The case is Sackett v. Nationwide Mutual Insurance Company, 919 A.2d 194 ( Pa. 2007). Sackett brought an action for a declaratory judgment that the insurer needed to offer and obtain a new waiver of uninsured or underinsured motorist benefits when a newly-acquired vehicle was added to the auto policy. The Court of Common Pleas entered summary judgment in favor of insurer. Insureds appealed. The Superior Court affirmed. Appeal to the Supreme Court was permitted.

 

The question before the Supreme Court was this: does the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL) require insurers to provide the opportunity to waive stacked limits of uninsured/underinsured coverage for each instance an insured purchases UM/UIM coverage by adding a vehicle to an existing policy? The answer provided by the Pennsylvania Supreme Court is yes. Section 1738 of the MVFRL, read as a whole, makes it clear that an insurer must provide a stacking waiver each time a new vehicle is added to the policy because the amount of coverage that may be stacked increases.

 

The trial court found that an insurer “does not have a duty to obtain waivers of stacking when the same named insured simply adds a vehicle to the policy,” and entered summary judgment in favor of Nationwide. The trial court found that “[t]he language of the statute does not set forth a duty on behalf of the defendant-insurer to offer additional stacking waiver forms when additional vehicles are added to the policy if [the insureds] have previously executed a waiver of stacking.”

 

However, the Supreme Court found that the addition of a vehicle to a policy providing UIM coverage raises different concerns. The Supreme Court concluded that it was the intention of the legislature that the waiver notice should to be provided each time such coverage is purchased. Adding a vehicle to an existing policy constitutes a purchase within the meaning of the statute and entitles insureds who select UM/UIM coverage the opportunity to waive the new sum of available stacked limits of that coverage. In contrast, if an insured decides to waive all UM/UIM coverage at inception, the coverage limits waived are not affected by a subsequent addition of vehicles.

The Court reasoned that if Sackett did not purchase the coverage prior to acquiring the new vehicle then the purchase could only have occurred after he acquired it. Once the Sacketts purchased coverage for the vehicle, the available sum of stacked limits increased. Stated otherwise, it was not possible at the inception of the policy, when the Sacketts had just two vehicles, for Mr. Sackett to waive the stacked limits for three vehicles.

The Court concluded that the opportunity to waive the increased limit of stacked UM/UIM coverage was denied because Nationwide did not provide the required rejection form. An insured must affirmatively waive stacked coverage in order to pay a reduced premium. Since Nationwide failed to inform the Sacketts of the new sum of available coverage, the UIM coverage available under the policy is the sum of the available coverage limits of three vehicles. Accordingly, the Supreme Court reversed the Superior Court's judgment and remanded the matter to the trial court.