January 05, 2006 - Transportation Litigation Update - January 2006
Pennsylvania Supreme Court Allows Insurers to Exclude Mandatory Arbitration from UM/UIM Coverages
The Pennsylvania Supreme Court has ruled that auto carriers are permitted to exclude mandatory arbitration from their uninsured and underinsured motorist coverages. In Insurance Federation of Pennsylvania, Inc. v. Koken, the Supreme Court held that the Insurance Department did not have the power to require an auto carrier to include mandatory arbitration in its UM/UIM coverage. Accordingly, a carrier has the ability, should it so desire, to exclude mandatory arbitration from its policy and permit UM/UIM disputes to be resolved by jury trial. Although mandatory arbitration was once considered advantageous to carriers fearful of uncertain jury outcomes, experience has arguably shown otherwise. Indeed, many adjusters and defense counsel now believe that a carrier is better off before a panel of lay jurors than three attorney arbitrators, at least two of whom are often accused of being more concerned with taking care of the fellow attorney representing the plaintiff than rendering a fair award based on the facts and injuries claimed. It is expected that the Koken decision will significantly change the UM/UIM landscape in the Commonwealth.
- Brian L. Calistri