Anti-stacking Clause for UIM in Driver's Policy Ambiguous, Unenforceable

 

In Wagner v. Yates, 2009 WL 2832880 ( Ind. ), Brenda Wagner sued Bobbi Yates for injuries she received in an auto collision while driving a vehicle owned by her employer. Wagner's husband joined the action on a loss of consortium claim. Wagner later amended the complaint to add State Farm and American Family, seeking UIM coverage.

 

At the time of the collision Wagner carried an auto insurance policy with American Family Insurance. Yates carried an auto liability policy with Allstate Insurance Company and the company car Wagner drove was insured by her employer through a policy with State Farm. Wagner settled with Allstate for policy limits in the amount of $50,000. Wagner sought UIM coverage from American Family and State Farm. Both of those policies provided $100,000 per person in UIM coverage.

 

The parties agreed that under the terms of Allstate's liability policy Allstate was responsible for the first $50,000. The parties also agreed that, if applicable, State Farm would be liable for the next $50,000. American Family asserted that because of anti-stacking and set-off provisions in the Wagner insurance policy, it had no liability. American Family contended that Wagner was entitled to a total recovery of $100,000. And because Allstate had already settled for $50,000 and State Farm would be responsible for the next $50,000, if any, American Family's exposure was zero. American Family moved for summary judgment on this basis.

 

Wagner filed a cross-motion for summary judgment. The trial court agreed with American Family and granted summary judgment in its favor. On appeal, Wagner conceded that an insurer could limit its exposure by including an “anti-stacking” provision in its insurance policy; but argued that a plain reading of American Family's policy showed that no such provision was included. Wagner also contended that based on the language of the policy, American Family was not entitled to set off any amounts that may be paid by State Farm. Concluding that American Family may set off payments made by State Farm, the court of appeals affirmed the judgment of the trial court. It did not address the anti-stacking claim.

 

Transfer was granted, and the Supreme Court of Indiana held that American Family was not entitled to set off any payment of UIM benefits made to Wagner by State Farm, and the purported “anti-stacking clause” for UIM coverage in Wagner's policy was ambiguous and thus unenforceable.

 

In its decision, the court explained that the provision in Wagner's policy stating that limits of liability of UIM coverage were to be reduced by “payment made or amount payable by or on behalf of any person or organization which may be legally liable” referred to payments by or on behalf of those directly liable for causing the injuries.

 

Also, American Family was not entitled to set off any payment of UIM benefits made to Wagner by State Farm under the provision in her policy stating that limits of liability of UIM coverage were to be reduced by a payment made or amount payable under any “collectible auto liability coverage.” According to the court, the policy was ambiguous on the question of whether “collectible auto liability insurance” included a payment by an insurance company under its UIM coverage, and there was authority for the proposition that while UIM coverage was not considered “liability insurance” under some circumstances, it might be considered as such under other circumstances. Thus, the provision was to be strictly construed against American Family.

 

Finally, the purported “anti-stacking clause” for UIM coverage set forth in Wagner's policy was ambiguous and thus unenforceable, as it made no reference to other insurance policies or UIM coverage to indicate insured's maximum recovery would be limited by other policies. Further, it did not mention anything about other insurance companies' policy limits or aggregate recovery with respect to losses.