A recent Wisconsin Supreme Court decision runs counter to it’s usual pro-carrier rulings and held that an insured may stack uninsured/underinsured (UM/UIM) coverage from different polices issued from 2009 through 2011. The decision involved an issue of law that has been in constant flux for the last few years.
This article will discuss the history of stacking in Wisconsin as well as summarize the Court’s recent decision. The most recent change to Wisconsin auto insurance law took effect November 1, 2011. Among other significant changes, the law dramatically altered UM/UIM coverage. Under the 2011 law, carriers are no longer prohibited from including “reducing clauses” in their auto policies. The 2011 law also allows carriers to issue policies with provisions precluding the “stacking” of UM/UIM coverage when the insured has more than one auto insured by the carrier. Prior to the 2011 change, however, Wisconsin law prohibited a policy from providing that, regardless of the number of policies involved, the limits of UM/UIM coverage may not be added to the limits of UM/UIM coverage applying to other vehicles. Fortunately, for carriers, the 2011 law now allows anti-stacking policies, but numerous outstanding claims remain that involve policies issued prior to November 1, 2011.
The Wisconsin Supreme Court recently considered a case involving two policies issued before the 2011 law in which the insured attempted to stack UM coverage. Belding v. State Farm Mut. Auto. Ins. Co., 2014 WI 8, aff’g 2013 Wis. App. 26, 346 Wis.2d 160, 828 N.W.2d 890. The twist arose when the carrier, notwithstanding the anti-stacking law then in effect, contended the “drive-other-car exclusion” in one policy barred UM coverage under that policy.
The facts of the case are straightforward. The plaintiff purchased two policies from the carrier, one policy for his Ford Ranger, the other for his wife’s Mercury Villager. The plaintiff paid separate premiums and the policies had separate UM/UIM coverages. In 2010, the plaintiff was driving his Ranger when he was involved in a serious accident with an uninsured motorist. The carrier paid the $100,000 UM limits under the Ranger policy, but denied the UM claim under the Villager policy. The carrier relied on the drive-other-car exclusion of the Villager policy, which seemed on point. The exclusion provided there was no coverage for an insured who sustains bodily injury resulting from the use of a vehicle “IF IT IS NOT YOUR CAR.” The term “your car” is defined as the vehicle listed on the declarations page. The declarations page for the Villager policy listed only the Villager.
Although the carrier persuaded the trial court, the appellate courts had different ideas. The auto insurance statute then in effect explicitly prohibited anti-stacking provisions in Wis. Stat. § 632.32(6)(d), but explicitly allowed drive-other-car exclusions in § 632.32(5)(e). The Supreme Court had to somehow reconcile the two state law provisions.
The Court’s ruling was a surprise, both in its holding and its unanimity. The Court held the anti-stacking provision trumped the drive-other-car exclusion. The Court looked to another state law provision establishing that only exclusions not prohibited by § 632.32(6) are enforceable. Relying on that other provision, the Court held the carrier could not rely on the drive-other-car exclusion. “Thus, pursuant to the prohibition on anti-stacking clauses in Wis. Stat. § 632.32(6)(d), State Farm could not use the drive-other-car exclusion to prevent the Beldings from stacking the uninsured motorist coverage in their Mercury Villager policy onto the uninsured motorist coverage in their Ford Ranger policy.” Belding, ¶ 43.
As a result, for accidents that took place in 2009 through 2011, carriers should expect claimants to attempt to stack not only UM/UIM coverages of vehicles insured by the same policy, but also UM/UIM coverages provided in different polices. If such a claim comes in, carriers should be sure to confirm the date on which the responding policy was issued; if before November 1, 2011, stacking is permitted even if the drive-other-car exclusion would seem to apply. If after that date, a court should enforce any anti-stacking provisions in the policy.
If you should have questions regarding this article or insurance coverage in general, please contact Gary Wickert at [email protected].