Pennsylvania Appellate Court Requires New Stacking Waiver After Removal of a Vehicle From Policy (PA)
The Pennsylvania appellate court, in Franks v. State Farm, recently held that insurers must obtain a new stacking waiver after the insured removes a vehicle under the policy. The factual pattern in the instant matter was a matter of first impression for Pennsylvania Courts. Specifically, although it is clear that an addition of a vehicle to an existing multi-vehicle policy requires a new stacking rejection form, the courts had not heard a case to decide whether a stacking rejection form was required when a vehicle was removed from a multi vehicle insurance policy.
In this instant matter, the insurer paid $100,000 – what it contended to be the policy limit – in response to an auto accident suffered by Franks, after Franks asserted UIM benefits as the other vehicle’s insurance was insufficient to fully compensate him for his injuries. The relevant insurance policy originally insured three vehicles. About 15 months prior to the accident, the insured removed a vehicle from the policy. The insurer did not require – or obtain – a new stacking waiver. Franks thus asserted that he was entitled to $200,000 in UIM benefits as opposed to $100,000, as he never signed a stacking waiver after removing a vehicle from the policy.
The Court agreed with Franks and held that, “[i]n determining whether a new stacking waiver is required, the critical question is whether there is a change in the potential amount of stacked coverage.” Notably, the Court clarified that simply replacing a vehicle with another vehicle would not trigger the waiver requirement, as the amount of stacked coverage would not change. However, adding or subtracting a vehicle without like replacement requires an additional waiver from the insured.
Thus, insurers should take note of this recent Pennsylvania case law, as to ensure that they are complying with stacking waiver requirements if vehicles are being added or removed from policies.
Thanks to Matt Care for his contribution to this post. If you have any questions or comments, please contact Colleen Hayes.