Does removing a vehicle restore stacked coverage?
Removing a car from a family auto policy changes the list of insured vehicles. It does not necessarily change an earlier decision to reject stacked underinsured motorist coverage. In Franks v. State Farm, the Pennsylvania Supreme Court considered a removal that left the coverage and premiums for the remaining vehicles unchanged.
The Court held in its Franks opinion that the removal, on the stipulated facts, was not a purchase of coverage requiring a new stacking waiver under 75 Pa.C.S. § 1738(c). The decision is about that policy change and that statutory question. It does not mean every change to a policy has the same effect.
Coverage and stacking are separate decisions
UIM coverage can help when a responsible driver’s applicable liability insurance is insufficient for covered injuries. Stacking concerns whether available limits associated with more than one insured vehicle or policy can be added, subject to the policy, applicable law and any effective waiver. An election rejecting UIM coverage altogether is different from an election rejecting stacking of UIM coverage.
For an example of the arithmetic at issue, two available $100,000 vehicle limits could yield a claimed $200,000 stacked limit; a valid rejection of stacking could leave a $100,000 limit. That example describes the dispute, not a promise that a particular person can collect either amount. Coverage eligibility and damages must be evaluated separately.
The Franks family’s policy history
Robert and Kelly Franks obtained a State Farm policy for a Nissan Xterra and a Ford Taurus in 2013. They purchased UIM coverage at $100,000 per person and $300,000 per accident and signed a form rejecting stacked UIM coverage.
In January 2014 they added a Nissan Altima and Robert, the first named insured, signed another rejection of stacked UIM coverage. In July 2014 they removed the Taurus. The coverage and premiums attributable to the remaining vehicles did not change. The family received a credit for the unused premium on the removed car, and the total ongoing premium fell because there was one fewer vehicle.
In March 2015 the Xterra was replaced by a Nissan Frontier. No new stacking rejection was obtained upon the Taurus removal or afterward. In August 2016 Robert was injured driving the Frontier in a crash caused by another driver whose liability coverage was insufficient. The family sought UIM benefits and contended that, without a new waiver after the Taurus was removed, two $100,000 limits could be stacked. State Farm maintained that the existing waiver left a $100,000 limit.
Why the court did not require a new waiver
The Supreme Court affirmed the Superior Court’s decision. Section 1738(c) requires an opportunity to waive stacking when the relevant coverage is purchased. On the stipulated facts, deleting one vehicle without changing the coverage or premiums attributable to the remaining vehicles did not constitute a purchase of new coverage. The earlier waiver therefore remained effective in the case.
The family did not challenge the rule the Superior Court had applied to a vehicle substitution, and the Supreme Court identified that limit in describing the dispute. Franks should not be converted into a blanket rule for additions, substitutions, new policies or changes in coverage. The legal question turns on what changed, the governing statute and the applicable authority.
Nor does the decision decide whether every waiver form is valid. The parties’ policy history and the statutory issue presented were specific. A reviewer should examine the actual election form and chronology rather than assume that a form exists or that any policy change automatically resets it.
Build a useful policy timeline
A different policy history might include an increase in limits, a newly added vehicle, an insurer change or a newly issued policy. Those changes should be identified precisely and evaluated under the authority governing them. A single phrase such as “changed my policy” does not establish whether the legal event at issue in Franks occurred.
Start with the full policy and declarations for the date of the crash. Then gather earlier and later declarations, endorsements and change confirmations showing when each vehicle was added, removed or replaced. Record who was the first named insured and keep every stacking form the insurer provides.
Compare the coverage and premium for each remaining vehicle before and after a change. A lower total bill may reflect removal of a vehicle rather than a change in the coverage on those left. Ask for the insurer’s written explanation of the applicable limits and identify any missing form or unexplained change.
If another driver caused the crash, retain the liability coverage and settlement information too. A UIM coverage issue, the value of the injury, and the terms of any release are connected but distinct questions. Reviewing the timeline before making decisions can identify which documents and issues need attention.
Discuss the policy and the crash together
A coverage analysis is most useful when it accounts for the vehicles, policies and elections actually in force. Learn about our motor vehicle accident work, personal injury representation and State Farm accident claims. To review a particular claim, schedule an initial consultation.
This article provides general information, not legal advice. Reading it does not create an attorney-client relationship.