Pennsylvania’s approach to choice of law is supposed to be “workable and fair.” Recently, the Philadelphia Court of Common Pleas reviewed a case involving a claim for underinsured motorist coverage and a choice of law analysis, resulting in an empty-handed plaintiff.

In Inez Coates v. Nationwide Insurance Company, the plaintiff Inez Coates was operating her father’s Mitsubishi Galant when she was rear-ended by David Tamarchio’s van while driving in Philadelphia on the Schuylkill Expressway.  Coates settled the claim against Tamarchio for $100,000 – the auto policy limit.  Subsequently, Coates filed a claim for the underinsurance coverage limit of $15,000 with her father’s insurer, Nationwide Assurance Company.    After Nationwide denied the claim and Coates sued Nationwide for both bad faith and breach of contract.

The case centered on one issue: what state’s law applied? While the accident occurred in Pennsylvania, the Nationwide insurance policy was issued in Delaware and Coate’s father resided in Delaware.  Moreover, Coate’s father agreed to comply with Delaware’s motor vehicle statutes upon purchasing the policy.  This question was crucial because if Pennsylvania law applied, Coates would be entitled to $15,000, but if Delaware law applied, Coates would not be entitled to anything.  Pennsylvania case law is settled: (a) when the issue is coverage under an insurance policy, the case is a contract matter, and (b) when the issue involves an insurance policy, courts consider each state’s contacts with the insurance policy at issue and not the underlying tort.

In Coates, the court arrived at its answer quite easily given that the only contacts the insured and insurer had with Pennsylvania was the underlying car accident giving rise to the underinsured claim.  In its analysis, the court relied on the expectations of both the insurer and insured, stating that Nationwide had the expectation to be bound by Delaware law in its dealings with Coate’s father, and that Coate’s father should have expected Delaware law to apply.  Lastly, the court stated that the fact that the accident occurred in Pennsylvania was just “happenstance” and that no matter where the car was driven, Delaware ultimately had the most relevant contacts with the insurance policy.  Accordingly, the court ruled in favor of Nationwide and Coates was unable to recover any underinsured motorist benefits.

Thanks for Erin Connolly for her contribution to this post.  If you have any questions or comments, please contact Paul at .