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PA’s New Stacking Waiver When Insurance Coverage Changes

stacked pa insurance

On July 31, 2020, the Pennsylvania Superior Court filed a decision that affects vehicle owners with PA auto insurance. Below is a breakdown of the Court’s ruling and what it means for consumers – including those who are pursuing a Pennsylvania auto accident claim.

PA Superior Court Ruling on UIM “Stacking” Waivers

The PA Superior Court held that insureds with Pennsylvania vehicle insurance must receive a new stacking waiver whenever the stacked amount of underinsured motorist (UIM) coverage changes – regardless of whether the change is an increase or decrease in the amount of coverage.

In Franks v State Farm Mut. Auto. Ins. Co., the Court reviewed the interpretation of Section 1738(c) of the Pennsylvania Motor Vehicle Financial Responsibility Law. Prior to the July 31 ruling, it was clear that the addition of a vehicle to an existing multi-vehicle policy requires the insurance company to provide the insured with a new stacking rejection form. An appeal from a 2019 case questioned whether insurance companies must also provide new waivers for stacked UIM benefits when insureds remove a vehicle from their existing policies. The appellants in the case, Robert and Kelly Franks, contended that their removal of a third vehicle from their policy with State Farm constituted a “purchase” of a new policy that covered a different number of vehicles and required a different premium, so a new waiver of stacking was required. Since they didn’t receive one and Robert Franks was injured in a crash, State Farm should have covered the couple with stacked UIM insurance.

The Superior Court concluded that the removal of a vehicle from a multi-vehicle policy changes the stacked amount of UIM coverage, and when that happens, the insurance company must issue new stacking waiver form to the insured for them to sign. The Court’s interpretation complies with its policy of being “liberally in favor of the insured” to ensure that injured claimants receive the greatest possible insurance coverage.

How the Ruling Impacts Vehicle Owners and Injured Claimants

Stacking allows insureds to combine UIM coverage limits on multiple vehicles, which increases their protection in the event of an accident. Stacked coverage usually means paying higher premiums, so some vehicle owners choose to waive this coverage on their policies by signing a form.

Vehicle owners with Pennsylvania auto insurance will notice now that when they remove a vehicle from their policy, their insurer will provide them with a new waiver for stacked UIM coverage. At that point, insureds could review their existing policy and the waiver and decide whether they want to instead accept stacked UIM coverage or reject it again.

For some individuals who are pursuing an auto accident injury claim against an uninsured or underinsured motorist, this ruling may actually change the payout they can pursue from the insurance company. If they made changes to their insurance policy prior to the crash and did not receive a new waiver for stacked UIM coverage, their insurer may have to provide them with stacked coverage for their injuries pursuant to the July 31st ruling.

If you have questions about this law and how it may pertain to you, we welcome you to contact Gay Chacker & Ginsburg at (215) 567-7955.

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