On December 27, 2007, the Pennsylvania Supreme Court decided the case of Everhart v. PMA Insurance, 938 A.2d 301 (Pa. 2007), holding that stacking of Uninsured/Underinsured (UM/UIM) coverage is not required by the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL) in the context of commercial fleet policies.
"Stacking" is a concept under automobile insurance law which multiplies the amount of UM/UIM coverage purchased in a policy by the amount of vehicles insured under the policy. In commercial fleet policies, which often cover many vehicles, stacking would result in substantial coverage. For example, stacking UM/UIM of $50,000 for a 100 vehicle commercial fleet policy would result in available coverage of $5,000,000 ($50,000 x 100 vehicles) for each person injured in an accident.
The question in Everhart was whether Section 1738 of the MVFRL, which was passed in 1990 and made UM/UIM stacking mandatory unless a form waiver was provided by the insurance company and signed by the purchaser of the policy, applied to commercial fleet policies. The Pennsylvania Supreme Court decided that the answer was no, that fleet policies were exempt from Section 1738 and no stacking would apply, despite the fact that no form waivers had been signed.
The Facts
Robert Everhart was the President and CEO of Russell Standard Corporation which had a commercial fleet automobile insurance policy with PMA insuring 33 vehicles. The policy provided liability coverage of $1,000,000 but UM/UIM coverage of only $35,000. PMA did not offer UM/UIM stacking on commercial policies, so no waivers had been executed.
On July 26, 2001, Everhart was driving a Chevy Tahoe covered
under Russell Standard's commercial fleet policy when the Tahoe was struck by another vehicle and Everhart was killed. Everhart's estate made a claim with PMA alleging that, since no valid UM/UIM waivers were signed as was required by Section 1738 of the MVFRL, stacking automatically applied. The Estate claimed that it was entitled to stacked UIM coverage of $1,155,000 ($35,000 x 33 vehicles = $1,155,000).
The Supreme Court Decision
Ultimately, the Supreme Court held that the Estate was wrong and that stacking did not apply to a commercial fleet policy. The following were the reasons cited by the Court:
1. The language of Section 1738 provides clues that the Legislature intended to exclude commercial fleet policies. Although Section 1738 states that waivers must be signed or else stacking is mandatory, the waiver forms themselves use language including terms like "I," "myself" and "member of my household" which indicate that they intend to apply to personal, but not commercial, policies.
2. The primary purpose of the MVFRL is to control the cost of insurance so that more people can afford insurance. Stacking of coverage under commercial policies, potentially covering tens, hundreds or thousands of cars, would lead to very high premium costs.
3. Insurers and commercial policyholders do not expect UM/UIM stacking to apply, such that holding that Section 1738 requires stacking would be unfair.
4. At the time that Section 1738 was enacted, prior court decisions had consistently held that stacking of UM/UIM coverage did not apply to commercial fleet policies. Accordingly, the Court would not overturn existing court decisions without explicit direction from the Legislature.
Author Resource:-
Tim Rayne is the author of numerous publications on Personal Injury Law and is a graduate of the Temple University Beasley School of Law's Master's in Trial Advocacy Program. Tim can be reached at http://www.macelree.com/traynelaw.
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