Pennsylvania Supreme Court: very minor deviations from underinsured motorist coverage rejection form permitted
In Ford v. American States Insurance Company, the Pennsylvania Supreme Court recently clarified that “de minimis,” or minor, deviations from the underinsured motorist (UIM) coverage rejection form set out in Section 1731 of the Motor Vehicle Financial Responsibility Law can nevertheless “specifically comply” with Section 1731. Ford v. American States Ins. Co., No. 13 WAP 2016, 2017 WL 694744 (Pa. February 22, 2017).
Section 1731 requires that insurers obtain the signature of any insured wishing to reject UIM coverage on a form that contains specific language dictated by the General Assembly. Specifically, the UIM rejection form shall include the following language:
REJECTION OF UNDERINSURED MOTORIST PROTECTION
By signing this waiver I am rejecting underinsured motorist coverage under this policy, for myself and all relatives residing in my household. Underinsured coverage protects me and relatives living in my household for losses and damages suffered if injury is caused by the negligence of a driver who does not have enough insurance to pay for all losses and damages. I knowingly and voluntarily reject this coverage.
75 Pa. C.S. § 1731(c). The General Assembly added that “[a]ny rejection form that does not specifically comply with this section is void.” 75 Pa. C.S. § 1731(c.1).
Prior to the high court’s ruling, other courts applying Section 1731 had reached mixed conclusions on whether the phrase “specifically comply” meant that the UIM coverage rejection form must be a verbatim, “cut and paste” of the language in the statute in order to be valid. Writing for the majority, Justice Baer, stated that “when a UIM rejection form differs from the statutory form in an inconsequential manner, the form will be construed to specifically comply with Section 1731 of the MVFRL.” Ford, No. 13 WAP 2016, 2017 WL 694744 at *8. Thus, a verbatim copy of the statutory language is not required. This does not mean, however, that forms which contain even modest changes to the statutory language will satisfy Section 1731.
In Ford, the insurance company’s UIM rejection form differed very slightly from the statutory form. Indeed, the court noted that form in question included all of the language from the statutory form, but also made some minor additions. The insurance company’s UIM rejection form read:
REJECTION OF UNDERINSURED MOTORISTS PROTECTION
By signing this waiver I am rejecting underinsured motorists coverage under this policy, for myself and all relatives residing in my household. Underinsured motorists coverage protects me and relatives living in my household for losses and damages suffered if injury is caused by the negligence of a driver who does not have enough insurance to pay for all losses and damages. I knowingly and voluntarily reject this coverage.
Id. at *2 (emphasis noting the additions to the form supplied by the Court). As shown here, the form at issue was not identical to the statutory form, but it was darn close. Only one word and two letters were added to the statutory form. Importantly, the Supreme Court ruled that these “inconsequential” additions did not “modify the coverage or inject ambiguity into the statutory form.” Id. at *8. In fact, the court cited a Third Circuit opinion construing an identically modified UIM rejection form in which it was observed that the additions “made the form more consistent with the rest of the MVFRL.” Id. at *4 (discussing Robinson v. Travelers Indemnity Co., 520 Fed. Appx. 85 (3d Cir. 2013)).
The court, however, differentiated between the form in Ford and other forms that had been ruled to be void based upon alterations made to the statutory form. Specifically, the court noted that a form which removed the word “all” from the “all losses and damages” injected ambiguity as to the coverage provided and appeared to improperly limit coverage. Id. at *3 (discussing American International Ins. Co. v. Vaxmonsky, 916 A.2d 1106 (Pa. Super. 2006)). The court also noted that a form that added the phrase “[b]y rejecting this coverage, I am also signing the waiver on P. 13 rejecting stacked limits of underinsured motorist coverage” had been ruled void because it deviated from the proximal relationship required between the statutory UIM rejection form language and the signature and date line to be filled out by the insured. Id. at *4 (discussing Jones v. Unitrin Auto & Home Ins. Co., 40 A.3d 125 (Pa. Super. 2012)).
Overall, the Ford holding makes clear that while an exact duplicate of the statutory language is not required, insurance companies operating in Pennsylvania are best advised to use UIM rejection form language that is identical to that set out in Section 1731 of MVFRL. Any deviation from the form language runs the risk of voiding the insured’s rejection of UIM coverage, unless, as in the Ford case, the deviation in language is minor, non-substantive and does not inject any ambiguity into the waiver form.