In Craley v. State Farm Fire and Casualty Company, State Farm insured two vehicles in a household, one under a policy issued to Mrs. Craley and the other under a policy issued to Mr. Craley who signed the form prescribed by Section 1738(d)(1) rejecting stacked uninsured motorist limits. That form reads:
UNINSURED COVERAGE LIMITS
By signing this waiver, I am rejecting stacked limits of uninsured motorist coverage under the policy for myself and members of my household under which the limits of coverage available would be the sum of limits for each motor vehicle insured under the policy. Instead, the limits of coverage that I am purchasing shall be reduced to the limits stated in the policy. I knowingly and voluntarily reject the stacked limits of coverage. I understand that my premiums will be reduced if I reject this coverage.
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Signature of First Named Insured
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Date
Mrs. Craley was killed and other family members were injured while occupying Mrs. Craley’s car in an accident caused by the negligence of an uninsured motorist. It was undisputed that the $15,000/$30,000 uninsured motorist coverage on Mrs. Craley’s vehicle was available to their claims. The issue was whether the claimants also could recover the $15,000/$30,000 uninsured motorist limits applicable to Mr. Craley’s vehicle.
The lower court held that Section 1738 did not permit a named insured to reject inter-policy stacking (accumulating coverage under more than one policy) but only permitted the rejection of intra-policy stacking (where multiple vehicles are insured under one policy) and, therefore, found that the claimants could recover uninsured motorist benefits under Mr. Craley’s policy. The Superior Court reversed on the basis that the household exclusion in Mr. Craley’s policy precluded the claimants from recovering uninsured motorist benefits under that policy though the Superior Court believed that the anti-stacking language of the policy was unenforceable (on the basis that Section 1738 does not permit a named insured to reject stacking under a policy insuring only one vehicle).
The Supreme Court agreed that the claimants could not recover uninsured motorist benefits under Mr. Craley’s policy but reached that conclusion for a different reason. While acknowledging that the rejection form prescribed by Section 1738 does not clearly address inter-policy stacking (as opposed to intra-policy stacking), the Supreme Court found that Mr. Craley must have understood that the rejection form applied to inter-policy stacking as intra-policy stacking would have been unavailable as the policy insured only one vehicle. The court suggests that it might have reached a different result if Mr. Craley had signed the rejection form in connection with a policy that insured multiple vehicles. The reasoning invoked by the court made it unnecessary for it to decide the enforceability of the household exclusion under the facts of the case.
If you would like to read a copy of the opinion of the Supreme Court, please click here (Majority opinion), here (Concurring opinion of Chief Justice Cappy), and here (Concurring opinion of Justice Eakin). You can also contact Denise Alosi at (215) 665-3321 and request a copy from her. If you have any questions about the opinion or any other automobile insurance law issues, please feel free to call me.
Very truly yours,
Michael Saltzburg
For further information, please contact Michael Saltzburg, Esquire.
Telephone: 215-665-3340
E-mail: saltzburg@bbs-law.com
