Upon surveying state statutes and case law, there are a wide range of opinions on the propriety of stacking policies in the area of uninsured/underinsured motorist coverage. State stances on the stacking versus anti-stacking issue range from state-mandated stacking through statute to state-prohibited stacking by statute and several in between.
This is a significant question because insureds want to stack the policies to obtain a full recovery for their actual damages. If anti-stacking provisions do violate public policy, insurers should consider that their exposure may be higher when negotiating multiple vehicle coverage auto policies.
Two or More Auto Policies
On March 27, 2009, the Texas Supreme Court entered its per curiam opinion in Progressive Cty. Mut. Ins. Co. v. Kelley, 2009 Tex. LEXIS 110 52, Tex. Sup. J. 488 (Tex. 2009). The court remanded the case for a fact finding on the issue of whether the two documents involved in the dispute constituted one policy or two separate policies. Because a fact finding was needed on this issue, the court did not reach the more significant question in the case, whether the "two or more auto policies" provision prevents the insured from "stacking" two policies.
The "two or more auto policies" provision at issue in Progressive v. Kelley reads as follows.
If this policy and any other auto insurance policy issued to you by us apply to the same accident, the maximum limit of our liability under all the policies shall not exceed the highest applicable limit of liability under one policy.
This is the first case to specifically address a "two or more auto policies" provision in Texas. Though the Texas Supreme Court did not reach this issue in this case, in other cases and in other courts, there has been discussion concerning the uninsured/underinsured motorist statute's intended purpose and whether policy provisions frustrate those purposes.
The Texas Supreme Court held that one way a policy provision can frustrate the uninsured/underinsured motorist statute's intended purpose is by limiting the possibility that an injured insured can recover actual damages. Stracener v. United Servs. Auto. Assoc., 777 S.W.2d 378, 383 (Tex. 1989), Mid-Century Ins. Co. v. Kidd, 997 S.W.2d 265, 276 (Tex. 1999). Clauses in insurance policies which are not consistent with and do not further the purpose of the uninsured/underinsured motorist statute are invalid. Stracener at 384. Multiple policies may be stacked even though issued by the same insurer to the same insured for damages arising out of the same accident. United Services Auto. Ass'n v. Hestilow, 754 S.W.2d 754, 757-59 (Tex. App.—San Antonio 1988), aff'd, 777 S.W.2d 378 (Tex. 1989); Travelers Indem. Co. v. Lucas, 678 S.W.2d 732. 735 (Tex. App.—Texarkana 1984, no writ).
Progressive v. Kelley
The insured in Progressive v. Kelley alleged her medical bills were over $1 million. The underinsured's driver's limits were $100,000, and $500,025 would have been available under each Progressive policy, if there were indeed two, and if the courts held the "two or more auto policies" provision invalid. The insured would therefore need to be able to recover under each Progressive policy to be fully compensated for the medical expenses, meaning that the "two or more auto policies" provision arguably would frustrate the purpose of the uninsured motorist statute by limiting the possibility that an injured insured can recover actual damages.
The Texas statute does not speak specifically to the stacking issue, but, as evidenced in the case law, the courts have expressed a clear understanding that the purpose of the statute is that insureds recover for their actual damages and that a policy provision preventing full recovery conflicts with that public policy and is thus invalid. Therefore, it appears that in Texas, the "two or more auto policies" provision, when coupled with the intent and purpose of the uninsured motorist statute, will not operate to prevent stacking where the insured has two policies with an insurer and their actual damages are greater than the maximum recovery under one policy's uninsured/underinsured motorist coverage.
State Stacking Positions
There are some states which allow anti-stacking if certain requirements are met. In Florida, per statute, stacking is only allowed if certain notice requirements are fulfilled by the insured, and the insurer is required to revise premium rates to reflect a reduction in the uninsured motorist coverage premium of at least 20 percent for policies with such stacking limitations. See Fla. Stat. § 627727(1); Rando v. Government Employees Ins. Co., 556 F.3d 1173 (11th Cir. 2009). Nevada's statute permits insurers to limit stacking, but provides that any such limiting provision must meet three requirements: clarity, prominence, and the insured cannot "have purchased separate coverage on the same risk nor paid a premium calculated for full reimbursement under that coverage." Dairyland v. Emens, 2008 U.S. Dist. LEXIS 51425 (D.C. Nev. 2008).
Many states, like Texas, do not have insurance code provisions speaking directly to whether anti-stacking provisions are valid. In Missouri, there is no statute speaking specifically to stacking, but the courts are inclined to find anti-stacking provisions ambiguous, and therefore construe them in favor of finding coverage. It necessarily follows, however, that where an anti-stacking provision is clear and unambiguous, it will operate to prevent stacking in Missouri. Bolin v. Progressive Northwestern Ins. Co., 2009 U.S. Dist. LEXIS 30234 (E.D. Mo. 2009).
Ohio courts hold clear and unambiguous anti-stacking provisions to be fully enforceable. Nationwide Mut. Fire Ins. Co. v. Wood, 2008 Ohio App. LEXIS 3648 (Civ. App. 9th Dist. Ohio, 2008). Virginia courts take the position that stacking will be allowed unless clear and unambiguous language on the face of the policy exists to prevent it. Virginia Farm Bureau Mut. Ins. Co. v. Williams, 677 S.E.2d 299 (Va. 2009).
An Oklahoma case construing an insurance policy entered into in Arkansas under the provisions of Arkansas law held that in Arkansas, anti-stacking provisions are valid and enforceable. Howe v. Carter, 2008 U.S. Dist. LEXIS 91082 (N.D. Okla. 2008). Montana courts hold that anti-stacking provisions violate public policy and are therefore invalid. See Tenas v. Progressive Preferred Ins. Co., 197 P.3d 990 (Mont. 2008).
Some state courts have provisions which prohibit stacking. Kansas has an anti-stacking statute, and the Kansas Supreme Court has said that this effectively becomes a part of the policy such that both the state statute and insurance policies prohibit stacking. State Farm Mut. Auto. Ins. Co. v. Oursler, 2008 U.S. Dist. LEXIS 97785 (D.C. Kan. 2008). In Minnesota, Minn. Stat. § 65B.49 subsection 3(a)(6) is an anti-stacking statute which prohibits insureds from stacking policies to enhance recovery. Johnson v. Progressive Northern Ins. Co., 2009 Minn. App. Unpub. LEXIS 195 (Civ. App. Minn. 2009).
There is at least one state that requires insurers to allow insureds to stack coverage. The Rhode Island statute mandates the ability to stack. Stated another way, anti-stacking provisions are not allowed by statute in Rhode Island. R.I. Gen. Laws § 27-7-2.1(a), (i); LaPlante v. York Ins. Co. of Me., 2008 U.S. Dist. LEXIS 6002 (D.C.R.I. 2008).
Other state courts address the issue of stacking but neither mandate nor prohibit anti-stacking provisions in policies. In Delaware, anti-stacking provisions are authorized by Del. C. § 3902(c). This provision clearly and unambiguously allows anti-stacking provisions. Bromstad-Deturk v. State Farm Mut. Auto. Ins. Co., 2009 Del. LEXIS 274 (Del. 2009). Iowa Code § 516A.2(1) permits insurers to include anti-stacking provisions in the policies they issue. Section 516A.2(2) allows the parties to contract for stacking. When a contract is silent, per 516A.2(3), the insured is entitled to recover up to the highest policy limit, with no stacking of coverage. So in Iowa, the parties have permission to stack or not to stack by statute, but the default in the absence of specifically addressing the issue is no stacking. Ewing v. American Nat'l Prop. & Cas. Co., 2008 Iowa App. LEXIS 98, (Civ. App. Iowa 2008).
Conclusion
In many states, the courts or the legislatures have spoken on the issue of multiple auto policies and anti-stacking provisions. But others, like Texas, have not directly addressed the issue yet. When dealing with an anti-stacking issue, one should first determine if the particular state legislature has spoken on the issue. If they have specifically addressed the issue, then insureds and insurers alike should negotiate accordingly. Other times case law may either directly or indirectly address the issue, such that insurers are able to bargain accordingly with insureds who have multiple automobiles and policies.
Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.
Upon surveying state statutes and case law, there are a wide range of opinions on the propriety of stacking policies in the area of uninsured/underinsured motorist coverage. State stances on the stacking versus anti-stacking issue range from state-mandated stacking through statute to state-prohibited stacking by statute and several in between.
This is a significant question because insureds want to stack the policies to obtain a full recovery for their actual damages. If anti-stacking provisions do violate public policy, insurers should consider that their exposure may be higher when negotiating multiple vehicle coverage auto policies.
Two or More Auto Policies
On March 27, 2009, the Texas Supreme Court entered its per curiam opinion in Progressive Cty. Mut. Ins. Co. v. Kelley, 2009 Tex. LEXIS 110 52, Tex. Sup. J. 488 (Tex. 2009). The court remanded the case for a fact finding on the issue of whether the two documents involved in the dispute constituted one policy or two separate policies. Because a fact finding was needed on this issue, the court did not reach the more significant question in the case, whether the "two or more auto policies" provision prevents the insured from "stacking" two policies.
The "two or more auto policies" provision at issue in Progressive v. Kelley reads as follows.
This is the first case to specifically address a "two or more auto policies" provision in Texas. Though the Texas Supreme Court did not reach this issue in this case, in other cases and in other courts, there has been discussion concerning the uninsured/underinsured motorist statute's intended purpose and whether policy provisions frustrate those purposes.
The Texas Supreme Court held that one way a policy provision can frustrate the uninsured/underinsured motorist statute's intended purpose is by limiting the possibility that an injured insured can recover actual damages. Stracener v. United Servs. Auto. Assoc., 777 S.W.2d 378, 383 (Tex. 1989), Mid-Century Ins. Co. v. Kidd, 997 S.W.2d 265, 276 (Tex. 1999). Clauses in insurance policies which are not consistent with and do not further the purpose of the uninsured/underinsured motorist statute are invalid. Stracener at 384. Multiple policies may be stacked even though issued by the same insurer to the same insured for damages arising out of the same accident. United Services Auto. Ass'n v. Hestilow, 754 S.W.2d 754, 757-59 (Tex. App.—San Antonio 1988), aff'd, 777 S.W.2d 378 (Tex. 1989); Travelers Indem. Co. v. Lucas, 678 S.W.2d 732. 735 (Tex. App.—Texarkana 1984, no writ).
Progressive v. Kelley
The insured in Progressive v. Kelley alleged her medical bills were over $1 million. The underinsured's driver's limits were $100,000, and $500,025 would have been available under each Progressive policy, if there were indeed two, and if the courts held the "two or more auto policies" provision invalid. The insured would therefore need to be able to recover under each Progressive policy to be fully compensated for the medical expenses, meaning that the "two or more auto policies" provision arguably would frustrate the purpose of the uninsured motorist statute by limiting the possibility that an injured insured can recover actual damages.
The Texas statute does not speak specifically to the stacking issue, but, as evidenced in the case law, the courts have expressed a clear understanding that the purpose of the statute is that insureds recover for their actual damages and that a policy provision preventing full recovery conflicts with that public policy and is thus invalid. Therefore, it appears that in Texas, the "two or more auto policies" provision, when coupled with the intent and purpose of the uninsured motorist statute, will not operate to prevent stacking where the insured has two policies with an insurer and their actual damages are greater than the maximum recovery under one policy's uninsured/underinsured motorist coverage.
State Stacking Positions
There are some states which allow anti-stacking if certain requirements are met. In Florida, per statute, stacking is only allowed if certain notice requirements are fulfilled by the insured, and the insurer is required to revise premium rates to reflect a reduction in the uninsured motorist coverage premium of at least 20 percent for policies with such stacking limitations. See Fla. Stat. § 627727(1); Rando v. Government Employees Ins. Co., 556 F.3d 1173 (11th Cir. 2009). Nevada's statute permits insurers to limit stacking, but provides that any such limiting provision must meet three requirements: clarity, prominence, and the insured cannot "have purchased separate coverage on the same risk nor paid a premium calculated for full reimbursement under that coverage." Dairyland v. Emens, 2008 U.S. Dist. LEXIS 51425 (D.C. Nev. 2008).
Many states, like Texas, do not have insurance code provisions speaking directly to whether anti-stacking provisions are valid. In Missouri, there is no statute speaking specifically to stacking, but the courts are inclined to find anti-stacking provisions ambiguous, and therefore construe them in favor of finding coverage. It necessarily follows, however, that where an anti-stacking provision is clear and unambiguous, it will operate to prevent stacking in Missouri. Bolin v. Progressive Northwestern Ins. Co., 2009 U.S. Dist. LEXIS 30234 (E.D. Mo. 2009).
Ohio courts hold clear and unambiguous anti-stacking provisions to be fully enforceable. Nationwide Mut. Fire Ins. Co. v. Wood, 2008 Ohio App. LEXIS 3648 (Civ. App. 9th Dist. Ohio, 2008). Virginia courts take the position that stacking will be allowed unless clear and unambiguous language on the face of the policy exists to prevent it. Virginia Farm Bureau Mut. Ins. Co. v. Williams, 677 S.E.2d 299 (Va. 2009).
An Oklahoma case construing an insurance policy entered into in Arkansas under the provisions of Arkansas law held that in Arkansas, anti-stacking provisions are valid and enforceable. Howe v. Carter, 2008 U.S. Dist. LEXIS 91082 (N.D. Okla. 2008). Montana courts hold that anti-stacking provisions violate public policy and are therefore invalid. See Tenas v. Progressive Preferred Ins. Co., 197 P.3d 990 (Mont. 2008).
Some state courts have provisions which prohibit stacking. Kansas has an anti-stacking statute, and the Kansas Supreme Court has said that this effectively becomes a part of the policy such that both the state statute and insurance policies prohibit stacking. State Farm Mut. Auto. Ins. Co. v. Oursler, 2008 U.S. Dist. LEXIS 97785 (D.C. Kan. 2008). In Minnesota, Minn. Stat. § 65B.49 subsection 3(a)(6) is an anti-stacking statute which prohibits insureds from stacking policies to enhance recovery. Johnson v. Progressive Northern Ins. Co., 2009 Minn. App. Unpub. LEXIS 195 (Civ. App. Minn. 2009).
There is at least one state that requires insurers to allow insureds to stack coverage. The Rhode Island statute mandates the ability to stack. Stated another way, anti-stacking provisions are not allowed by statute in Rhode Island. R.I. Gen. Laws § 27-7-2.1(a), (i); LaPlante v. York Ins. Co. of Me., 2008 U.S. Dist. LEXIS 6002 (D.C.R.I. 2008).
Other state courts address the issue of stacking but neither mandate nor prohibit anti-stacking provisions in policies. In Delaware, anti-stacking provisions are authorized by Del. C. § 3902(c). This provision clearly and unambiguously allows anti-stacking provisions. Bromstad-Deturk v. State Farm Mut. Auto. Ins. Co., 2009 Del. LEXIS 274 (Del. 2009). Iowa Code § 516A.2(1) permits insurers to include anti-stacking provisions in the policies they issue. Section 516A.2(2) allows the parties to contract for stacking. When a contract is silent, per 516A.2(3), the insured is entitled to recover up to the highest policy limit, with no stacking of coverage. So in Iowa, the parties have permission to stack or not to stack by statute, but the default in the absence of specifically addressing the issue is no stacking. Ewing v. American Nat'l Prop. & Cas. Co., 2008 Iowa App. LEXIS 98, (Civ. App. Iowa 2008).
Conclusion
In many states, the courts or the legislatures have spoken on the issue of multiple auto policies and anti-stacking provisions. But others, like Texas, have not directly addressed the issue yet. When dealing with an anti-stacking issue, one should first determine if the particular state legislature has spoken on the issue. If they have specifically addressed the issue, then insureds and insurers alike should negotiate accordingly. Other times case law may either directly or indirectly address the issue, such that insurers are able to bargain accordingly with insureds who have multiple automobiles and policies.
Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.