Franks v. State Farm Mut. Auto. Ins. Co.

This case presented the Pennsylvania Superior Court with a matter of first impression: Whether the removal of a vehicle from an auto insurance policy providing non-stacked UIM coverage for three vehicles constituted the “purchase” of coverage as contemplated by section 1738(c) of the Motor Vehicle Financial Responsibility Laws (MVFRL), such that the insured must be provided the opportunity to waive the stacked limits of coverage at the time of removal. Mr. Franks sustained injuries in a car accident caused by the negligence of the other vehicle involved in the accident. After ascertaining that the bodily injury liability coverage available to the tortfeasor was insufficient to compensate them for the injuries and damages fully, the Frankses asserted a claim for UIM benefits. In response, State Farm paid the Frankses $100,000 in UIM benefits. The Frankses filed a complaint for declaratory judgment, seeking a declaration that State Farm was obligated to pay them an additional $100,000 in UIM benefits because there was no valid waiver of stacked UIM coverage in effect at the time of the accident. State Farm filed a counterclaim for declaratory judgment, seeking a declaration that it was obligated to pay only the $100,000. After a stip. trial, the court ruled in State Farm’s favor. The Franks appealed, and the Superior Court affirmed. The Court held that under section 1738(c), removing a vehicle from an insurance policy does not constitute a “purchase” of coverage requiring that the insured be provided the opportunity to waive the stacked limits of coverage at the time of removal.

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