Application Satisfies Requirement of Written Election of Lower UM/UIM Limits, Federal Court Finds


HARRISBURG, Dec. 29 – A U.S. District Court magistrate judge has ruled that an original signed application was  a valid means of choosing UM/UIM limits lesser than bodily injury limits under Pennsylvania’s motor vehicle law, even if a separate option selection form was not compliant with the statute.

In Farmland Mut. Ins. Co. v. Sechrist, 2017 U.S. Dist. LEXIS 213618 (M.D. Pa., Dec. 29, 2017)(Arbuckle, M.J.), Plaintiff Farmland Mutual Insurance Company filed a declaratory judgment suit  against Defendants Edward Alfred Sechrist and Gary Bryant Kauffman, employees of Farmland’s insured, Clouse Trucking, seeking a  ruling that the commercial automobile insurance policy issued with a $1 million liability limit  provided $35,000 of combined single limit coverage for underinsured motorist claims arising out of an accident on April 30, 2013 in which both Sechrist and Bryant were seriously injured.

The Employees opposed Farmland Mutual, contending that the UIM limit should be equal to the policy’s bodily injury liability limit of $1 millon, on grounds that there was not a valid election of lesser UIM coverage pursuant to the Pa.M.V.F.R.L.  The employees claimed that the insurance policy should be reformed to include one million dollars of underinsured motorist coverage because the requirement of a signed writing choosing reduced UIM coverage  under 75 Pa.C.S.A. section 1734 was not met.

U.S. Magistrate Judge William I. Arbuckle first agreed with the employees that a specific UIM option selection form did not comply with section 1734 and was therefore not a valid election of lesser coverage:

Section 1734 of the MVFRL allows a named insured to elect limits of underinsured motorist coverage in an amount equal to or less than a policy’s liability limit for bodily injury. 75 Pa.C.S.A. section 1734.   Absent a signed, written election for lesser coverage, it is presumed that the underinsured motorist coverage limit is the same as the bodily injury liability coverage limit. . .

The Underinsured Motorist Coverage Selection form in this case. . .    is signed by Mr. Clouse but does not expressly designate the amount of coverage requested. Accordingly, we find that this form does not satisfy the requirements of  75 Pa.C.S.A. section 1734.

Judge Arbuckle went on to find, however, that the original insurance application prepared by an insurance agent, and signed by Mr. Clouse selecting the lesser amount of coverage, did meet the requirement of a signed writing under section 1734:

The parties dispute whether the Insurance Policy Application in this case satisfies the writing requirement of section 1734. . . Farmland contends that the Farmland Policy Application signed by Mr. Clouse is a valid written election of lower coverage under section 1734. By contrast, the Employees contend that the Farmland Policy Application does not satisfy the requirements of section 1734 because: (1) the Farmland Policy Application does not advise Clouse Trucking of Farmland’s obligation to offer underinsured Motorist coverage limits equal to the Farmland Policy’s limit for bodily injury; and (2) the Farmland Policy Application is not a clear indication of Clouse Trucking’s intent to purchase a underinsured motorist coverage below the Farmland Policy limit for bodily injury because the blanks in the Farmland Policy Application were filled in by an insurance agent.

As an initial matter, I find that Farmland is correct that the Farmland  Policy Application meets the requirements of section 1734. The Farmland Policy Application  is signed by Mr. Clouse, and does request a specific amount of underinsured motorist coverage.

In short, Judge Arbuckle found that the policy documents, including the application, constituted a valid written request for reduced UIM coverage.  He also found that whether or not an insurance agent completed the application itself  was irrelevant, provided, as here, that the insured certified via signature his review and adoption of the statements contained in the application.

Farmland Mut. Ins. Co. v. Sechrist, 2017 U.S. Dist. LEXIS 213618 (M.D. Pa., Dec. 29, 2017)(Arbuckle, M.J.)


Zurich Asks 3rd Circuit To Reverse $1M UM/UIM Award

PHILADELPHIA, Jan. 13.  Zurich American Insurance company has asked the U.S. Court of appeals  for the Third Circuit to reverse a lower court’s ruling ordering it to pay $1 million in uninsured motorist (UM) benefits, arguing that a sign down form setting UM limits at $35,oo0.00 was valid and enforceable.

Stefan Freeth alleged injury while working on a truck owned by roadway contractor Road-Con Inc.  He sought UM/UIM benefits under Road – Con’s commercial auto policy with Zurich, and was awarded $1 million in U.S. District Court for the Eastern District of Pa., following Zurich’s removal of the case from the Chester County, Pa. Court of Common Pleas.

On appeal, Zurich contends that the sign down form completed by a company executive was a sufficient “express designation” within the meaning of the Pa. M.V.F.R.L.  to constitute a valid election of UM/UIM limits lower than the commercial auto policy’s bodily injury limits of $1 million dollars.  Freeth’s counsel claims the form is ambiguous, stating,  “there is no affirmative written election of the amount of $35,000.00 by Road-Con. There is no handwritten entry by the named insured or check mark or initialing of the amount of $35,000.00 on the Summary Form.”

Stefan Freeth v. Zurich American Insurance Co., No. 15-2924, (3rd Cir 2015)

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