Car insurance. Photo: BLACKWHITEPAILYN/Shutterstock.com
A divided en banc Pennsylvania Superior Court panel has clarified insurance law dealing with when auto insurance customers have the opportunity to waive stacking benefits.
"This case presents us with a matter of first impression: Whether the removal of a vehicle from an auto insurance policy providing non-stacked UIM coverage for three vehicles constitutes the 'purchase' of coverage as contemplated by Section 1738(c) of the MVFRL, such that the insured must be provided the opportunity to waive the stacked limits of coverage at the time of removal," wrote Judge Anne Lazarus in the court's majority opinion.
In Franks v. State Farm, the majority held that a vehicle's removal from a policy does not constitute a purchase. Joining Lazarus in the majority were Judges John Bender, Mary Janes Bowes, Judith Olson, Alice Dubow and Mary Murray.
Judge Daniel McCaffery dissented and was joined by President Judge Jack Panella and Judge Deborah Kunselman.
The plaintiffs, Robert and Kelly Franks, claimed they should have been entitled to twice the $100,000 policy limit paid out to them by State Farm when Robert was injured in an accident involving another motorist. The Frankses argued that their removal of a 1999 Ford Taurus from their multi-vehicle insurance policy should have been accompanied by a new stacking waiver.
In reaching its ruling, the court analyzed Section 1738 of the Motor Vehicle Financial Responsibility Law, which governs stacking. The pertinent part the court focused on was Section C, which states in part, "Each named insured purchasing uninsured or underinsured motorist coverage for more than one vehicle under a policy shall be provided the opportunity to waive the stacked limits of coverage."
With that in mind, Lazarus said, "it is clear that the Frankses did not effectuate a 'purchase' of coverage within the plain meaning of Section 1738(c). When the Frankses deleted the 1999 Ford Taurus from their policy, they did not 'obtain something' that they did not 'already possess.' To the contrary, they eliminated a portion of their existing coverage. Nor did the Frankses make a payment of any sort. In fact, they received a credit from State Farm in the amount of $15.06, and their annual premiums were reduced by a total of $500.00."
McCaffery disagreed.
"Because Section 1738(c) of the Motor Vehicle Financial Responsibility Law (MVFRL) was enacted with the aim of consumer protection, I conclude the statute requires a new stacking waiver whenever the amount of UIM coverage changes, regardless of whether that change is an increase or decrease in the amount of stacked coverage as a result of the addition or removal of a vehicle. Thus, I respectfully dissent," McCaffery said.
Leon Aussprung of the Law Offices of Leon Aussprung, representing the Franks, did not respond to a request for comment.
Michael Saltzburg of Bennett, Bricklin & Saltzburg represents State Farm and did not respond to a request for comment.
P.J. D'Annunzio
Reporter at the Legal Intelligencer covering public corruption, federal courts, and breaking news.