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Pennsylvania Court Finds Stacked UIM Coverage

June 12, 2017

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The Pennsylvania Superior Court recently held stacked coverage is permitted under a policy, when the insurer failed to obtain an executed underinsured motorist (UIM) waiver when a new vehicle was added to the insureds’ policy.
In <a href="http://www.pacourts.us/assets/opinions/Superior/out/j-a33014-15o%20-%2010306061616888644.pdf#search=%22pergolese%22"><em>Pergolese v. The Standard Fire Ins. Co</em></a>., the insureds obtained an insurance policy from their insurer.  At the time the insureds originally obtained this policy, they executed a waiver of stacked UIM benefits in connection with the four vehicles being insured by the policy.  Several years later, the insureds removed one of their vehicles from the policy.  Two months later, the insureds requested coverage for a newly purchased vehicle.  The newly purchased vehicle was reflected on the policy with an amendment to the policy’s declarations page.  No UIM waiver was executed at the time this new vehicle was added to the policy.  Subsequently, the insureds were injured in a motor vehicle accident and sought stacked UIM coverage under the policy.
Cross-motions for summary judgment were filed in the lower court.  On appeal, the Superior Court was asked to determine whether the insureds were entitled to stacked coverage under the policy because of the insurer’s failure to execute a new waiver.  In analyzing this issue, the Superior Court noted the Pennsylvania Supreme Court had previously held the addition of a new vehicle constituted a purchase under a policy, which required a new stacking waiver.  Conversely, the addition of a vehicle through a policy’s after-acquired clause did not require a new waiver.  As such, the Superior Court had to determine whether the vehicle added to the policy qualified as a new purchase.
Looking to the facts, the Superior Court reasoned since the insureds’ new vehicle was added to their policy through an amendment to their declarations page, the new vehicle constituted a purchase under the policy.  As such, under Pennsylvania law, a new waiver had been required.  Thus, since there was no new waiver, the insureds were entitled to stacked coverage under the policy.
This case illustrates the importance of clearly establishing whether a vehicle is being added as a new purchase under a policy, as merely amending a policy’ declarations page may unintentionally result in stacked UIM coverage being provided under a policy.
Thanks to Colleen Hayes for her contribution to this post.
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