Insurance is a contract between the insurer and the personinsured.

Insurance companies sell to the insured the coverage requested:Carriers have no obligation to force, or even advise, the insuredabout the limits of liability of automobile liability insurancethat should be carried by the insured. Rather, the insurer isobligated only to provide the insurance coverages ordered, as someinsureds found out when they tried to convince a court to provideliability limits that were not ordered because they believed, aslongtime customers, they should have been advised to carry higherlimits.

Case background

In 1984, while he was a captain in the U.S. Army, Charles Cohanpurchased an automobile insurance policy from USAA with a $100,000per-person liability limit. He maintained the policy with the samecoverage limits through 2011. He married Lisa Cohan in 1995 andadded her to the auto policy as an "operator." The Cohans neveradvised USAA that they should increase their automobile liability coverage.

In 2002, the Cohans purchased land and built a new home. On Dec.6, 2002, they purchased homeowner's insurance from USAA withliability coverage in the amount of $1 million per occurrence.

Lisa Cohan, while driving a Cohan vehicle, collided with anothervehicle, killing the driver. The administrator of the deceaseddriver's estate brought a wrongful death/survival action, and USAAdefended the action on Lisa's behalf. The matter settled for$300,000 but USAA paid only the policy limits of $100,000. TheCohans paid the remainder of the settlement amount.

On April 1, 2015, the Cohans sued USAA, claiming that it shouldhave advised Cohan to increase the auto liability policy limitsover the years that he was a customer, and requested judgment inthe amount of $200,000. USAA filed preliminary objections, whichthe trial court granted by order and opinion, and it dismissed thecomplaint with prejudice.

Issues on appeal

The facts of the case were not in dispute. The two questions onappeal were focused on whether the trial court was mistaken in itsrulings:

1. Did the trial court err in holding that despite their 27-year,multi-policy, insurer-insured relationship and USAA's targetedaffinity-group-based marketing, USAA had no duty to coordinate theCohans liability coverage across their policies or to reform theliability limits of their auto policy?

2. Did the trial court err in granting USAA's preliminary objectionto the Cohans' Unfair Trade Practices and Consumer Protection Lawallegations as irrelevant, and holding that the Cohans must pleadthat they were "lied to" and that USAA's targetingaffinity-group-based advertising program was "puffery"?

Analysis

Pennsylvania courts have often stressed that the insured hasboth the capacity and the duty to inquire about the scope ofinsurance coverage, rather than rely on hand-holding andsubstituted judgment.

There was no justification in the law to impose the additionalburden on insurers that they anticipate and then counsel theirinsured on the hypothetical, collateral consequences of thecoverage chosen by the insured.

The trial court found that USAA did not have a duty to advisethe Cohans to purchase higher liability limits on their autoinsurance policy, regardless of the terms in the separatehomeowner's policy.

The trial court was correct that USAA had no obligation toadvise the Cohans of a disparity in liability coverage that theyshould have been aware of or to otherwise "coordinate" or"equalize" the liability limits of two different policies.

To the contrary, once the insurance contract takes effect theinsured must take responsibility for the policy. The Cohans'argument — that the two policies should have been "equalized" —overlooks the salient fact that an automobile insurance policy anda homeowner's insurance policy are not coextensive and insureagainst very different risks.

The purpose of the Pennsylvania Unfair Insurance Practices Act(UIPA), the appeals court said, is to regulate trade practices inthe business of insurance in accordance with the intent of Congressby defining or providing for the determination of all suchpractices in this state that constitute unfair methods ofcompetition or unfair or deceptive acts or practices and byprohibiting the trade practices so defined or determined.

There is no evidence to suggest, and the court had no reason tobelieve, that the system of sanctions established under the UIPAmust be supplemented by a judicially created cause of action.

Zalma opinion

The Pennsylvania court refused — properly — to substitute itselfas a parent for the Cohans. The court correctly found that the dutyto decide the coverages to be purchased from an insurer is theobligation of the insured not an insurer or a court.

Related: 'Special relationships' revisited

Barry Zalma, Esq., CFE, has practiced law in California formore than 40 years as an insurance coverage and claims handlinglawyer. Contact him at [email protected].