In Franks v. State Farm Mutual Automobile Insurance Company, 93 Bucks Co. L. Rep. (2019), the trial court, in a case of first impression, held that Section 1738 of the MVFRL does not require a new waiver of stacked UIM coverage form when the insured merely removes a vehicle from a policy because a removal of a vehicle does not constitute a “purchase” of a vehicle which triggers Section 1738.
The Franks initially purchased a policy with State Farm which insured two vehicles, a 2002 Nissan Xterra and a 1999 Ford Taurus. The Franks signed a rejection of stacked UIM coverage under Section 1738 for non-stacked $100/$300 UIM coverage. On January 22, 2014, the Franks added a 2012 Nissan and signed a second stacked UIM rejection form. The policy then insured three vehicles.
On July 23, 2014, the Franks removed the 1999 Ford, did not change the coverages, and paid a reduced premium. The policy then had two vehicles insured. A new waiver of stacked UIM form was not signed. On March 26, 2015, the Franks replaced the 2002 Nissan Xterra with a 2013 Nissan Frontier. The policy remained covering two vehicles. The Nissan Frontier was involved in an August 11, 2016 accident. At the time of the accident, the State Farm policy insured two vehicles for non-stacked UIM coverage.
After the accident, State Farm paid the $100,000 in non-stacked UIM coverage. The Franks an additional $100,000 for stacked UIM coverage contending that when the policy changed from three (3) automobiles to two (2) automobiles a new waiver of UIM stacking form was required.
The trial court held the case centered on the word “purchase” in Section 1738. The trial court first looked the Sackett line of cases which held that a new waiver of stacking is required when an insured adds a new vehicle to the policy, because that constituted a “purchase” of insurance. Adding the vehicle was not akin to replacing a vehicle or renewing an existing policy.
The trial court next reviewed the recent Pennsylvania Supreme Court case, Barnard v. Travelers Home & Marine Ins. Co. where the insured initially purchased $100,000 in UIM coverage and waived stacking. The insured subsequently increased the UIM coverage without executing a new waiver of stacked UIM coverage. The court held that increasing UIM coverage constitutes a “purchase” and requires a new waiver of stacked UIM coverage form.
However, in Franks, the trial court noted that this case did not involve either an increase in UIM coverage or an increase in vehicles on the policy, it held that a new waiver form was not required. It noted that a new stacking waiver was required when affirmatively adding coverage or a new vehicle on the policy. The Franks removed a car from their policy and decreased the coverage from three vehicles to two vehicles which constituted a modification but not a purchase, the Court held.
Questions regarding this opinion can be directed to David Friedman.
