In a recent decision involving major auto carriers, the federal court in Philadelphia has issued an important decision regarding passive anti-theft device discounts. Willisch, et. al. v. Nationwide Insurance Company of America, 2012 WL 1057425 (E.D. PA). On cross motions for summary judgment, the court held in favor of the policyholders, ruling that Pennsylvania’s Motor Vehicle Financial Responsibility Law mandates a 10% discount on comprehensive coverage if the car had the requisite passive anti-theft device. The court rejected the insurance carriers' argument that they only were required to grant the discount to insureds who expressly asked for it. In reaching this conclusion, Judge Savage concluded that the law was unambiguous and clearly required the discounts without any policyholder request. He also rejected the defendants' argument that the Insurance Commissioner's failure to issue regulations defining what were qualifying devices left the carriers unable to determine the answer. The court also held that the carriers had breached the implied terms of their insurance contracts by failing to grant discounts as they had promised in their rate filings.
The opinion carefully examined each make and model car at issue to determine based on expert testimony which automobile had qualifying passive anti-theft devices. The judge rejected one defense expert's electrical engineering contention that he could not determine what devices qualify without a detailed examination of each device to determine precisely when it activated. The judge dismissed this approach as “hyper-technical”, calling it an attempted excuse from paying any discount to anyone. The opinion also contained an extensive discussion of whether removal of an ignition key after turning the car off renders an otherwise passive device “not passive”. The judge dryly observed that this is an absurd argument because removing the key from the ignition is necessary to prevent the car from being stolen simply by turning it back on.