Presented by the Insurance Agents & Brokers Liability Practice Group

Best Practices Regarding Stacking Waivers in Pennsylvania

June 1, 2019

Pennsylvania law is currently in flux with respect to uninsured/underinsured stacking waivers. An insured with an auto policy insuring one or more vehicles with stacking waived may acquire an additional vehicle during the policy period. The insured may not have been asked to again waive stacking, with the agent or insurer believing that the new vehicle is subject to the same terms and conditions of the policy pursuant to the after-acquired vehicle clause. If an insured who was not asked to waive stacking when the new vehicle was added then has an accident, stacked coverage may be sought.

In January of this year in Kuhns v. Travelers Home & Marine Insurance Company, the Court of Appeals for the Third Circuit spoke on this issue, applying Pennsylvania law. Decisions from a federal court on state law are not binding, though they are persuasive. The Third Circuit’s decision in Kuhns is favorable to insurers, but care should be taken with respect to waivers when an additional vehicle is added during the policy period. The reason for such caution is because Kuhns is contrary to recent Pennsylvania Superior Court decisions, and the Pennsylvania Supreme Court has not yet spoken on this exact issue.

The Kuhns initially waived stacked uninsured and underinsured benefits under their policy, which covered three vehicles. Several months later, they purchased another vehicle and added it to the existing policy. The question presented to the Third Circuit was whether the waiver of stacked insurance coverage applied to the fourth vehicle.

The Third Circuit cited the recent Pennsylvania Supreme Court Sackett line of cases in holding that:

[W]hen an insured adds a new vehicle to an existing multi-vehicle policy, the insurer, under Sackett I, must provide that insured with a new opportunity to waive stacked UIM coverage . . . unless, under Sackett II, the insured has already signed a valid stacking waiver . . . and coverage for the newly-added vehicle is extended under a continuous after-acquired-vehicle clause.

The court analyzed the specific language of the Travelers policy with regard to coverage for newly acquired automobiles, holding that it applied and was “continuous.” The court rejected the argument that the vehicle was not added to the policy pursuant to the newly acquired vehicle clause but, rather, by Travelers’ addition of a new declaration sheet. The court held that the initial waiver was still in place, explaining that Travelers’ contractual duty was triggered by the policy’s after acquired vehicle clause, not the adding of the vehicle to the declarations sheet or issuance of the declarations sheet. As such, Travelers had no duty to to issue another waiver when the fourth vehicle was added.

Despite this favorable ruling from the Third Circuit Court of Appeals, Pennsylvania state law regarding the requirement of waivers for stacking of underinsured/uninsured motorist coverage is uncertain and unpredictable. It is considered best practice to inquire whether the insured who adds a new vehicle to a policy seeks to continue to waive stacking and, if so, to obtain the required waiver of stacking form(s) and ensure the forms are on record.

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