Walsh Pancio, LLC -- Attorneys at Law

Sackett v. Nationwide Mutual Insurance: The case involved the question whether auto insurers are required to secure new UI/UM forms on “after acquired vehicles”. The Supreme Court had held earlier this year that new forms are required because the acquisition amounts to a new auto policy. Nationwide sought reconsideration of the Court’s decision, which was granted. The Insurance Department filed a brief with the Court in support of reconsideration and arguing that insurers should not have to secure new forms on existing auto policies when a new vehicle is added to the policy. The Court has now modified its prior holding. In an opinion by Justice Saylor, joined by Cappy, Baer and Baldwin, the Court now holds that whether new forms are required for an after-acquired vehicle depends on the type of after-acquired vehicle clause contained in the auto policy. If the clause provides coverage for the after-acquired vehicle for a limited time, then new UI/UM forms must be secured. If the clause provides continuing coverage for the after-acquired vehicle as long as the insured provides notice to the insurer of the addition and pays the required additional premium, then no new forms are required. Most Pennsylvania insurers have, we believe, the latter continuing coverage provision. Unfortunately for Nationwide Insurance, Justice Saylor could not determine from the record which type of provision Nationwide had, and so therefore did not disturb the prior holding of the Court that there is coverage for the Sacketts in this case. Justice Saylor did not remand the case for determination of which provision Nationwide had. Justice Saylor limits his holding to after-acquired vehicles on multi-vehicle policies, the situation present in the case. It does not address after-acquired vehicles on a single vehicle policy. It is suggested there should be no different result, but the determination of this issue apparently will have to wait for another day.

Everhart v. PMA Insurance: This case involved the question whether auto accident claimants may stack UI/UM coverage under commercial fleet auto policies. The Supreme Court unanimously affirmed the Superior Court’s holding that by its terms the MVFRL does not mandate the stacking of UI/UM coverage on commercial fleet policies. Justice Cappy in his opinion does not address the issue of what is a “fleet” policy.

Donegal Mutual Insurance v. Baumhammers: There were two issues in this matter. The first is whether a homeowner insurer owes liability coverage to the insured parents of their son who shot and killed five people and seriously injured a sixth. The Court in an opinion by Justice Baldwin joined by Castille, Saylor and Eakin, holds that the incident was an “accident” under the policy and Pennsylvania case law and therefore Donegal does owe liability coverage to the insured parents for the shootings. The second question is what is the amount of the available liability coverage under the policy? The Court considered whether the alleged negligence of the parents in not taking the gun away from their son or reporting their concerns about him to law enforcement or mental health officials shootings was a single “occurrence” under the policy resulting in a single liability limit, or six separate “occurrences” warranting separate liability limit coverage for each occurrence. Justice Baldwin concluded there was just one “occurrence” of alleged negligence, and therefore a single liability limit coverage foe all the shootings. In doing so, she reversed the Superior Court.

In a rather surprising decision rendered on April 17, 2007, the Pennsylvania Supreme Court ruled in the case of Sackett v. Nationwide Insurance. The majority (4-2) held that when a new vehicle is added to an existing auto policy, the insurer must offer a new UI/UM waiver of stacking form, and the failure to do so results in the insurer being responsible for stacked coverage. Sackett had waived stacking benefits at the inception of his two vehicle policy, and then subsequently added a third vehicle to the policy. Nationwide did not require Sackett to complete a new UI/UM stacking waiver at the time of adding the additional vehicle to the policy. Justices Castille and Eakin dissented, arguing there is nothing in the MVFRL requiring a new waiver form be completed each time a vehicle is added to the policy. The dissenters opined that the majority decision resulted in Sackett receiving UI/UM benefits he did not pay for and will increase the cost to administer these coverages in derogation of the intent of Act 6’s amendments to the MVFRL of auto cost containment. Insurers will now not only have to secure completed waiver forms when a vehicle is added, but will likely have to get such forms for existing policies where vehicles were added after policy inception.

On February 21, the Supreme Court by a 4-1 margin upheld the validity of a set-off provision in a UIM policy in Pennsylvania National Insurance v. Black. The provision reduces the amount of UIM benefits recoverable by any amount paid or payable to a claimant under the liability coverage of the same auto policy. Eric Black was a passenger in a car driven by John Myers and insured by Penn National when they were involved in an accident resulting in both their deaths. Black’s Estate recovered $99,000 from the liability coverage under Myers’ Penn National policy. Black’s Estate then made a claim for $100,000 in UIM benefits under the Penn National policy. Exercising the set-off provision, Penn National offered $1,000 in UIM payment to Black’s Estate. When this offer was refused, Penn National brought a declaratory judgment action to determine the amount owed on the UIM claim. The Supreme Court upheld the set-off provision. In doing so, the Court also reiterated UIM coverage is optional and may be offered by insurers with exclusions and set-offs as long as they are not prohibited, and confirmed that cost containment is an increasingly significant purpose behind UIM coverage. In a footnote (18), the Court suggested that insurers may not be required to offer or include UIM coverage for guest passengers at all.

The Supreme Court recently granted allocatur in Generette v. Donegal Mutual Insurance. The Superior Court en banc on September 9, 2005 upheld Donegal’s “other insurance” clause that prohibited Generette from recovering UIM benefits under her policy with Donegal. Generette was injured while a passenger in a car insured by Nationwide for UIM benefits. She received the $50,000 UIM limit of the Nationwide policy, and then sought the UIM limit under her Donegal auto policy. That policy covered one vehicle. Generette elected non-stacked coverage of $35,000 for her vehicle. The Donegal policy’s “other insurance” provision restricts recovery of UIM benefits to the amount by which the $50,000 recovery from the Nationwide policy is exceeded by the UIM limit of the Donegal policy. Since in this case the Donegal limit ($35,000) did not exceed the Nationwide policy recovery ($50,000), Generette was not entitled to any UIM benefits under the Donegal policy.

On January 11, 2007, the Pennsylvania Supreme Court in Blood v. Old Guard agreed to hear Old Guard’s appeal from the Superior Court decision that insurers are required to obtain a written request for a change of coverage consistent with Section 1734 of the MVFRL each time an insured amends the liability limit of their auto policy, such request including a selection of UI/UIM limits. Failure to do so entitles the insured to UI/UIM coverage equal to the liability limit according to the Superior Court.

Oral argument before the Pennsylvania Supreme Court in Donegal Mutual Insurance v. Baumhammers is scheduled for March 5, 2007 in this multiple shootings case on the issue of whether the “per occurrence” homeowner policy limit is determined by the number of injured claimants or by the nature of the conduct committed by the insured.

The Pennsylvania Supreme Court on February 5 granted Nationwide’s appeal to determine two issues in Nationwide v. Schneider: (1) if primary UIM coverage must be exhausted before a claimant may pursue excess UIM coverage, and (2) may an excess UIM insurer deny UIM benefits where the insured failed to obtain the insurer’s consent to settle with the tortfeasor as required by the insurance policy?