An Overview of § 1738 under the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL)

Section § 1738 under the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL) deals with the stacking of uninsured and underinsured motorist benefits, and the option to waive those benefits.
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Statutory Text

§ 1738. Stacking of uninsured and underinsured benefits and option to waive.

(a) Limit for each vehicle.--When more than one vehicle is insured under one or more policies providing uninsured or underinsured motorist coverage, the stated limit for uninsured or underinsured coverage shall apply separately to each vehicle so insured. The limits of coverages available under this subchapter for an insured shall be the sum of the limits for each motor vehicle as to which the injured person is an insured.

(b) Waiver.--Notwithstanding the provisions of subsection (a), a named insured may waive coverage providing stacking of uninsured or underinsured coverages in which case the limits of coverage available under the policy for an insured shall be the stated limits for the motor vehicle as to which the injured person is an insured.

(c) More than one vehicle.--Each named insured purchasing uninsured or underinsured motorist coverage for more than one vehicle under a policy shall be provided the opportunity to waive the stacked limits of coverage and instead purchase coverage as described in subsection (b). The premiums for an insured who exercises such waiver shall be reduced to reflect the different cost of such coverage.

(d) Forms.--

(1) The named insured shall be informed that he may exercise the waiver of the stacked limits of uninsured motorist coverage by signing the following written rejection form:

UNINSURED COVERAGE LIMITS

By signing this waiver, I am rejecting stacked limits of uninsured motorist coverage under the policy for myself and members of my household under which the limits of coverage available would be the sum of limits for each motor vehicle insured under the policy. Instead, the limits of coverage that I am purchasing shall be reduced to the limits stated in the policy. I knowingly and voluntarily reject the stacked limits of coverage. I understand that my premiums will be reduced if I reject this coverage.

Signature of First Named Insured

Date

(2) The named insured shall be informed that he may exercise the waiver of the stacked limits of underinsured motorist coverage by signing the following written rejection form:

UNDERINSURED COVERAGE LIMITS

By signing this waiver, I am rejecting stacked limits of underinsured motorist coverage under the policy for myself and members of my household under which the limits of coverage available would be the sum of limits for each motor vehicle insured under the policy. Instead, the limits of coverage that I am purchasing shall be reduced to the limits stated in the policy. I knowingly and voluntarily reject the stacked limits of coverage. I understand that my premiums will be reduced if I reject this coverage.

Signature of First Named Insured

Date

(e) Signature and date.--The forms described in subsection (d) must be signed by the first named insured and dated to be valid. Any rejection form that does not comply with this section is void.

Key terms

Stacking:

In the context of automobile law in Pennsylvania, stacking means multiplying the insured's uninsured or underinsured motorist coverage by the number of vehicles for which they've bought coverage.

Waiver:

A legal term that implies the intentional relinquishment or surrender of a known right or privilege.

Uninsured or Underinsured Motorist Coverage (UM/UIM):

This is an auto insurance policy option which pays for your injuries if you are struck by a hit-and-run driver or a driver who does not have auto liability insurance.

Named Insured:

A designated individual protected by an insurance policy.

Premiums:

Payments made to maintain your insurance policy.

Why this matters for Pennsylvanian drivers:

This section matters because it allows drivers to choose how they wish to cover themselves in the event of an accident with an underinsured or uninsured driver. By opting for stacking, they can increase their coverage limits per the number of vehicles insured. However, this option typically comes with higher premiums. The option to waive coverage provides flexibility in managing insurance costs versus risk assessment.

Why this matters for Pennsylvania attorneys:

This section is a critical area where attorneys can provide advice to clients regarding the benefits and drawbacks of stacking under/overinsurance, as its implications significantly affect financial outcomes following an accident. Understanding the specific choices their clients made can greatly impact what recovery may be available.

The MVFRL language clearly lays out the legal requirements for stacking and waiving uninsured and underinsured motorist benefits. The law provides that the insured may increase their coverage limits by stacking benefits for each vehicle insured under one or more coverages. This section also permits a named insured to waive this coverage explicitly, thereby opting for a lower premium but also lower recoverable benefits.

Advanced analysis:

The clear definitions and descriptions in each subsection guide insurance policyholders' decisions and ensure they are adequately informed. The language and requisite forms found in subsections (d) and (e) indicate the importance of policyholder's explicit consent to stack or waive UM/UIM coverage. This prevents possible disputes or confusion later by requiring clear understanding and written agreement of the insured.

This section delineates the procedures that must be followed in executing a waiver, such as written forms, clearly emphasized waiver content, and signed confirmation by the policyholder. Failure to comply with these procedures invalidates the waiver, as stated in subsection (e). This serves to protect the rights of insured entities, demonstrating thorough protection and strict compliance requirements within this aspect of MVFRL.

Moreover, the amendment from Act 6 highlights a systematic move towards mandatory opportunity for stacking per policy, recognizing the potential benefits of stacking for policyholders.

However, this section does not directly address potential disputes that may arise between an insured and their insurance company, such as definitions of underinsured or uninsured, or scenarios involving multiple policies or carriers. These gaps can result in disagreements in calculations of stacking benefits after an accident, showing that while this section provides clear guidance on stacking, underinsured, and uninsured motorist benefits, it doesn't cover every possible situation that could arise. Therefore, hiring competent legal representation remains important for Pennsylvania drivers and insured entities.

In conclusion, § 1738 is integral in the MVFRL as it provides drivers with options regarding their uninsured or underinsured coverage, thereby allowing them to have some control over their potential recovery in a loss. For attorneys, this section serves as a critical aspect in advising clients on managing their insurance policies and understanding their rights and responsibilities under their chosen coverages.

About the author
Von Wooding

Von Wooding

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