How is Pennsylvania Auto Insurance Stacking Up?

Written by Robin Jabour

While most Pennsylvanians are social distancing and doing their best to stay healthy during 2020 and COVID-19, the Pennsylvania Courts and Pennsylvania Senate have each taken measures to change existing Pennsylvania auto insurance law.

Senate Bill 1212 (Printer No. 1812) was drafted by members of the Pennsylvania Senate on June 23, 2020. In the Bill, the Senate removes stacking of underinsured and uninsured motorist coverage. Currently, the Motor Vehicle Financial Responsibility Law (MVFRL) permits the stacking of coverage where the insured has a number of insured vehicles. An insured may waive stacking by signing a form and receiving a premium reduction for the waiver of coverage.

The Senate Bill prohibits stacking in its entirety.

The relevant language of the Bill provides as follows:

General Rule: Regardless of the number of policies issued, vehicles, or premiums shown on a policy, premiums paid, persons covered, vehicles involved in an accident, claims made or lawsuits filed, in no event shall the limit of liability for underinsured or uninsured motorist coverage applicable to two or more motor vehicles covered under the same or separate policies be added together to determine the liability for the coverage available to an injured person or persons for any one accident.

The Senate’s Bill has not yet advanced through the Senate and as of this date, has had no committee votes. Its purpose, however, is clear—to shield automobile insurers from being required to pay additional monies to their insureds where the policy of insurance covers multiple vehicles.

Strangely enough, a few days after the Senate Bill was drafted, on July 30, 2020, in a 2-1 decision, a panel of the Pennsylvania Superior Court issued its opinion in Franks v. State Farm (2784 EDA 2019). In Franks, the Court reversed a Bucks County trial judge’s decision in a declaratory judgment action, holding that when a vehicle is removed from an auto insurance policy and the amount of uninsured/ underinsured coverage changes, a new stacking waiver is required.

The facts in Franks

The facts of the Franks case reveal that for years the insureds had several vehicles covered by an automobile insurance policy issued by State Farm. Vehicles were added and deleted from the policy over the course of several years. Prior to an accident involving one insured, a vehicle had been removed from the policy. The insured involved in the accident contended that liability coverage was inadequate. The insureds demanded underinsured coverage from State Farm. State Farm asserted that coverage was limited to $100,000.00, the coverage provided for one vehicle. The insureds asserted that their underinsured coverage was “stackable” and totaled $200,000.00 in coverage because there had been no waiver signed by the insureds when the policy changed after one vehicle was removed from the policy.

In a case of first impression, the Superior Court considered whether the removal of a vehicle from a multi-vehicle policy requires a waiver of underinsured coverage. In its decision, the Court reviewed the language of Section 1738(c) of the MVFRL (which is to be interpreted in the light most favorable to the insured) and the policy behind the law which is to protect those injured by a negligent driver who lacks adequate coverage. The Court stated that in determining whether a new stacking waiver is required, the critical question is whether there is a change in the potential amount of stacked coverage. Since the removal of one of the Franks’ vehicles from their policy changed the amount of underinsured coverage, the Court found that a new waiver was required, and in the absence of a waiver, coverage in the amount of $200,000.00 was owed.

It is expected that State Farm will file a petition for allowance of appeal to the Pennsylvania Supreme Court.