Stacking UIM Benefits; Need for New Waiver Where Policy Limits Increased

Barnard v. The Travelers Home and Marine Ins. Co., 2018 WL 6807257 (Table), Petition of the United States Court of Appeals for the Third Circuit, granted Dec. 27, 2018, appeal docket 42 EAP 2018

Michelle Barnard had a policy with Travelers insuring two vehicles, creating the option to “stack” benefits, which would aggregate the limits of uninsured motorist coverage (UIM) on both vehicles in the event of a claim, effectively doubling the amount of coverage available.  After Travelers denied her stacking claim she sued in state court, and Travelers removed the case to federal court.  Thereafter, the federal district court granted summary judgment in favor of Barnard.  Barnard v. Travelers Home and Marine Insurance Company, 289 F.Supp.3d 633 (E.D. Pa. 2018).  Travelers appealed to the Third Circuit, and the Third Circuit petitioned the Pennsylvania Supreme Court to accept certification of a question of Pennsylvania law pursuant to Pa. R.A.P. 3341, which the Pennsylvania Supreme Court has granted.

Under Pennsylvania’s Motor Vehicle Financial Responsibility Law (MVFRL), a carrier is required to offer stacked benefits when a policy holder purchases insurance, and to secure a written waiver if stacking is rejected. Here, Barnard signed a waiver of stacked benefits when the policy was originally issued, but two years later sought a higher level of UIM benefits.  The question is whether her original waiver of stacking still applied after she increased the limits.

Barnard signed a written waiver of stacked benefits upon initial purchase of her policy, with the result that the maximum she or anyone else insured could recover in UIM benefits was $50,000. If she had stacked her UIM benefits at that time, the available UIM coverage would have totaled $100,000 per person. She later increased her UIM limits to $100,000 per person, and Travelers did not secure a separate signed waiver of stacking at that time.

Barnard was injured in a car accident on June 17, 2016. The third-party motorist responsible for the accident maintained insurance coverage with the minimum limit required by law—$15,000—and tendered the full amount. Barnard filed a claim for underinsured motorist coverage with Travelers, which in turn tendered $100,000 in UIM benefits, the per person limit applicable to a single car under the policy. Barnard rejected this tender claiming stacked limits were available by operation of law because of Traveler’s failure to secure a written waiver of stacking when she increased the limits of her UIM coverage in 2009.

At issue is the meaning of the term “purchase” as used by Section 1738(c) of the MVFRL. There is no Pennsylvania case directly on point.  The District Court reasoned that the increase in limits constituted a “purchase” that triggered the obligation to either secure a waiver or provide stacking benefits:

In common usage, to purchase means to buy—to acquire something by paying for it. Travelers contends that the transaction should be characterized as an “alteration” of limits, but that ignores the fact that Plaintiff here paid for a level of UIM insurance that was different from what she had previously purchased, and for which she paid a different and higher premium. As an insurance “product,” the May 2009 policy was distinct from the May 2007 version that preceded it. In short, a “plain meaning” analysis of the literal terms of the statute would support the conclusion that an opportunity for a waiver of stacking was required.

289 F.Supp. 3d at 636.

The court considered and rejected arguments based on Pennsylvania cases that addressed stacking in other contexts, including Sackett v. Nationwide Mut. Ins. Co., 591 Pa. 416, 420, 425, 919 A.2d 194, 197, 199–200 (2007) (Sackett I) and Sackett v. Nationwide Mutual Insurance Company, 596 Pa. 11, 940 A.2d 329 (2007)(Sackett II), which addressed the need for a new waiver of stacked benefits in the situation where there is an existing policy of automobile insurance, and the policy holder purchases a new vehicle. The court was not persuaded by the rationale in arguably analogous cases, however, reasoning:

The parties acknowledge that there is no case directly on point, and argue by way of analogy. I am convinced that such case law as there is favors a literal reading of Section 1738 in this context.


In granting certification from the Third Circuit, the Pennsylvania Supreme Court stated the issue to be decided as follows:

If an insured under a policy of insurance subject to the Pennsylvania Motor Vehicle Financial Responsibility Law has waived stacking but later secures an increase in the limit of her UIM coverage on her existing policy, must her insurance carrier obtain a separate waiver of her right to stack the coverage or does a prior waiver of the right to stack the coverage remain in effect?

The court designated Michelle Barnard as appellant and Travelers as appellee and directed the case for oral argument.