Court denies "stacking" auto insurance liability policies
Tuesday, March 12, 2019
Posted by: Joe Menden
The Montana Supreme Court has upheld a district court decision denying a claim for "stacking" coverage on an automobile liability insurance policy.
Taylor Warren was at fault for an automobile accident that injured three of the plaintiffs. Warren’s insurance provider, Progressive, paid the $100,000 per person policy limit in liability coverage -- $300,000 total.
However, Warren’s family had purchased liability insurance on three other vehicles, and the plaintiffs claimed the coverages on all the vehicles must be combined or stacked, to provide coverage limits of $400,000 per person, or $1.2 million total. The District Court denied the plaintiffs’ claim for this increased coverage limit, and the plaintiffs sued.
In a 5-2 decision, the Supreme Court affirmed the District Court’s denial of increased coverage limits, holding that state statute defers to vehicle insurance policies that specifically determine the limits of coverage, including whether coverage limits can be “stacked,” before applying the statute’s rate-filing process for stacking determinations. Here, the Progressive policy contained multiple provisions explaining that the liability coverages under the policy could not be stacked together to increase the coverage limits.
The plaintiffs argued that, despite the provisions of the policy, stacking of third-party liability coverages should be required just like cases of first-party insurance coverages, such as uninsured motorist, underinsured motorist, or medical payments. However, the court reasoned that liability coverage operated differently than those other coverages, because it was not personal and portable in nature, but was tied to the use or involvement of a particular vehicle. The court further ruled that the policy’s coverage was not illusory because it was paid out in accordance with the $100,000 limits purchased by the Warrens and would be so paid for other accidents involving additional vehicles insured under the policy, and therefore, the anti-stacking provisions of the policy did not need to be judicially voided.
Justice Laurie McKinnon concurred with the decision, and wrote a separate opinion explaining that stacking of coverages is also impermissible because the plaintiffs did not purchase the policy, are not insureds under the policy, and can have no expectation of increased coverage limits by stacking the coverages.
Justice Dirk Sandefur dissented, joined by Justice Ingrid Gustafson, reasoning that the statute does not defer to the policy and that an insurance company can avoid stacking of coverages only by satisfying the statute’s rate-filing process. Further, third-party liability coverages operate similarly to other coverages and should be considered personal and portable for purposes of stacking the coverage limits for plaintiffs’ claims.
The court heard oral argument in the case at the State Bar's 2018 Annual Meeting in Kalispell.