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Amount of Coverage and StackingA. Calculating Coverage (generally)UIM Coverage Scenario (continued): If Driver of Auto A settles with Driver of Auto B for 19,000,then no UIM claim is triggered (usually). In that scenario, Auto B was adequately insured to cover the loss. If Auto B tenders policy limits to Driver of Auto A, UIM claim is in play. The inquiry turns to whether Auto B policy limits fully and fairly compensatedDriver of Auto A. If Driver of Auto A sustained catastrophic injuries regularly compensated in excessof his 100,000 in UIM coverage—then insurer of Auto A will (or should) pay itsinsured the available 80,000 of UIM benefits. If the injuries sustained are less serious, the insurer of Auto A seeks to settle withits insured for a fair amount within the UIM policy limits that would make Driver ofAuto A whole.

Amount of Coverage and StackingB. StackingSome states allow coverage “stacking.” Stacking is the application oftwo or more policies’ limits to a single occurrence, claim, or loss.Whether your state allows stacking is generally dependent on yourparticular state UM and UIM statutes. For instance, New Jersey has astrict Anti-Stacking Statute (N.J. Stat. § 17:28-1.1(c)).

Amount of Coverage and StackingB. StackingStacking usually works in one of two general ways:1) Intra-policy stacking: combining more than one coverage limit withina single policy and applying the aggregate of those limits to anindividual loss; or 1) Inter-policy stacking:combining coverage under more than onepolicy and applying the aggregate limits to an individual loss.

A.STACKING POLICIES: GENERAL RULE:1)Usually permitted if the stacking occurs between twodifferent policies:Separate UM policies:PERMITTEDSeparate UIM policies: PERMITTEDUsually prohibited if stacking is within the samepolicy.Usually prohibited to stack the LIABILITY and UMor UIM coverage under the same policy: Hanson v.Republic Ins. Co., 5 S.W.3d 324 (Tex. App. - Houston[1st Dist.] 1999, pet. denied), and Jankowiak v.Allstate, 201 S.W.3d 200 Tex. App. - Houston [14thDist] 2006, no pet.).a.b.c.d.

Amount of Coverage and StackingB. Stacking Example 1: an insured carries a policy with a UM limit of 20,000covering three different vehicles. One of those vehicles is in an accidentwith an uninsured driver. Intra-policy stacking would allow the insuredto recover up to 60,000. Example 2: an insured student living at home owns his own insuredvehicle. The student gets into an accident with an uninsured driverwhile driving his parents’ vehicle. Inter-policy stacking would allow thestudent to stack coverages under his policy and his parents’ policy(ies).

Amount of Coverage and StackingB. StackingThe Insurance Follows The CarCases where more than one policy provides coverage for the same loss (Interpolicy stacking) often requires a determination as to which policy is primary (paysfirst). Scenario: Driver borrows Owner’s car. Driver has his own personal autoinsurance covering him when he is a permissive driver of another vehicle not on hispolicy. Owner also has insurance on the car he is lending to Driver. In the case ofan accident, the rule of thumb is that insurance on the car is primary (driver’spersonal insurance is excess). Ohio Farmers Ins. Co. v. Ohio Cas. Ins. Co., 28Ohio App. 2d 170, 174 (Ohio Ct. App. 1971). That rule has been long recognizedby most insurance companies. Id. “To use a shorter term-insurance follows thecar.” Id.

Amount of Coverage and StackingB. StackingAllstate Ins. Co. v. Hague, 449 U.S. 302 (1981) SCOTUS decided Hague in 1981. More of a “choice of law matter” but highlights different state lawsleading to different outcomes re: UM/UIM Man dies in an accident in Wisconsin while riding as a passenger on a motorcycle. Neither vehicle operator was insured. Deceased maintained a policy that covering three vehicles with 15,000of UM coverage each. Minnesota allows stacking – Wisconsin does not Widow sued in Minnesota seeking to “stack” UM coverages. Insurer sought to have the court apply Wisconsin law arguing parties involved were Wisc. residents, policywas issued in Wisc., and accident happened in Wisc. Minnesota Supreme Court applied Minnesota law and ruled in favor of the widow.

Amount of Coverage and StackingB. StackingSCOTUS affirmed: Neither the due process clause nor full faith and credit clause were violated by applying Minnesota law toallow “stacking.” Even with Wisconsin policy, residents, and accident - Deceased worked in and commuted to Minnesota for 16years prior to death. Place of an accident is merely one fact to be considered in choice–of–law analysis Deceased’s employment status was not a sufficiently less important status than his residence status whencombined with his daily commute Insurer was present and doing business in Minnesota at all relevant times and deceased’s widow became aMinnesota resident (for other reasons) prior to brining suit. “An automobile accident need not occur within a particular jurisdiction for that jurisdiction to be connected tothe occurrence.” Hague, at 314. SCOTUS was clearly unimpressed with the Minnesota Supreme Court’s decision to apply its own law; butfound no basis to invalidate the decision.

Amount of Coverage and StackingB. StackingPennington v. State Farm Mut. Auto. Ins. Co, 553 F.3d 447 (6th Cir. 2009)Under Kentucky law, the personal nature of UIM coverage creates areasonable expectation that payment of separate premiums results inseparate coverages, and if insured has paid additional money withoutreceiving additional coverage, stacking is necessary to preventinsurance companies from depriving insured of benefits that they havealready paid for. Pennington, at 451.

Amount of Coverage and StackingB. StackingPallay v. Nationwide Ins. Co., 165 Ohio App. 3d 242 (2005)Passenger in a car being driven by his wife was injured in an accident.Injured party attempted to collect under both the liability and UIMcoverages that insured the vehicle. Pallay court held that an insurercould enforce its intra-policy anti-stacking clause so as to bar insuredfrom recovering UIM benefits after receiving 100,000 benefit limitfrom liability coverage under same auto policy.

Amount of Coverage and StackingB. StackingJankowiak v. Allstate, 201 S.W.3d 200 Tex. App. - Houston [14th Dist]2006, no pet.)The Court held that the claimant could recover policy both: LIABILITY COVERAGE against the driver of the vehicle the insured occupiedfor his driver’s negligence, and UNINSURED MOTORIST COVERAGE benefits under the same policy for thenegligence of the uninsured driver that was also negligent and proximately causedthe occurrence.

Amount of Coverage and StackingB. StackingStacking in Pennsylvania Pennsylvania’s Motor Vehicle Financial Responsibility Law or “MVFRL” mandates thatinsurers present insureds with “stacking waivers” when purchasing insurance coverage. An insured can waive the right to stack in exchange for a reduced policy premium. Absent a signed waiver, the insured may stack UM or UIM claims based on the sum ofthe limits of coverage on vehicles on all applicable policies. The statute addresses both inter-policy stacking and intra-policy stacking—either can bewaived by a signed form. See, Generette v. Donegal, 884 A.2d 266 (Pa. Super. 2005).

Amount of Coverage and StackingB. StackingStacking in PennsylvaniaWhat happens when an insured makes changes to their policy? Must they execute anotherwaiver? In 2019 the Pennsylvania Supreme Court said, yes. Subsection (c) of the MVFRLstates:(c) More than one vehicle. Each named insured purchasing uninsured or underinsuredmotorist coverage for more than one vehicle under a policy shall be provided the opportunityto waive the stacked limits of coverage and instead purchase coverage as described insubsection (b). The premiums for an insured who exercises such waiver shall be reduced toreflect the different cost of such coverage. 75 Pa. Stat. and Cons. Stat. Ann. § 1738 (c);(emphasis added).

Amount of Coverage and StackingB. StackingStacking in PennsylvaniaBarnard v. Travelers Home & Marine Ins. Co., 216 A.3d 1045 (Pa. 2019). Plaintiff sought to increase her UIM coverage on a policy she previouslymaintained. Insurer never asked her to sign another stacking waiver though plaintiffhad executed a waiver when originally purchasing the policy. The Supreme Court of Pennsylvania nevertheless held that this increaseto the limits of UIM coverage for multiple vehicles under an existing autopolicy constitutes a “purchase” within the meaning of MVFRL.

Amount of Coverage and StackingB. StackingStacking in PennsylvaniaBarnard v. Travelers Home & Marine Ins. Co., 216 A.3d 1045 (Pa. 2019).The court concluded that increasing one’s coverage limits qualifies as a “purchase” andtriggers an obligation by an insurance company to offer its insured another stacking waiver.The court stated, “[w]e conclude that an insurance company must offer an insured theopportunity to waive stacking any time she acquires UIM coverage for more than onevehicle, regardless of whether this acquisition occurs when she initially applies for aninsurance policy or when she subsequently increases her UIM coverage limits formultiple vehicles.” Barnard, at 1054.

Bad Faith Issues

Bad Faith IssuesWhat is “Bad Faith”?The legal definition of “Bad Faith” varies greatly from state to state. Some states: “Bad Faith” is defined solely by statute; Some states: “Bad Faith” may also have common law definitions of what is or is not “badfaith” In some states: there is no “Bad Faith” claim applicable to UM/UIM cases. Virginia has no right to bring a bad faith claim arising out of the handling UM/UIMclaims. Manu v. Geico Cas. Co., 293 Va. 371 (2017). The insurer has no legalobligation to pay the claim until the insured proves the insured is “legally entitled torecover” damages. In some states there is even bad faith in failure-to-settle third party liability claims. New Mexico

Bad Faith IssuesWhat is “Bad Faith”?The legal definition of “Bad Faith” varies greatly from state to state. Arkansas: “bad faith” is defined as dishonest, malicious, or oppressive conduct carried out with a state ofmind characterized by hatred, ill will, or a spirit of revenge. Mere negligence or bad judgment is insufficient so long as the insurer is acting in good faith. The tort of bad faith does not arise from a mere denial of a claim; there must be affirmativemisconduct. Honest errors of judgment and bad judgment are insufficient; Value disputes are not bad faithState Auto Prop. & Cas. Ins. Co. v. Swaim, 338 Ark. 49, 56, 991 S.W.2d 555, 559 (1999); See Stevensonv. Union Std. Ins. Co., 294 Ark. 651, 746 S.W.2d 39 (1988). Alaska: The insurer must act fairly and in good faith in discharging its contractual responsibilities. Bad faithinsured refusing, without proper cause, to compensate its insured for loss covered by the policy. State FarmFire & Cas. Co. v. Nicholson, 777 P.2d 1152 (1989) Arizona: An insurer may be found liable for bad faith even if no coverage exists for the claim if the insurer’sconduct was unreasonable and unduly harmed an insured or a third party. Deese v. State Farm Mut. Auto.Ins. Co., 838 P.2n 1265 (Az. 1992)

Bad Faith IssuesWhat is “Bad Faith”?The legal definition of “Bad Faith” varies greatly from state to state. California: To prevail on a bad faith claim, the insured must show (1) the insurer withheld benefits due under the policy;and (2) such withholding was unreasonable or without proper cause. The actionable withholding of benefits may consistof the denial of benefits due, paying less than due, and/or unreasonably delaying payment due. Major v. Western HomeIns. Co, 87 Cal. Rptr. 3d 556 (4th Dist, Div. 1, 2009) Georgia: To prevail on a claim of bad faith, the insured must show: (1) that the claim is covered under the policy; (2) that ademand for payment was made against the insurer within 60 days prior to filing suit; (3) that the insurer’s failure to paywas motivated by bad faith. Ga Code Ann. Section 33-4-6.

Bad Faith IssuesWhat is “Bad Faith”?The legal definition of “Bad Faith” varies greatly from state to state. Hawaii: Bad faith is the failure to deal fairly and in good faith with its insured by refusing, without proper cause, tocompensate its insured for a loss covered by the policy. Best Place, Inc. v. Penn America Ins. Co. 920 P.2d 334 (1996). Theinsured was permitted to bring a bad faith claim even though there was clearly no coverage under the policy bymishandling the claim. Enoka v. AIG Hawaii Ins. Co., Inc. 128 P.3d 850 (Ha 2006) The insured need not prove he sufferedeconomic or physical loss caused by the bad faith in order to recover emotional distress damages. Miller v. Hartford LifeIns. Co. 268 P.3d 418 (Ha 2011) Idaho: To recover on a bad faith claim, the insured must show (1) the insurer intentionally and unreasonably denied orwithheld payment; (2) the claim was not fairly debatable; (3) the denial or failure to pay was not the result of a good faithmistake; and (4) the resulting harm is not fully compensable by contract damages. Harmon v. State Farm Mut. Auto.Ins. Co., 394 P.3d 796, (2017) Illinois:Bad faith is a purely statutory claim. The insured must show the insurer’s conduct was “vexatious andunreasonable.” Section 155 of the Illinois Insurance Code (215 ILCS 5/155)

Bad Faith IssuesWhat is “Bad Faith”?The legal definition of “Bad Faith” varies greatly from state to state. Indiana: Bad faith is (1) making an unfounded refusal to pay policy proceeds; (2) causing an unfounded delay in makingpayment; (3) deceiving the insured; and (4) exercising any unfair advantage to pressure an insured into a settlement of theclaim. Auto-Owners Ins. Co. v . C&J Real Estate, Inc. 996 N.E. 2d 808 (In. 2013) Nebraska: Where the facts supporting bad faith differ from those supporting the breach of contract claim, an insuredneed not prevail on the breach of contract claim as a condition precedent to prevail on a bad faith claim. Further, theultimate payment of the claim does not defeat a bad faith claim. LeRette v. American Medical Security, Inc., 705 N.W.2d41 (Neb. 2005) New Mexico: The insured must show that the insurers reasons for denying payment of the claim were frivolous andunfounded or (2) in failure-to-settle cases, the liability insurer’s failure or refusal to settle the claim against the insuredwas based on a dishonest or unfair balancing of interests. Sloan v. State Farm Mut. Auo Ins. Co. 135 N.M.2018)

Bad Faith IssuesWhat is “Bad Faith”?The legal definition of “Bad Faith” varies greatly from state to state. Nebraska: Where the facts supporting bad faith differ from those supporting the breach of contract claim, an insuredneed not prevail on the breach of contract claim as a condition precedent to prevail on a bad faith claim. Further, theultimate payment of the claim does not defeat a bad faith claim. LeRette v. American Medical Security, Inc., 705 N.W.2d41 (Neb. 2005) New Mexico: The insured must show that the insurers reasons for denying payment of the claim were frivolous andunfounded or (2) in failure-to-settle cases, the liability insurer’s failure or refusal to settle the claim against the insuredwas based on a dishonest or unfair balancing of interests. Sloan v. State Farm Mut. Auo Ins. Co. 135 N.M.2018) Oklahoma: To make a prima facie case of bad faith, the insured must show: (1) the claim was covered under the policy;(3) the insure was required to take reasonable actions in the handling of the claim; (3) the actions of the insurers wereunreasonable under the circumstances; (4) the insurer failed to deal fairly and to act in good faith toward the insured inthe handling of the claim; and (4) the breach or violation of the duty of good faith and fair dealing was the direct cause ofdamages sustained by the insured. Badillo v. Mid Century Ins. Co., 121 P.3d 1080 (2005) Oregon: A breach of the duty of good faith may occur independently of, or even without, any brach of contract. McKenziev.P ac. Health & Life Ins. Co., 118 Or. App. 377 (1993).

Bad Faith IssuesWhat is “Bad Faith”?The legal definition of “Bad Faith” varies greatly from state to state. Nevada: Bad faith is when the insurer refuses the claim without proper cause and the claim was for a loss covered by thepolicy.” Estate of Lomastro ex re. Lomastro v. American Family Ins. Group, 195 P.3d 339, (Nev. 2008) Wyoming: “A plaintiff must establish (1) the absence of any reasonable basis for denying the claim; and (2) the insurer’sknowledge or reckless disregard of this lack of a reasonable basis for denying the claim. Gainsco Ins. Co. v. AmocoProduction Co., 53 P3d 1051 (2002)

Bad Faith IssuesWhat is “Bad Faith”?The legal definition of “Bad Faith” varies greatly from state to state. Texas: Texas has transitioned its definitions of what is “Bad Faith” over time.1)Arnold v. National County Mutual Fire Ins., 75 S.W.2d 165 (Tex. 1987).a. No reasonable basis for denial or delay of payment; orb. Failure to determine if there was a reasonable basis to deny or to delay payment of the claim.2)Aranda v. Ins. Co. Of N. America, 748 S.W.2d 210 (Tex. 1988)a. In the absence of a reasonable basis to deny or delay payment; andb. Insurance company knew or should have known there was no reasonable basis to deny or to delay paymentof the claim.3)Transportation Ins. Co. v. Moriel, 879 S.W.2d 10 (Tex. 1994).a.4)If there is a bona fide dispute, there is no bad faith.Universal Life Ins. Co. v. Giles, 950 S.W.2d 48 (Tex. 1997)a. Failing to attempt in good faith to effectuate a prompt, fair and equitable settlement of a claim when insurer’sliability become “reasonably clear”;b. Essentially this is a negligence standard where the insured must prove the insurance company knew orshould have known it needed to pay this covered claim.

Bad Faith IssuesWhat is “Bad Faith”?The legal definition of “Bad Faith” varies greatly from state to state. Texas: Texas has transitioned its definitions of what is “Bad Faith” over time.1)USAA Texas Lloyds Co. v. Menchaca, 545 S.W.3d 479 (Tex. 2018).The Supreme Court acknowledges that some of its previous decisions have created uncertainty in the law. As aresult, this opinion is designed to put that uncertainty to rest as nearly as possible.On re-hearing, the Texas Supreme Court affirmed its five rules governing the relationship between contractualand statutory claims from its or

Jun 1, 2021