Defense Digest

Pennsylvania Superior Court Rejects Request to Void Stacked Coverage Rejection Forms
By Walter F. Kawalec, III, Esq.*

In Pennsylvania, the law requires that purchasers of automobile insurance be given the opportunity to reject stacked coverage of their underinsured or uninsured motorist protection for an additional savings on their premium.  However, in order to reject stacking, the law requires a specific rejection form be executed by the named insured.  The text of that rejection form is set out at 75 Pa.C.S. §1738, which includes the title, “Underinsured Coverage Limits.”  In two recent cases, the Pennsylvania Superior Court held that minor changes in the title of a stacked coverage rejection form does not void the form, so long as the changes in the title clarify the purpose of the rejection form.

In Vosk v. Encompass Ins. Co., 2004 PA Super 168 (Pa. Super. 2004), the form used by the insurer was titled, “Rejection of ‘Stacked Limits’ for Underinsured Motorist Coverage.”   The remainder of the rejection form mirrored the language contained in §1738.  The plaintiff argued that since the title did not match verbatim the title in the statute, it was void under the voiding provision of the statute.  That provision reads: “Signature and date.—The forms described in subsection (d) must be signed by the first named insured and dated to be valid.  Any rejection form that does not comply with this section is void.” 

Stacking coverage makes additional coverage available from different vehicles or policies to provide for a greater amount of coverage than would be available under a single policy.  The plaintiff argued that because the stacking coverage rejection form was void, in his estimation, he was entitled to full stacked coverage, notwithstanding having paid the lower premium.

The trial court rejected that argument.   It found that the voiding provision only applies to the requirement that the named insured sign and date the rejection form and that the minor variation in the title did not void the form.   The Superior Court affirmed.  It first looked to a recent Supreme Court case Winslow-Quattlebaum v. Maryland Ins. Group, 752 A.2d 878 (Pa. 2000).  In Winslow-Quattlebaum, the form signed by the insured contained rejections of both underinsured motorist coverage and stacked underinsured motorist coverage.  The Superior Court had held that since the option to reject underinsured coverage was not presented alone, on a separate page, it was void.  The Supreme Court rejected that reasoning.  It held that since the insured clearly executed the rejection form, there was a question of whether she rejected both coverages. 

Thus, under the Supreme Court’s reasoning, minor variations in the title of the form used to reject coverage are not be grounds to invalidate the rejection of stacked coverage.  Of note, the form approved by the Winslow-Quattlebaum Court, itself, was not titled, “Underinsured Coverage Limits,” but was titled, “Rejection of Stacked Underinsured Coverage Limits.”  This mimicked a sample form promulgated by the Pennsylvania Insurance Department.

The Vosk Court also cited another Superior Court case which was recently decided, Allstate Ins. Co. v. Seelye, 2004 PA Super. 103 (Pa. Super. 2004).  In Seelye, the rejection form signed by the insured was titled, “Rejection of Stacked Underinsured Coverage Limits,” the same as the form used in Winslow-Quattlebaum.  The Seelye Court pointed out that there is nothing in the statute which precludes the addition of a few words to the title, where it would make the meaning of the form clearer.  Further, the court held that since the form was drafted by the Insurance Department, it was entitled to substantial deference.  If the Department interpreted §1738 to not require verbatim adherence to the titling in the statute, that interpretation would be valid since it was not fraudulent, not made in bad faith, not clearly arbitrary, and not an abuse of discretion.

The Vosk Court concluded that that the form executed by the insured was unmistakable proof that he rejected stacked benefits and that the form substantially complied with the requirements of §1738.  Minor variations in the title are insufficient to void otherwise valid rejection forms.  The court also agreed with the trial court that the specific voiding provision of §1738 only refers to the signing and dating requirements. 

Thus, both Vosk and Seelye stand for the proposition that the stacked coverage rejection forms set out in the statute need not contain exactly the same titles chosen by the legislature for inclusion in the statute, so long as the meaning of the title chosen makes the rejection by the insured clear and knowing.  The Superior Court did, however, warn insurance companies about the dangers in doing so, stating:

…we must note the potential dangers that are created when insurance companies add extra words to the section 1738 forms.  Here, [the insurer’s] addition of the words “rejection,” “motorist,” and “for” did nothing to diminish the meaning of the title of the stacked UIM waiver form.  Insurance customers could read [the insurer’s] title without being confused regarding what they were about to sign.  Nevertheless, we are mindful that in other cases the addition of certain words might serve to confuse insurance applicants.  In such cases, this Court will not hesitate to declare such forms inoperative.

Thus, Vosk and Seelye are both a vindication and a warning: the court will not void rejection forms because their titles vary slightly from that set out in statute, but only if the changes made by the insurer increase the understanding of the form and do not serve to confuse the purchaser.

*Walt, the editor of the Defense Digest, is an associate in the Appellate Advocacy Group and is located in our Cherry Hill, New Jersey office.  He can be reached at (856) 414-6024 or wkawalec@mdwcg.com.  He, along with Doug Kent, Esquire of our Philadelphia office, represented Encompass Insurance in the Vosk case.