The opinion of the court was delivered by: Judge Sylvia H. Rambo
Before the court are cross-motions for summary judgment in this declaratory judgment action. Plaintiff, The Travelers Indemnity Company ("Travelers"), seeks a ruling that the limit of underinsured motorist ("UIM") coverage in an automobile policy issued to Defendant Leichtman Ice Cream Co., Inc. ("Leichtman") is $35,000. Defendant John J Pauline, Jr., a former employee of Leichtman, submits that the limit of UIM coverage is $1 million. Because Leichtman executed a valid request for reduction of UIM benefits, the court concludes that the maximum UIM benefit under the policy is $35,000.
The undisputed facts are as follows. On or about February 23, 2004, Travelers issued a commercial automobile insurance policy to Leichtman. The limit of liability on the policy for bodily injury caused by one accident was $1 million. The policy included coverage for damages caused by underinsured motorists. The policy limit for UIM benefits was stated as $35,000. Pennsylvania law, however, requires that the UIM coverage in an automobile policy be equal to the limit of bodily injury liability on the policy. See 75 Pa. Cons. Stat. Ann. § 1734. Because there had been no request from Leichtman to reduce or eliminate the UIM coverage, Travelers issued a new declarations page for the policy on March 15, 2004. It reflected that UIM coverage was capped at $1 million.
On April 2, 2004, Leichtman submitted a written request, on a form provided by Travelers, to reduce UIM coverage. The heading on the form states in bold "UNINSURED AND UNDERINSURED MOTORISTS COVERAGE." The heading is followed by text, which reads, in pertinent part, as follows:
Underinsured Motorists coverage provides protection against bodily injury caused by a driver who has insurance, but the available liability limits are not enough to pay for your damages.
Your automobile liability or motor vehicle liability policy shall automatically include . . . Underinsured Motorists coverage for damages for bodily injury which the insured may be entitled to recover from the owner or operator of an . . . underinsured motor vehicle at the same limits as the bodily injury liability policy limits, unless you reject or select lower limits as indicated below, but not less than the minimum limits required by statute ( . . . $35,000 each accident). . . .
You may rejected Underinsured Motorists coverage by signing the written rejection form provided on page 5 attached hereto.
Please make your selection below only if you wish to select . . . Underinsured Motorists coverage at limits lower than your bodily injury liability limits. (Doc. 19-6.)
The options for reducing UIM coverage follow. There is an "X" in the box next to "Underinsured Motorists coverage at the minimum limits of . . . $35,000 each accident." (Id.) The box is empty next to the option allowing the insured to select another amount for UIM coverage "greater than the minimum limits but less than the bodily injury liability policy limits." (Id.)
The owner of Leichtman signed the form as the named insured. The insurance company received the form on April 12, 2004.
On April 28, 2004, Pauline was involved in a motor vehicle accident in the course of his employment with Leichtman; he was driving a Leichtman vehicle insured by Travelers under the policy described above. Pauline sued several defendants as a result of the accident. That litigation settled. Pauline demanded UIM benefits from Travelers and Travelers tendered $35,000. Pauline refused the tender, claiming that he is entitled to $1 ...