An appellate court ruled that an ambiguously-worded declarations page means an insured may stack coverage despite a written waiver. The case is Garcia v. Allstate Fire & Cas. Ins. Co., 541 P.3d 162 (N.M. Ct. App. 2023).
The Policy
Linda Garcia purchased a personal auto policy from Allstate in spring 2016 to cover a single vehicle and put a second vehicle on the same policy later in the year. When she added the second vehicle, she was required to choose between stacked and non-stacked UM/UIM coverage for both vehicles. The form explicitly advised Garcia that the difference between stacked and non-stacked coverage was whether or not she could combine the coverage limits for the vehicles due to a single occurrence. Garcia elected not to stack her UM/UIM benefits.
After adding the second vehicle, Garcia received an amended policy declarations page, which clearly stated that "Uninsured Motorists Insurance Bodily injury limits of insured vehicles may not be stacked" (emphasis added). However, it also listed a premium for UM/UIM coverage in the coverage details for each vehicle.
What Happened
Garcia was struck by a vehicle while going through a crosswalk on foot. She submitted a claim to Allstate and asked for stacked coverage limits. Allstate denied the claim based on Garcia's earlier waiver of stacked coverage. Garcia sued, alleging she was entitled to the stacked $50,000 limits. She pointed out that her amended policy declarations showed a separate premium was charged for UM/UIM coverage on each vehicle, rather than a single premium for both vehicles.
Allstate did not dispute Garcia's point, but the company argued that Garcia had knowingly rejected the opportunity to stack the coverages for her vehicles, and that rejection had been valid. The trial court ruled in favor of Allstate, stating Garcia had knowingly selected non-stacked coverage, and the waiver she had executed was valid. Garcia appealed.
Unclear Coverage
When Garcia had added the second vehicle to her policy, she had completed a form rejecting the opportunity to stack her UM/UIM limits; the premium for this non-stacked coverage was given as a single, undivided amount. The declarations page, however, indicated a separate UM/UIM premium was charged for each of the vehicles. Therefore, Garcia argued, the premium was ambiguous and she was entitled to stacked coverage. Allstate claimed the combined total of the allegedly separate premiums represented the total premium Garcia had agreed to pay for non-stacked coverage. The company also reiterated its argument that Garcia had knowingly executed a valid waiver of stacked coverage.
The appellate judges looked to cases where the New Mexico Supreme Court had confronted the question of vaguely structured premiums. In Rodriguez v. Windsor Ins. Co., 879 P.2d 759 (N.M. 1994), the declarations page of an insured's policy stated that "INSURANCE [WAS] PROVIDED WHERE A PREMIUM [WAS] SHOWN FOR THE COVERAGE" (all caps original). A specific UM/UIM premium was given for the insured's first vehicle, and the coverage details for her second and third vehicles indicated the UM/UIM premium for those vehicles was "included" in the UM/UIM premium for the first vehicle. However, the insurer denied the insured's claim for stacked coverage. The insured sued, arguing the premium structure was ambiguous regarding what her premium had paid for. The New Mexico Supreme Court stated that, when an "insurer intend[s] to provide only one coverage regardless of the number of vehicles listed on the declarations page, then listing coverage under each vehicle disingenuously leads the reader of the policy to believe that she is getting more than she paid for" (emphasis added). Judgment was awarded in favor of the insured.
Similar to the policy at issue in Rodriguez, Garcia's policy had listed the UM/UIM coverages separately for each of her vehicles. A specific amount of premium was listed for each vehicle. It had not been unreasonable for Garcia to think she was paying multiple premiums for UM/UIM coverage and that she was therefore entitled to stack her coverage. The Rodriguez court had said that stacking UM/UIM coverage is permissible "when separate premiums have been paid on the rationale that separate premiums for separate coverages entitle the insured to the benefit of what he or she has paid for" (internal quotes omitted).
Allstate argued the separate premiums were simply a per-vehicle allocation of Garcia's total premium. She had only paid one premium because the separate amounts added up to the sum Garcia had agreed to pay when she had originally rejected the option to stack coverage.
The appellate judges were not persuaded. They pointed out that, according to the New Mexico Supreme Court, "when multiple premiums are charged for UM coverage on multiple cars, even in the face of a truly unambiguous limitation-of-liability clause, stacking will be required" (Montano v. Allstate Indem. Co., 92 P.3d 1255 (N.M. 2004)). Therefore, even though Garcia had rejected stacking in writing, the fact remained that she reasonably believed she had paid multiple premiums and was therefore entitled to stack her UM/UIM coverage.
The verdict in favor of Allstate was reversed and sent back to the trial court for consistent proceedings.
Editor's Note: Insurers don't like paying claims they didn't agree to insure, but it is equally unfair to go against the reasonable expectations of the insured based on the information presented to the insured. Even though the insured waived stacking of coverage, because the declarations page showed a premium for the coverage for each vehicle, she believed the coverage existed. As the appellate court pointed out, it hadn't been unreasonable for Garcia to think she was paying a separate UM/UIM premium for each of her vehicles. As insurers write the policies and declarations pages, it's important for the language and presentation of information to be abundantly clear to insureds so there is no confusion.
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