By Eric McNamar, Lewis Wagner LLP
Despite the fact that UIM coverage has been available in Indiana for almost 25 years, questions regularly arise whether an insured can combine or “stack” the coverage limits of those policies to increase the total coverage for the loss and how payments are applied. Recently, in Glover v. Allstate Prop. & Cas. Ins. Co., 2019 WL 4399865 (Ind. Ct. App. 2019), the Indiana Court of Appeals confronted a scenario involving a three-car accident, which resulted in the death of a passenger.
Following the accident, the passenger’s estate obtained settlements from the two tortfeasors and from UIM coverage provided by her insurer and the insurer of the vehicle in which she was a passenger. Altogether, she recovered $125,000. The passenger’s estate then sought UIM coverage from her parents’ insurer (she lived with them at the time of the accident), whose policy had a UIM coverage limit of $100,000 per person. Her parents’ insurer objected because that policy prohibited stacking of UIM coverage. That policy also included an offset provision, which reduced the limit of UIM coverage by "all amounts paid or payable by or on behalf of any person or organization that may be legally responsible for the bodily injury for which the payment is made, including, but not limited to, any amounts paid under the bodily injury liability coverage of this or any other insurance policy.”
One question before the Court of Appeals was whether the phrase “legally responsible” included UIM insurers in addition to the actual tortfeasors. The Court of Appeals held that the UIM insurers were “legal responsible” under Indiana law, which reduced the policy limits in the parents’ policy to $0.
While the Glover decision may provide helpful guidance on the stacking of UIM coverage limits under multiple policies, insurance practitioners should remain mindful that whether stacking is allowed is fact-specific and dependent on many factors, including the types of coverages sought, the terms and conditions of those coverages, and the laws governing the enforcement or prohibition of stacking those coverages. As always, start the analysis by reading the relevant policies.
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