INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
Stacking debate
Within the span of only six days and through no fault of her own, Myra Windham was in two car accidents. The first, on September 29, 2012, rendered her car inoperable. Consequently, on the date of the second accident, October 5, 2012, she was driving the rental car provided to her through the insurance of the first accident’s at-fault driver.
In the second accident, Windham sustained injuries that exceeded the at-fault driver’s liability insurance and sought to stack her underinsured motorist (UIM) policies. Windham was insured under five separate policies with State Farm at the time of the second accident. Though she was permitted to collect under one UIM policy, State Farm denied that she could stack.
The parties stipulated that the rental car in question met the definition of a “temporary substitute car” as defined in Windham’s policies. Further, the parties stipulated that the rental car was not a vehicle shown under the “YOUR CAR” heading of the declarations page on any of the policies issued to Windham or her husband, nor did the car meet the definition of “owned by” in the policies. Windham paid for the maximum $100,000 of UIM coverage on each vehicle.
State Farm contended, and the circuit court agreed, that only owned vehicles or those listed as “your car” on the declarations page can stack, and there is no basis in the policy for finding that a temporary car is an owned vehicle under the policy. In reply, Windham argued that the label “temporary substitute car” implies it took the place of her owned car for the duration of its temporary use. State Farm claimed that the policy intends to treat a temporary car as a non-owned car because “by its very definition, a temporary substitute car cannot be owned by an insured.” It came to this conclusion by analyzing the section that defines a temporary substitute car as a car “you nor the person operating it own or have registered.” State Farm then tied this to its argument that the legislature intended ownership as a prerequisite to stacking in most cases under a section of a state statute.
Immediately following the sentence quoted by State Farm is this provision that the court found significant: “If a car qualifies as both a non-owned car and a temporary substitute car, then it is considered a temporary substitute car only.” Windham contended that the only apparent purpose of this sentence is to remove temporary substitute cars from the consequences of being non-owned cars. While normally all temporary cars would be considered non-owned because, as State Farm pointed out, they are by their definition not owned, the policy ostensibly exempts them from this consequence by denominating them temporary substitute cars only. Windham appealed.
On appeal, the court found that because both parties offered reasonable interpretations of the policy language, an ambiguity existed, which it construed against the drafter. Accordingly, the supreme court agreed with the court of appeals that Windham could stack and affirmed as codified.
State Farm Mutual Automobile Insurance Company v. Windham—Supreme Court of the State of South Carolina—November 2, 2022—No. 28121.
