The Pennsylvania Supreme Court affirmed a lower court’s opinion last week, saying an insurer had demonstrated prejudice from an uninsured motorist claim in which the policyholder submitted “untimely notice” of a “phantom vehicle” involved in the crash.
The case involved the estate of Forester Vanderhoff and Harleysville Insurance Company.
The state court ruled that, while Harleysville can’t deny a claim without showing prejudice from a policyholder’s “delay in notice,” the insurer does not have to prove what it would have found “had timely notice been provided.” Requiring that an insurer do so would be unreasonable, according to the unanimous decision.
“To demand such evidence … to show prejudice, the insurer would have to show through concrete evidence the evidence it was unable to uncover due to the untimely notice,” the ruling stated.
Case in Question Involved Rear-end Crash in 2001
The Pennsylvania auto insurance case stems from an October 2001 crash in which Vanderhoff, who was driving a Harleysville-insured truck for his work, rear-ended Ryan Piontkowski, who was stopped for a left-hand turn.
More than eight months later, in June 2002, Vanderhoff filed a claim with Harleysville for benefits under uninsured motorist coverage on the basis that “the accident was caused by a phantom vehicle pulling out in front of Piontowski, causing him to stop suddenly,” according to the court.
Harleysville rejected the claim, seeking “declaratory judgment that he was not entitled to uninsured motorist benefits” while also contending that he “failed to comply with the statutory requirement to notify Harleysville of the phantom vehicle within 30 days.”
The phantom vehicle was not mentioned in the police report first taken at the crash scene or a worker’s comp statement Vanderhoff submitted to his employers 20 days after the crash, the court said.
State’s High Court Seeks Balance on a ‘Case-by-Case Basis’
The initial trial court ruled against Harleysville, saying that Vanderhoff had abided by state law by reporting the phantom vehicle “as soon as practicable.” An appeals court reversed that ruling in 2006 and the accompanying award.
The Pennsylvania Supreme Court returned the case to lower courts when it ruled on it for the first time in 2010. In that ruling, the state Supreme Court said that, because the crash was reported to authorities within the 30-day window, the case needed to go back to a trial court for a necessary ruling on whether or not Harleysville suffered “prejudice” from the late notice of a phantom vehicle.
“Before an insurer can deny uninsured motorist benefits resulting from an accident involving a phantom vehicle, the insurer must demonstrate prejudice due to the failure of an insured to notify the insurer of the phantom vehicle accident,” the Supreme Court’s decision read.
The case then went to the Luzerne County Court of Common Pleas, which ruled against Harleysville and said that it “did not suffer prejudice” from Vanderhoff reporting the phantom vehicle outside of the 30-day requirement.
The case then saw a reversal in the trial court’s decision when the state Superior Court ruled that Harleysville suffered prejudice when Vanderhoff failed to tell the insurer that a phantom vehicle was involved in the crash within 30 days.
The Supreme Court then took up the case again in November 2012 and issued its decision last Wednesday that backed the Superior Court’s ruling.
The state’s high court said that “these cases must be addressed on a case-by-case basis.”
“The court balances the extent and success of the insurer’s investigation with the insured’s reasons for the delay,” the decision read.
Prejudice against Harleysville existed because Vanderhoff’s delay in notifying it about the phantom vehicle made the carrier unable to “thoroughly investigate the claim and thereby uncover relevant facts,” the state Supreme Court said.
“Handling these cases in this manner promotes prompt notice … while encouraging insurers to investigate phantom vehicle claims,” according to the ruling.