June 26, 2017

Failing to Report “Phantom” Vehicles may Threaten Uninsured Motorist Benefits

picture of insurance policy that highlights uninsured motorist claim sectionA recent Supreme Court ruling in the state of Pennsylvania supports sufficient prejudice for an insurance carrier to terminate coverage if the insured driver fails to report a “phantom” vehicle in a timely manner when pursuing an uninsured motorist claim.

Insurance Carriers May Cancel Coverage over Suspicious Delays in Uninsured Motorist Claims

A unanimous court decision made on Oct. 30 upheld the Superior Court’s decision in Vanderhoff v. Harleysville Insurance that, although filing an untimely report was not in and of itself prejudicial, an eight-month delay in reporting a phantom vehicle prejudiced the carrier. The ruling found in favor of the insurance carrier in the case of an 8-month reporting delay and rejected the plaintiff’s argument that an insurance carrier should have to show some concrete evidence of prejudice.

The judge said that determining whether there has been prejudice depends on particular circumstances, and that making an insurer prove how its determination was prejudiced would not be practical in all situations:

“To demand such evidence would result in a Mobius strip whereby, to show prejudice, the insurer would have to show through concrete evidence the evidence it was unable to uncover due to the untimely notice. While the insurer is always obligated to investigate the case such as it can, where an insured’s delay results in an inability to thoroughly investigate the claim and thereby uncover relevant facts, prejudice is established.”

Prior Cases Suggest Fraud, Attempts by Drivers to Access UM Benefits Dishonestly

According to court documents concerning a case back in 2001, Forester Vanderhoff rear-ended a car being driven by Ryan Piontkowski in Luzerne County (PA) while both vehicles were waiting to turn left at a traffic light at a busy intersection. The crucial dispute point in the case was whether Piontkowski stopped suddenly to yield to an unidentified car, which would be considered an uninsured motor vehicle under PA state law and could entitle Vanderhoff to UM benefits under his employer’s Harleysville policy.

On June 14, 2002, over eight months after the accident took place, Vanderhoff suddenly filed a claim for UM benefits with Harleysville, clearly disregarding a provision in the insurance contract requiring prompt notice and a 30-day reporting requirement.

While Vanderhoff claimed that the phantom car had existed, Piontkowski denied it. Vanderhoff asserted that he had believed the existence of the phantom car had been documented in the police report but didn’t notice until several months later that the report contained no mention of an unidentified vehicle, according to court documents. In May 2004, a Luzerne County trial court held a hearing to finally determine whether the phantom car actually existed. The Superior Court eventually ruled that Harleysville did not have to prove prejudice and was within its rights to terminate Vanderhoff’s coverage.

Officials Advise Drivers to Report Sensibly

Experts say that despite these types of rulings, honest drivers needn’t worry about the ruling, as it is geared to better equip insurance carriers to deal with fraudulent claims, a rampant issue in states like Florida. If a driver is a victim of a hit and run collision, or the other driver claims he/she is uninsured, that driver should attempt to report any possible information about the other car to police and his/her insurance company. Drivers who file an uninsured motorist claim and submit the information within a few days of the incident (or an otherwise reasonable time period) will not be subjected to scrutiny and possible policy cancellation unless other questionable circumstances are involved.