Paperwork snafu costs Zurich almost $1 millionReprints
Zurich America Insurance Co. is liable to pay an injured worker $1 million in uninsured motorist coverage because his employer failed to sign all the necessary documents needed to reduce coverage to just $35,000, says a federal appeals court, in upholding a lower court ruling.
In February 2012, the president of West Chester, Pennsylvania-based Road-Con Inc. signed an “uninsured/underinsured motorist coverage selection/rejection limits summary form” electing to reduce the company's uninsured motorist coverage to $35,000 from $1 million, according to Thursday's ruling by the 3rd U.S. Circuit Court of Appeals in Philadelphia in Stefan Freeth v. Zurich American Insurance Co.
However, he did not also sign the necessary state-specific forms enclosed with the summary form, although both the summary form and the cover letter accompanying it warned him it was necessary to do so, according to the ruling.
In September 2012, Mr. Freeth was seriously injured while working on the back of a Road-Con truck when a passing semitractor-trailer, which was never identified, struck a traffic sign, propelling it into his leg.
Mr. Freeth filed suit against Zurich, seeking a declaration he was entitled to $1 million in coverage. Zurich argued the policy only provided $35,000 in coverage because of the signing of the summary form.
In July 2015, the U.S. District Court in Philadelphia ruled in Mr. Freeth's favor, and in Thursday's ruling a three-judge 3rd Circuit panel agreed.
“To prevail, Zurich must show that the summary form by itself constituted a 'request,' notwithstanding the language in the summary form warning insureds that signing the summary form was insufficient to effect a reduction in coverage. Zurich fails to do so,” said the appeals court, in upholding the lower court's ruling.