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To stack or not to stack?

To stack or not to stack?

December 20
13:11 2019

To stack or not to stack?

On October 17, 2014, Bennie Barlow was driving a pickup truck owned by his employer, Enviro-Tech, when he was rear-ended by a vehicle driven by the at-fault driver, Sebastian Dionne. Barlow was acting within the scope of his employment at the time of the accident. The Enviro-Tech truck Barlow was driving was one of 16 trucks insured under an automobile policy with State Farm Mutual Automobile Insurance Company. Dionne was covered by a policy with Safe Auto that had limits of $20,000. Safe Auto paid its policy limit to Barlow, but the cost to treat his injuries was well in excess of $20,000.

Barlow made an underinsured motorist claim against State Farm. The insurer initially denied coverage because Barlow was also covered under a workers compensation policy. State Farm’s underinsured motorist coverage specifically provided that any workers compensation payments “shall reduce the amount payable under this coverage.” State Farm argued that the amount of Barlow’s workers compensation claim exceeded the $250,000 underinsured motorist limit. Barlow’s attorney acknowledged that State Farm was entitled to a setoff for monies paid by workers compensation but continued to proceed with an underinsured motorist claim against State Farm.

The parties filed cross-motions for summary judgment on the issue of stacking. Barlow argued that the policy was ambiguous as to the limits of underinsured motorist coverage and that he should be allowed to stack the underinsured motorist coverage for all 16 vehicles for an aggregate of $4 million. State Farm argued that the policy contained unambiguous anti-stacking language and that the fact that premiums were listed separately for each vehicle did not render the policy ambiguous. The court agreed with Barlow that the policy was ambiguous and allowed underinsured motorist coverage to be stacked. State Farm appealed.

On appeal, State Farm contended that the policy contained a clear, unambiguous anti-stacking provision and that even though the declarations page repeated the limits of liability, that did not mean the policy was ambiguous. The court disagreed.

The court noted that the policy’s limit of liability section directed the insured to find the limit of underinsured motorist coverage in the declarations page. The beginning of the policy contained a key to the policy and provided for underinsured motorist coverage if a “W” was shown. In the declarations page, “W” was repeated 16 times, once for each vehicle covered by the policy. Barlow’s employer, Enviro-Tech, paid 16 separate premiums for underinsured motorist coverage. The key indicated that “W” stood for underinsured motorist coverage with limits of $250,000 per person and $500,000 per accident. The court found that this created an ambiguity that could reasonably be interpreted as favoring aggregation of the 16 vehicles’ limits of liability for underinsured motorist coverage. The judgment of the circuit court was affirmed.

Barlow v. State Farm Mutual Auto-mobile Insurance Company-Appellate Court of Illinois, Fifth District-November 29, 2018-No. 5-17-0484.

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