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Superior Court Adds New Wrinkle to Stacking CaseIn yet another opinion in the motor vehicle insurance case Sackett v. Nationwide, the Superior Court has ruled the addition of a third car to an existing two-car policy requires the insurance company to issue a new stacking waiver even if stacking was waived when the initial two cars were insured.
The case has already been heard by the state Supreme Court twice and was remanded to the trial court to weigh the evidence of just what type of policy Victor and Diane Sackett had at the time of the August 2005 accident that resulted in this litigation.
This latest ruling, one of the plaintiffs' attorneys predicts, will largely put the onus on insurance companies to acquire new stacking waivers when insureds add a third vehicle.
The original Sackett opinion from the Supreme Court in 2007 reversed the Superior Court and trial court rulings that found the presumption is stacking of uninsured/underinsured benefits, if waived once, is waived for any additional vehicles added to the policy unless an affirmative decision is made otherwise.
In a 4-2 decision in October 2007, the Supreme Court granted Nationwide's petition for reconsideration and asked the state Insurance Department to file an amicus statement.
In contrast to their original ruling in Sackett I , the justices ruled in Sackett II that two types of insurance coverage exist when a consumer purchases a new vehicle depending on the type of "after acquired" clause contained in the policy.
In the first type of coverage, the new vehicle is automatically covered for a limited period of time under exactly the same terms as the insured enjoyed before the new vehicle purchase. When the automatic coverage period expires, a new policy is issued and a new waiver is required.
In the second type of coverage, the new vehicle is automatically covered under the same terms as the insured enjoyed before the new vehicle was purchased indefinitely - although at a higher overall premium. In that case no waiver is required.
The Supreme Court noted in its reconsidered opinion that there was insufficient evidence in the record to determine which type of coverage the Sacketts had with Nationwide when Victor Sackett was injured in a collision a month after he added a third vehicle to his policy.
After a non-jury trial in Westmoreland County in December 2008, the judge found the Sacketts could stack coverage and awarded them $300,000, or $100,000 per vehicle, according to the Superior Court's latest opinion in the case.
The Superior Court said Wednesday it relied on both Sackett I and Sackett II to come to the conclusion that Nationwide should have issued a stacking waiver to the Sacketts when they insured their Ford Windstar, the third vehicle on the policy.
Judge Cheryl Lynn Allen, writing for the court, said Sackett II differentiated policies that automatically extend coverage to a new vehicle based on after-acquired vehicle clauses. Despite its ruling in Sackett I , the Supreme Court ruled in Sackett II that coverage extended through such clauses did not require a new waiver, Allen said. But if that coverage of an after-acquired vehicle is expressly made finite by terms of the policy, the Supreme Court had said, then Sackett I controls and a new waiver is necessary.
"Therefore, under Sackett I , an insurer must obtain a new signed stacking waiver from the insured when the insured adds a new vehicle to an existing policy, unless the insured already signed a stacking waiver and the insurer, pursuant to Sackett II , added the new vehicle under an after-acquired vehicle clause," Allen said in summing up the effects of the Supreme Court's two decisions in this case.
In the Sacketts' situation, the Windstar was not covered under the original policy pursuant to an after-acquired vehicle clause, Allen said. That clause in their original policy was strictly a default measure, applying only if the Sacketts did not have other collectible insurance, she said. Prior to the accident, the Sacketts added coverage for the Windstar on their existing policy through an endorsement. That endorsement constituted collectible insurance independent of the after-acquired vehicle clause, she said.
"In short, after the Sacketts added the Ford Windstar to the policy by way of endorsement, the Ford Windstar was covered under the general terms of the policy and not its after-acquired vehicle clause," Allen said.
Nationwide argued its after-acquired vehicle clause was continuous, comparing it to the open-ended, after-acquired vehicle clause envisioned in Sackett II . Allen said the clause in the Sacketts' policy, however, expressly terminated coverage under the clause when other collectible insurance was obtained. The clause also said it provided coverage "only during the first 30 days" of a new vehicle being added to the policy, she said.
Nationwide also argued a waiver wasn't necessary because the company didn't engage in a new underwriting process or require the Sacketts to submit a supplemental application for the insurance. Allen said Nationwide did not cite any authority to support that argument. Allen said that argument isn't backed up by Sackett I or II .
Allen was joined by Senior Judges Robert E. Colville and John M. Cleland.
Scott B. Cooper of Schmidt Kramer in Harrisburg and Ronald J. Bergman of Nedwick & Bergman in Greensburg, Pa., represented the Sacketts. Cooper said the Superior Court's ruling resolves some uncertainty between plaintiff and defense attorneys about whether Sackett II was a complete reversal of Sackett I or just a modification.
Cooper said it is very rare that a car is added to a policy via the after-acquired vehicle clause, with the majority being added through an endorsement.
"I'd say 95 percent of the time Sackett I is going to apply," he said.
James C. Haggerty of Swartz Campbell represented Nationwide in the case. He was unavailable for comment.
(Copies of the nine-page opinion in
Sackett v. Nationwide , PICS No. 10-2508, are available from The Legal
Intelligencer . Please call the Pennsylvania Instant Case Service at
800-276-PICS to order or for information. Some cases are not available
until 1 p.m.)*
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