To Stack or Not to Stack, That is the Question

Anti-Stacking Provision Clear & Unambiguous

Plaintiffs, Mark and Karen Kuhn (the Kuhns) sued seeking a declaratory judgment of the available liability insurance covering an accident between a semitruck owned by Jason Farrell and a school bus driven by Mark.

In Mark Kuhn and Karen Kuhn v. Owners Insurance Company; et al, No. 4-22-0827, 2023 IL App (4th) 220827, Court of Appeals of Illinois, Fourth District (June 28, 2023) the semitruck was insured under a policy issued by Owners Insurance Company (Owners), and that policy also insured six other vehicles-two other semitrucks and four trailers- that were not involved in the accident. Each vehicle had a limit of $1 million per accident. The Kuhns sought a declaration that the coverage limits for all of the covered vehicles should be aggregated, or "stacked," resulting in a total of available liability insurance of $7 million for the accident.

The trial court entered a written judgment in favor of the Kuhns, concluding that (1) the policy was ambiguous; (2) because the ambiguity should be construed against Owners, stacking of the policy's coverage limits was permitted; and (3) the aggregate limit of insurance for liability coverage under the policy was $7 million. Accordingly, the court granted the Kuhns' motion for summary judgment and entered judgment against Owners. Owners appealed

BACKGROUND

"Stacking” ordinarily involves combining or aggregating the policy limits applicable to more than one vehicle where the other vehicles are not involved in the accident.

The rationale behind not allowing stacking of liability coverage-that liability policies insure particular cars-is contrary to plaintiff's position. Because the insurance attaches to a particular car.

The Illinois Supreme Court recently declined to consider adopting a per se rule barring stacking of automobile liability coverage as a matter of law because the antistacking provision in that case was unambiguous and enforceable as written. [Hess v. Estate of Klamm, 2020 IL 124649, ¶ 30, 161 N.E.3d 183.'

The Insurance Policy at Issue

The policy provided "Combined Liability" coverage on each of the seven vehicles of up to "$1 Million each accident." The Kuhns argued that the wording of the policy and accompanying declarations were ambiguous pursuant to Illinois case law because the coverages and premiums set forth in the declarations were repeated for each insured vehicle.

Owners argued that the policy declarations were consistent with each other and not ambiguous. Owners argued the policy contained an unambiguous antistacking provision that cleared up any arguable ambiguity in the declarations and should be enforced as written. In particular, subsection 5 explicitly stated that the limits for the same or similar coverage applying to other vehicles could not be added to determine the amount of coverage for an accident.

ANALYSIS

In general, antistacking provisions in insurance policies are not contrary to public policy. In Illlinois, an unambiguous antistacking clause will be given effect by a reviewing court.

In this case, the "Limit of Insurance" provisions refer back to the declarations to define the policy limits and the declarations pages state seven separate times that the "combined liability" limit on each vehicle is $1 million for each accident.

Reading the policy as a whole and interpreting its plain language, the court concluded that the declarations are consistent, not ambiguous, and the antistacking clause set forth in the policy clarifies any possible ambiguity.

The coverages varied based on the vehicle insured; for example, the premiums for vehicle 1 and vehicle 2 (both semitrucks) were identical for liability, UIM/UM coverage, and medical payments, but only vehicle 1 had comprehensive and collision coverage.

The Antistacking Clause

Even if some ambiguity existed, the policy's antistacking clause cleared up any possible confusion.

The explicit antistacking clause of the policy, is unambiguous and should be enforced as written.

Instead of applying the Policy's clear anti-stacking provision, the trial court engaged in the very sort of tortured and strained reading of the Policy to find an ambiguity that this Court and the Illinois Supreme Court have repeatedly rejected. This was error, the trial court’s order was reversed and the case remanded with directions to enter summary judgment in favor of Owners.

ZALMA OPINION

It should be axiomatic that a trial court should never engage in tortured or strained reading of a policy to find an ambiguity that did not exist. A clear and unambiguous policy wording that refuses to allow stacking of coverages that apply to more than one vehicle insured when only one vehicle is involved in an accident, should be enforced as written. The Illinois Court of Appeals read the entire policy and found no ambiguity and insisted on enforcing the contract of insurance as written.

(c) 2023 Barry Zalma & ClaimSchool, Inc.

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