Recently in Higgins v. Nationwide Affinity Ins. Co. of Am., 2024 PA Super 312 (Dec. 26, 2024), the Superior Court of Pennsylvania was tasked with analyzing whether an insurance policy provides illusory benefits by charging a premium for “stacking” of uninsured motorist (“UM”) and underinsured motorist (“UIM”) benefits in single vehicle insurance policies issued to individuals with no other drivers or policies in the household.
In Higgins, the claimant paid an additional premium to purchase “stacking” of UM and UIM coverage on her insurance policy. Because there was only one policy and driver in the household, the claimant argued that the stacking benefit was illusory and charged a premium for something that could never be collected. Furthermore, the claimant asserted that she is entitled to return of premiums for the stacking benefit that did not exist and that the insurance carrier violated the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”). The insurance carrier moved for summary judgement, and the trial court ruled in favor of the insurance carrier.
The Pennsylvania Superior Court affirmed, first expressing that there are two kinds of stacking, intra-policy stacking and inter-policy stacking. Intra-policy stacking provides for multiplication of UM and UIM coverage under a single policy, whereas inter-policy stacking provides for the adding together of UM and UIM coverage available under separate insurance policies. Next, the Court discussed section 1738 of the Motor Vehicle Financial Responsibility Law (“MVFRL”) which requires insurance carriers to provide stacked UM and UIM benefits, unless the named insured explicitly elects to waive the stacked coverage. 75 Pa. Stat. and Cons. Stat. Ann. § 1738. The Court also explained that although section 1738 does not specifically discuss waiver of intra-policy stacking it is unambiguously provided for and thus must be provided absent a waiver.
In ascertaining how a single-vehicle policy holder could benefit from stacking, the Court cited Craley v. State Farm Fire & Cas. Co., 895 A.2d 530, 537 (Pa. 2006), where the Supreme Court held that a single-vehicle policy holder could benefit from stacking “where the individual is injured in a vehicle other than his own insured vehicle and is an insured under the non-owned vehicle’s policy, which also has uninsured motorist coverage (such as an employer’s vehicle).” The Court further cited Jones v. GEICO Choice Ins. Co., 617 F. Supp. 3d 275, 281 (E.D. Pa. 2022) in providing another example of when a single-vehicle policy holder can benefit from stacking.
Thus, the Court held that because the stacked UM and UIM benefits conferred a benefit on the claimant she was not entitled to return of premiums. The Court further stated that its conclusion was reinforced by the Third Circuit decision in Berardi v. USAA Gen. Indemnity Company, 2023 WL 4418219 (3d Cir. July 10, 2023), which held single-vehicle owners with no other household policies can derive benefits from stacked motor vehicle insurance policies.
The Court further held that the insurance carrier did not deceive the claimant, but rather the claimant had a duty to question the carrier regarding the coverage selected. The Court explained that in order for a plaintiff to state a claim under the UTPCPL, they must allege deceptive conduct on behalf of the defendant, and justifiable reliance on the defendant’s deceptive conduct. In explaining that Pennsylvania law does not require an insurance carrier “to explain every permutation possible from an insured’s choice of coverage,” the Court cited Kilmore v. Erie Ins. Co., 595 A.2d 623, 626-27 (Pa. Super. Ct. 1991). Furthermore, the Court cited Wisniski v. Brown & Brown Ins. Co. of PA, 906 A.2d 571 (Pa. Super. Ct. 2006), in stating that it is the insured’s obligation to question the insurance carrier regarding the selection and impact of coverage, prior to entering the contract. The trial court’s decision was affirmed, accordingly.
The Higgins decision can be found here.
For additional questions, please contact Molly Hecht, Esq. and/or Glen Shikunov, Esq.
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