Clear & Unambiguous Anti-Stacking Language Allowed by Statute
When a person insured carries modest limits of liability on an auto liability policy but the insured causes severe injuries too small to cover the losses the insured and the injured persons will work together to attempt to find more insurance money by seeking to allow multiple insurance policies on multiple vehicles to stack and create limits not purchased.
In Kenneth & Kari Cross, Henley & Nicola Brady, and Roland & Lana Redfield, Plaintiffs v. Robert and Sherle Warren; Grass Chopper, LLC; Taylor Warren and Progressive Ins. Co., DA 17-0599, Supreme Court of the State of Montana (March 5, 2019) the plaintiffs appealed a denial of Plaintiffs’ claim that the four separate motor vehicle liability insurance coverages purchased by Robert and Sherle Warren (Warrens) from Progressive Direct Insurance Company (Progressive), should be “stacked” for application toward Plaintiffs’ injury claims.
While driving a 2000 GMC Sierra pick-up truck owned by his parents, Robert and Sherle Warren, eighteen-year-old Taylor Warren caused an accident resulting in injuries to Kenneth Cross, Henley Brady, and Roland Redfield.
At the time of the accident, Taylor Warren was an insured driver, and the truck he was driving was an insured vehicle, under a Progressive motor vehicle insurance policy purchased by the Warrens. The policy covered all four members of the Warren family and included separate liability coverages for each of the Warrens’ four vehicles. Each vehicle’s coverage provided identical bodily injury liability coverage limits of $100,000 for each person or $300,000 for each accident, although the premiums charged to the Warrens were different for each vehicle.
Following the accident, Progressive paid the limit of liability coverage, $100,000 to each of the three Plaintiffs injured in the accident (or, $300,000 total for the accident), under the Warrens’ coverage on the GMC Sierra pick-up truck involved in the accident. However, Plaintiffs claimed, as set forth in their March 2016 Amended Complaint, that they were entitled to recover based upon the combined, or stacked, liability coverage limits for all four of the Warrens’ vehicles, thus totaling $400,000 per person or $1,200,000 for the accident.
Noting that the Supreme Court had not ruled that third-party liability coverages were stackable, the District Court cited the rulings of federal courts applying Montana law to the issue, which had denied stacking. The court reasoned that Montana cases requiring stacking of first-party coverages were inapplicable because first-party and third-party coverages were fundamentally different, that only named insureds could stack their coverages, that third-party liability coverage was not personal and portable like first-party coverage, and that prohibition upon the stacking of third-party liability coverage did not render the Warrens’ policy’s coverage illusory.
Plaintiffs argued the District Court erred by failing to apply § 33-23-203, MCA, to the question of stacking the third-party liability coverage claimed here. Plaintiffs characterize the statute as having been changed by 2007 amendments from “an anti-stacking statute into a pro-stacking statute,” which now requires coverages to be stacked unless the insurer takes affirmative action otherwise.
Plaintiffs argued the statute applies to all automobile insurance coverages, including liability coverages and that the District Court erred because a Montana court may not properly reject, as somehow ill-suited, application of this controlling Montana statute. Progressive responded that Plaintiffs’ characterization of § 33-23-203, MCA, as a re-made, “pro-stacking” statute, is “overreaching,” and argues the statute has always been an anti-stacking statute, and remains so.
The Warrens’ policy, which provided automobile liability coverage in a section entitled “Liability to Others,” is encompassed within this definition and, therefore, the application of § 33-23-203, MCA, to motor vehicle liability policies necessarily includes application to their policy as well.
The statute’s initial clause prefaces the statute with the condition, “[u]nless a motor vehicle liability policy specifically provides otherwise, the limits of insurance coverage available under each part of the policy must be determined as follows . . . “. Section 33-23-203(1), MCA (emphasis added). The first question to be considered when applying the statute, which defers to the provisions of the policy, is whether the policy specifically determines whether the coverage limits can be stacked.
The Warrens’ policy contained a Declarations Page explaining the different coverages under the policy. On the Declarations Page, the bodily injury liability coverage limits, which would provide coverage for third-party claims such as Plaintiffs’ here, were listed for each vehicle as “$100,000 each person/$300,000 each accident.” The Declarations Page also set forth a general statement prohibiting stacking, stating, “[t]he policy limits shown for a vehicle may not be combined with the limits for the same coverage on another vehicle unless the policy contract or endorsements indicate otherwise.” (emphasis added) Progressive’s policy specifically and unambiguously provided that stacking of coverages would not be permitted.
The Supreme Court found property coverage to be “personal and portable” when it applies in “all circumstances,” or, in other words, is applicable without regard to the ownership or use of a motor vehicle. Liability coverage is not, like property coverages, portable and applicable in “all circumstances.” As Progressive’s policy here provides, liability coverage is applicable only “with respect to an accident arising out of the ownership, maintenance, or use of an auto or trailer.”
Because liability coverage is tied to the use or involvement of a motor vehicle, each additional insured vehicle presents a separate and additional risk: that by using it, another driver could cause an additional liability-incurring accident. While an individual could not personally operate multiple insured vehicles at once, it is entirely possible for vehicles driven by multiple permissive drivers to be involved in different liability-creating accidents at the same time, or later within the policy period. Nonetheless, each vehicle’s use triggers liability coverage for damages incurred in each separate accident, pursuant to the premium paid for that vehicle, securing a full coverage limit in the amount purchased and identified by the policy. Progressive paid the liability coverage limit for the Warrens’ GMC Sierra pickup involved in the accident, in the full amount stated on the Declarations Page, but also continued to assume the risk that full coverage limits on the Warrens’ second, third, and fourth vehicles would be payable for claims as well, and thus, the separate premiums secured protection for the Warrens that was not illusory.
Given that liability coverage is tied to a particular vehicle’s use and is not personal and portable, the policy provided liability coverage that was not illusory, the policy unambiguously and repeatedly stated that coverages on separate vehicles could not be stacked, as authorized by § 33-23-203(1), MCA, and that Progressive paid out the coverage limit for the Warrens’ GMC Sierra as set forth on the Declaration Page. The Supreme Court found it was unreasonable to expect the policy would pay more.
Public policy considerations do not allow a court to rewrite an insurance policy to provide coverage not purchased. There was no basis in law to require judicial voiding of the anti-stacking provisions of Progressive’s policy as applied to liability coverage.
The primary reason stacking is prohibited is the important distinction between optional first-party coverage (UM, UIM, and Med Pay) and legally-mandated third-party coverage (bodily injury and property damage).
Since dissents were filed by members of the court we can only say the plaintiffs made a good try but failed because the language of the statute allowed the insurer to include within the policy wording anti-stacking language. Since Progressive inserted – in accordance with the language of the statute – anti-stacking wording there was no right to stack the liability coverages. Although hindsight is always 20/20 and it would have been best if the insured’s purchased higher limits no court should change the wording of a policy of insurance to provide coverages when such coverage was not purchased.
© 2019 – Barry Zalma
This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and email@example.com.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
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