Photo: Rawpixel.com/Shutterstock.com

A woman injured in an automobile accident had sent a request to State Farm for lower insurance coverage before being struck by an underinsured motorist. But a federal judge ruled that since the request hadn't been finalized at the time of the accident, she was still entitled to the higher UIM policy limit.

In a Feb. 18 decision, U.S. Magistrate Judge Timothy Rice of the Eastern District of Pennsylvania ruled that Eileen Gibson's insurance policy entitled her to $750,000, which State Farm sought to avoid paying by arguing that, before the accident, Gibson had a request pending for a policy with a limit that was $400,000 lower.

Rice said that State Farm failed to send her the proper paperwork in time. Gibson had requested lower coverage April 22, 2016, but was not given the chance to sign the document until 19 days after her May 5, 2016, accident.

State Farm argued that Gibson's application for lower UIM benefits was sufficient, as expressed in her pending "request in writing," and that the May 24 request for a signature was merely a confirmation, according to Rice.

However, Rice said that State Farm's own documents were ambiguous.

"By cautioning on its application that an additional document—containing the insured's UIM coverage rights under Pennsylvania law—was 'required,' State Farm acknowledged that the Gibsons were entitled to more information," Rice said. "Although State Farm maintains its May 24 form waiving higher UIM coverage was redundant, that is only one possible interpretation of how the April 22 application and May 24 form could be read. Equally plausible is that the more explicit description on May 24 of the Gibsons' right to higher UIM coverage was necessary to ensure the Gibsons knew that they could maintain UIM coverage equal to the $750,000 in liability coverage they had already secured. Such ambiguity must be construed against State Farm, which drafted both documents."

Gibson took State Farm to court and on Nov. 21, 2019, a jury awarded her and her husband $1.75 million in damages to be paid by the insurer. A judge later molded the verdict to the coverage limit of $750,000.

Rice said State Farm failed to comply with Section 1734 of Pennsylvania's Motor Vehicle Financial Responsibility Law, based on the language in the application.

Joseph Fioravanti of Media represents Gibson and Katherine Douglas of Bennett Bricklin & Saltzburg in Philadelphia represents State Farm. Neither responded to requests for comment.