Illinois Supreme Court says anti-stacking auto insurance provision

St. Louis Daily Record & St. Louis Countian, Jan 26, 2005 by Emily Umbright

Auto insurance contracts can be confusing enough, but zeroing in on contractual language that has nothing to do with the issue can produce an even more erroneous judgment, as the unanimous Illinois Supreme Court found last week, reviewing two insurance disputes that questioned the ambiguity of anti-stacking provisions.

Where an ambiguity in an insurance policy is found, we will construe it in favor of the insured, wrote Justice Thomas R. Fitzgerald for the court. We will not, however, 'torture ordinary words until they confess to ambiguity.'

Consolidating two cases from Madison and Franklin counties, the Supreme Court reversed the decisions of the appellate and circuit courts that the policies' anti-stacking provisions were ambiguous and allowed the parties to collect double what the policies provided.

In the first case, Lula Hobbs of Madison County sustained injuries from an auto accident amounting to $200,000. As settlement, the other driver's insurance company awarded Hobbs its maximum $50,000. She then turned to her own insurance company, Hartford Insurance Co. of the Midwest, with which she had underinsured-motorist coverage that provided $100,000 per person.

Hartford tendered $50,000 to Hobbs to make up the difference between its coverage and the other driver's coverage, and Hobbs sued, arguing that she was entitled to more because her Hartford policy covered two vehicles, which each had coverage up to $100,000.

The appellate court found ambiguity in the contract because of the statement on the declaration page: COVERAGE IS PROVIDED ONLY WHERE A PREMIUM IS SHOWN FOR THE AUTO AND COVERAGE and the abbreviation INCL listed under the premium column and corresponding with the underinsured coverage.

'When the language is considered as a whole, it leaves the reader asking whether there is [underinsured-motorist] coverage at all, and if so, how much,' the Supreme Court cited from the lower court's decision.

In the Franklin County case, Lee Ann Anheuser was involved in a car accident with Dana Sample, who settled the Anheuser family's personal injury suit, within her insurance policy limits, for $100,000. The Anheuser family sought to stack their underinsured- motorist coverage with Prudential Property and Casualty Insurance Co. of $100,000 per person to recover $300,000 because they had coverage for three cars.

In its finding of ambiguity, the trial court relied upon Hall vs. General Casualty Co. of Illinois, which held that a declaration page containing the statement INSURANCE PROVIDED WHERE COVERAGE IS SHOWN could be construed to provide two times the coverage because premiums for both cars were listed on the declarations page.

In a blow to both cases, the Supreme Court overturned Hall in this decision, finding the statement on the declarations page in that case did not address the issue of stacking.

The interpretation adopted in Hall, however, reads the antistacking clause completely out of the policy, Fitzgerald wrote, alluding to Grinnel Select Insurance Co. vs. Baker. Hall was wrongly decided, and it is hereby overruled.

But overturning Hall did not leave its review of the two cases finalized.

In Hobbs' case, the high court refuted the notion that the declaration page's coverage statement and INCL abbreviation led to the question of whether the underinsured-motorist coverage even existed. Its existence, the court found, has never been an issue; rather, the issue is whether stacking is allowable.

While considering Hartford's declaration page alone could give rise to ambiguity, considering the page along with the limit of liability provision clearly results in the decision that coverage may not be stacked, Fitzgerald wrote.

The Supreme Court relied on its decision in Bruder vs. Country Mutual Insurance Co., which held that the limit of liability was consistent with an anti-stacking provision that would apply regardless of the number of vehicles covered by the insurance company.

We conclude that, under Bruder and Domin, the antistacking clause in the Hartford policy unambiguously limits coverage to $100,000 per person, regardless of the number of vehicles or premiums shown on the declarations, and that the statement, 'COVERAGE IS PROVIDED ONLY WHERE A PREMIUM IS SHOWN FOR THE AUTO AND COVERAGE,' does not create an ambiguity as to Hartford's limit of liability, Fitzgerald concluded. The antistacking clause will be enforced as written.

The disputed anti-stacking provision in the Anheusers' policy specifically spelled out that it would only cover the damages occurring in the car involved in the accident, regardless of the number of policies, insureds, insured cars, claims made, or cars involved in the accident or loss.

The high court rejected the Anheusers' contentions that the anti- stacking clause could not override the specific provisions found on the declarations page as well as their argument that Prudential's statement, We will not pay more than the limit of coverages for that particular car, allows for a stacked, per-person limit of $300,000 in underinsured-motorist coverage.