Denying Coverage Based On An Insured’s Untimely Report Must Be Assessed On A Case-By-Case Basis (PA)

The Pennsylvania Supreme Court recently held that an insurance company must prove prejudice before denying underinsured motorist benefits.  In Vanderhoff v. Harleysville Insurance, Forester Vanderhoff rear-ended a car driven by Ryan Piontkowski, while both vehicles were waiting at a busy intersection.  A factual dispute in the case was whether Piontkowski stopped suddenly to yield to an unidentified vehicle, which would have been considered an underinsured motor vehicle under the Motor Vehicle Financial Responsibility Law.

Almost eight months after the accident, Vanderhoff filed a claim for underinsured motorist benefits with his insurance company, Harleysville.  Vanderhoff’s policy, however, included a provision that required prompt notice and a 30-day reporting requirement for coverage to be triggered under the policy.  Furthermore, Vanderhoff had failed to allege the existence of the unidentified vehicle until several months after the accident had occurred.

The case went to arbitration and Vanderhoff was awarded $500,000.  However, Harleysville appealed the award citing Vanderhoff’s delay in reporting the accident and the unidentified vehicle.  Vanderhoff argued that Harleysville needed to show, with concrete evidence, that it was prejudiced by Vanderhoff’s actions.  Ultimately, the Pennsylvania Supreme Court held that, although an insured filing an untimely report was not in and of itself prejudicial, an eight month delay in reporting the alleged unidentified motor vehicle had in fact prejudiced the insurer.  The Court, however, noted a caveat to this ruling by stating that, in general, future cases involving untimely reporting should be examined on a case-by-case basis.

Special thanks to Colleen Hayes for her contributions to this post.  For more information, please contact Nicole Y. Brown at nbrown@wcmlaw.com.