Considering Pennsylvania law, the Third Circuit was asked whether the insured waived "stacked" UIM benefits in subsequent policies that listed additional automobiles? See State Auto Prop. & Cas. Ins. Co. v. Pro Design, P.C., No. 08-3006 (3rd Cir. May 12, 2009) [here]. In a result consistent with Hawai`i law, the Third Circuit held the initial wavier applied when automobiles were later added to the policy.
The insured was involved in an automobile accident while riding in a vehicle insured under a Business Auto Policy issued by State Auto. When issued in June 2001, the policy covered only one vehicle and provided $35,000 in underinsured motorist (UIM) coverage. The insured signed a written waiver of "stacked" UIM coverage. The policy was renewed in subsequent years, including 2004, when the insured added a second vehicle. In 2006, a third vehicle was added. State Auto did not provide the insured with the opportunity to sign additional stacking waivers when adding the second and third vehicles.
After renewal of the policy in 2007, the accident occurred. State Auto determined the stacking of UIM benefits was waived even when new automobiles were added and the liability limit was only $35,000. The insured, on the other hand, contended it never waived stacking of coverage when adding automobiles to the policy. Therefore, the liability limit was $105,000, or $35,000 for each of the three vehicles covered by the policy. The District Court agreed with the insured and ruled the initial stacking waiver was invalid because of the addition of new vehicles to the policy.
The Third Circuit reversed. It noted a Pennsylvania statute that presumed stacking applied unless waived by the insured for a smaller premium. The insured argued stacking applied to its policy because, while it waived stacking when purchasing a single-vehicle policy, the statute required the execution of an additional waiver upon the addition of vehicles to the policy. State Auto, however, argued the stacking waiver executed upon purchase of the single-vehicle policy remained valid as to the multi-vehicle policy. To settle this argument, the Third Circuit turned to two potentially conflicting decision of the Pennsylvania Supreme Court.
In Sackett v. Nationwide Mut. Ins. Co., 919 A.2d 194 (Pa. 2007)(Sackett I), the court held the statute required when adding a new car to an existing policy, the insurer must provide a new stacking waiver in order to permit the insured to waive the increased amount of available stacked UM/UIM coverage.
In Sackett II, however, the Pennsylvania Supreme Court modified Sackett I after rehearing. See Sackett v. Nationwide Mut. Ins. Co., 940 A.2d 329 (Pa. 2007)(Sackett II). The court held that the extension of coverage to a vehicle added to a pre-existing multi-vehicle policy was not a new purchase of coverage under the statute, and therefore did not obligate the insurer to obtain new or supplemental UM/UIM stacking waivers. Notably, however, the court warned that its decision was limited to the addition of a vehicle to a multi-vehicle policy, leaving unresolved a situation where additions were made to single-vehicle policies.
In Pro Design, the Third Circuit predicted the Pennsylvania Supreme Court would extend its ruling in Sackett II to a single-vehicle policy. The statute did not require State Auto to provide the insured with the opportunity to waive stacking upon the addition of the second and third vehicles to the policy. The waiver signed at the inception of the policy remained valid upon the addition of those vehicles and the subsequent renewals of the policy.
Under Hawai`i law, stacking of UM/UIM coverage is controlled by statute. An insurer must offer UM/UIM coverage with the option to stack coverage. Haw. Rev. Stat. 431:10C-301(d). If UM or UIM coverage is rejected, no further offer is required to be included in any renewal or replacement policy issued to the insured. See Dai-Tokyo Royal State Ins. Co. v. Yokote, 103 Haw. 181, 188 n. 9, 80 P.3d 1002, 1009 n. 9 (relying on Haw. Rev. Stat. 431:10C-301 (e).
