“Other Insurance” Provision Allows Insurer To Cap Limits (PA)
In Meyers v. Travelers Insurance Company, 2022 WL 1028705 (E.D. Pa. 2022), the plaintiff sued one of her auto liability insurers for extensive damages sustained in an automobile accident. This common occurrence led to a rather uncommon insurance coverage issue. The plaintiff recovered funds from her own primary auto insurance, plus two additional uninsured motorist (“UIM”) insurance policies. The fourth insurer, Travelers, argued that the plaintiff’s UIM recovery was capped based on an “Other Insurance” clause in its policy. By way of context, Travelers insured the vehicle of the plaintiff’s mother.
The plaintiff waived her right to stacking of UIM coverage in the Travelers policy, but not in the other two UIM policies. Thus, the question for the court was: what happens when a car accident a victim is insured under multiple policies of equal priority but has waived stacking in only one of the relevant policies?
In Pennsylvania, UIM benefits are stacked by default – but an insured may waive this privilege in exchange for a lower premium. Here, Travelers argued that its policy included a waiver of plaintiff’s right to stacked coverage pursuant to an “Other Insurance” provision that capped limits, and this provision therefore limited the plaintiff’s UIM recovery to the single highest applicable coverage limit among the three UIM insurers. The plaintiff argued that this waiver of stacking via the “Other Insurance” clause violated Pennsylvania’s Motor Vehicle Financial Responsibility Law as well as public policy in the Commonwealth. Specifically, the relevant “Other Insurance” language provided:
The maximum recovery under all policies in the Second priority may equal but not exceed the highest
applicable limit of liability for any one vehicle under any one policy providing coverage to you or any
“family member”.
The Eastern District agreed with the insurer, holding that an insurer may cap an insured’s maximum non-stacked secondary priority UIM policy at the highest liability limit applicable to the other insurance policies. Therefore, the court found that an “Other Insurance” clause was a valid manner by which an insurer could limit the coverage amounts. This is a case with unique facts, but it behooves all interested parties to be aware of the potential to cap limits via “Other Insurance” provisions.
Thanks to Jason Laicha for his contribution to this article. Should you wish to discuss, please feel free to contact Matthew Care.