Special Alert
SACKETT II DECISION ISSUED
In Sackett v. Nationwide Mutual Insurance Company, No. 8 WAP 2006, (December 27, 2007) the Supreme Court issued its decision on reconsideration of its prior decision in Sackett v. Nationwide Mutual Insurance Company, 591 Pa. 416, 919 A.2d 194 (2007) (“Sackett I”). In so doing, the Court modified its original position stating:
Thus, we clarify that Sackett I does not preclude the enforcement of an initial waiver of stacked UM/UIM relative to coverage extended under after-acquired-vehicle provisions of an existing multi-vehicle policy.
Accordingly, the Court held that the automatic reformation to stacked coverage as mandated by Sackett I does not apply during the period of time specified by the after-acquired-vehicle clause of the policy. Specifically, the Court stated:
We hold that the extension of coverage under an after-acquired-vehicle provision to a vehicle added to a pre-existing multi-vehicle policy is not a new purchase of coverage for purposes of Section 1738(c), and thus, does not trigger an obligation on the part of the insurer to obtain new or supplemental UM/UIM stacking waivers [footnote omitted]. However, where coverage under an after-acquired-vehicle clause is expressly made finite by the terms of the policy [citation omitted] Sackett I controls and requires the execution of a new UM/UIM stacking waiver upon the expiration of the automatic coverage in order for the unstacked coverage option to continue in effect subsequent to such expiration [footnote omitted]
Justice Castille filed a Dissent, noting that the decision in Sackett II “minimizes the damage” caused by Sackett I and further states:
That construction essentially adopts my position in Dissent in Sackett I and holds that the addition of a new vehicle to an existing multi-vehicle policy does not constitute a new “purchase” of uninsured/underinsured motorist (UM/UIM) coverage, that would require a new waiver of stacking.
As a result, the decision of the Supreme Court in Sackett II specifically modifies the prior holding of the Court eliminating many, if not most, of the administrative problems occasioned by the initial decision. Swartz Campbell LLC attorneys acted as co-counsel for the insurer. Click for a full copy of the Decision and Dissent.
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NO STACKING UNDER COMMERCIAL FLEET POLICY
In Everhart v. PMA, No. 13 WAP 2007, (December 27, 2007) the Supreme Court held that §1738 of the Pennsylvania Motor Vehicle Financial Responsibility Law, 75 Pa.C.S.A. §1738, does not mandate stacking of uninsured and underinsured motorist coverages under the commercial fleet policy. In so holding, the Court stated:
At the time Section 1738 was enacted, there was a thorough and unanimous body of appellate case law from this Commonwealth explicitly holding that stacking of UM/UIM coverage is not mandated for commercial fleet policies. We presume that the Legislature was aware of this body of law. There is nothing in Section 1738 which addresses, expressly disturbs, or abrogates this line of cases. We find that the provisions of Section 1738 are to be read in conjunction with, not in contradiction to, the pre-existing common law. As such, we interpret the provisions of Section 1738 in conjunction with the well-founded common law rule that UM/UIM stacking is not required for commercial fleet policies.
Based upon this statutory construction and analysis, we hold that the General Assembly did not intend to mandate the stacking of coverage under commercial fleet policies pursuant to Section 1738 of the MVFRL. Having found that stacking of coverage is not required under commercial fleet policies, we affirm the Order of the Superior Court denying the Estates' claim of entitlement to stacked coverage under Russell Standard's commercial fleet policy.
As a result, the Court did not address the issue of whether the claimant was a Class One or Class Two insured.
The decision poses several issues for commercial insurers. As a result of this ruling, insurers need not write stacked coverage under commercial fleet policies. No distinction was drawn between commercial policies issued to corporations or individuals. Thus, a commercial insurer need not offer stacked UM/UIM coverage under a commercial fleet policy issued to any entity. Under existing policies, however, where stacked coverage has been written, insurers may be required to provide this coverage until such time as the existing policy is modified. If insurers decide to write stacked UM/UIM coverages under commercial fleet policies issued to named individuals, stacking will still be limited to Class One insureds. Swartz Campbell LLC attorneys filed an Amicus Brief in this case on behalf the Insurance Federation of Pennsylvania, the Pennsylvania Defense Institute, Pennsylvania Property & Casualty Insurers of America and Insurance Agents and Brokers of Pennsylvania. Click for a full copy of the Decision and Concurring Opinion.
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