Perot Smith Koehler & Wall in Erie, Pa., was the primary counsel for Blood. He was not immediately available for comment by the time of publication. Jeffrey A. Ramaley of Zimmer Kunz in Pittsburgh represented Old Guard. He said he was pleased with the unanimous decision in a case he has fought since the trial level. Ramaley said the case would seem to have wide implications for the industry. (Copies of the 15-page opinion in Blood v. Old Guard Insurance Co, PICS No. 07-1882, are available from The Legal Intelligencer. Please refer to page 11 for ordering information.)

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.