Thursday, August 23, 2012

Pennsylvania Superior Court Addresses New Wrinkle in Sackett-Type Stacking Case

In its recent decision in the case of Shipp v. Phoenix Insurance Co., 2012 W.L. 3292939 (Pa. Super. Aug. 14, 2012) (Ford Elliot, P.J.E., Bender, and Colville, J.J.) (Opinion by Ford Elliot, P.J.E.), the Pennsylvania Superior Court addressed a variation of the Sackett-type issues and the application of 75 Pa. C.S.A. §1738 with regards to the need for an automobile insurance carrier to obtain a second waiver of stacked uninsured/underinsured coverage limits when the insured replaces an existing vehicle with a new vehicle.

The Court described the issue as involving the interpretation of §1738(c) and whether the addition and/or substitution of a new vehicle under an automobile insurance policy constitutes a purchase of additional UM/UIM coverage, requiring the insurance company to present the insured with a new opportunity to waive stacked coverage.

The Superior Court noted that this issue was “partially answered by [the Pennsylvania] Supreme Court in two separate decisions involving the same parties,” i.e., the Sackett I and Sackett II cases.

The Superior Court in this Shipp case noted that the Sackett Opinions dealt with the issue of additional vehicles being added to an automobile policy. In Shipp, Judge Ford Elliot noted that the “wrinkle in the case before us, and which distinguishes it from Sackett I, II or III, is the fact that there was no additional vehicle being added to the policy; rather, the new vehicle was a replacement for an existing vehicle. Thus, unlike Sacket, where the policy went from covering two vehicles to three, the instant policy continuously covered two vehicles only.

Since no additional vehicle was added to the policy, the Shipp court found that there was no change to the potential stacked UM/UIM coverage that was available under the policy ($200,000.00 stacked, $100,000.00 unstacked).

After reviewing the after-acquired vehicle clause in the policy at issue, the Court concluded that coverage on the replacement vehicle would continue uninterrupted as long as the insured gave notice to the insurance company. Under the case of Sackett II, it was held that continuing coverage subject only to a notice requirement did not require the insurance company to re-obtain a waiver. Accordingly, the Court ruled in this Shipp case that the initial waiver signed by the insureds was still valid and barred the stacking of coverage.

I note that I find these Sackett-type issues to be convoluted and I apologize if the above synopsis of the Shipp case is lacking in clarity.  Anyone wishing to review the decision for themselves may click this LINK.

I send thanks to attorney Steven K. DiLiberto, Esquire, Senior Counsel for the Claims Center General Counselor Group of Travelers Insurance Company for providing me with a copy of this case.

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