On March 24, 2016, the United States Court of Appeals for the Third Circuit affirmed a summary judgment order, declaring that Zurich was liable for up to $1,000,000 in uninsured motorist (“UM”) coverage for injuries suffered by Stefan Freeth.  Freeth was injured while working on the back of a truck owned by his employer, Road-Con, Inc.  A passing tractor-trailer struck a traffic sign, propelling it into Freeth’s leg.  Because the tractor trailer was never identified, Road-Con’s business insurance provided UM coverage for Freeth’s injuries.  That insurance policy was issued by Zurich, who contended that the policy only had a limit of $35,000 in UM coverage due to the existence of an executed Uninsured/Underinsured Motorists Coverage Selection/Rejection Limits Summary Form.

Freeth filed suit, seeking a declaration that the policy provided $1,000,000 in UM coverage.  In response, Zurich argued that in February 2012, prior to Freeth’s injury, Road-Con (through its president) signed an Uninsured/Underinsured Motorists Coverage Selection/Rejection Limits Summary Form (“Summary Form”) electing to reduce the UM coverage to $35,000.  The Summary Form advised the insured that the form was “NOT A SUBSTITUTE FOR REVIEWING EACH INDIVIDUAL STATE’S SELECTION/REJECTION FORM FOR UM AND UIM COVERAGE. YOU ARE REQUIRED TO DO SO.”  In light of this warning, Freeth argued that the signature on the Summary Form was not a sufficiently clear manifestation of Road-Con’s intent to reduce the coverage, and, therefore UM coverage defaulted to the same amount as the bodily injury liability coverage, or $1,000,000, by operation of Pennsylvania law.

Despite the language in the Summary Form warning Road-Con that signing the form was insufficient to effect a reduction in coverage, Road-Con never signed a Pennsylvania-specific form requesting reduced UM coverage, even though it did so for other states.  The court found this omission to be dispositive, reasoning that to any reasonable reader, the repeated emphatic warnings in the Summary Form would create an expectation that coverage amounts within a given state would be set at levels provided by law unless a form designed and submitted specifically for that state requested otherwise.  The court reasoned that if Zurich warned its insureds that an additional state-specific form was needed to reduce coverage and did not enclose the form (or enclosed it but never received it back), it could not prevail on the theory that an insured’s signature on the very document that contained the warning was, in the absence of the state-specific form, a sufficient manifestation of intent to reduce coverage.

Accordingly, the court affirmed the district court’s decision, holding that the mere act of signing a document like the Summary Form would ordinarily not suffice to reduce coverage, because the language on the Summary Form itself clearly and repeatedly stated that signing the Summary Form was insufficient to effect a reduction in coverage.  Thanks to Hillary Ladov for her contribution.  Please email Brian Gibbons with any questions.