Multiple Limits of Liability Clauses Create Ambiguity and Defeat Anti-Stacking Provisions.

The Illinois Fifth District Appellate Court, applying Illinois law, modified a judgement by the Circuit Court of Franklin County and held that an anti-stacking provision in an auto insurance policy did not prohibit stacking of liability limits where limitations of liability were set forth on separate pages and referenced separate sets of automobiles.  The appellate court applied the “Bruder dicta” from Bruder v. Country Mutual Insurance Co., 156 Ill. 2d 179 (Ill. 1993) to find that multiple instances of limitations of liability language in declarations pages in an insurance policy can create ambiguity that, per well-established insurance law, will be interpreted against the insurer.

The plaintiffs were guardians of minors or administrators of estates of individuals who were involved in a serious auto accident caused by the deceased defendant, TJay Klamm.  The vehicle Klamm was driving in the accident was insured by defendant State Auto Insurance Companies, d/b/a Meridian Security Insurance Company (“Meridian”).  The insurance policy covering Klamm’s auto covered a total of four vehicles.  The policy listed the vehicles on the declarations pages of the policy, with three vehicles on one page and one vehicle on another.  Both declarations pages listing vehicles contained language limiting liability per person and per accident.  The policy contained an anti-stacking provision, stating that “[t]he limit of liability shown in the Declarations … is our maximum limit of liability.”

At trial, plaintiffs argued that the limitation of liability should be stacked four times, once for each vehicle listed in the policy.  Meridian argued that its anti-stacking provision was valid and no stacking should occur.  The trial court ruled in favor of the plaintiffs holding that the limits were to be stacked four times.  Meridian immediately appealed.

The appellate court relied heavily on Bruder to examine the policy’s anti-stacking language.  There, the Illinois Supreme Court found that an anti-stacking provision was valid because the limitations were “set forth only once on the declarations page, despite listing two vehicles.”  However, the Bruder court went on to state in dicta that “multiple printings on a declarations page of policy limits for various covered automobiles could create an ambiguity.”  Here, the court agreed with what it called the “Bruder dicta” and held that Meridian’s coverage should be stacked twice, as the limitation of liability language occurred twice in the declarations pages, referencing autos 1, 2, and 3 on one page, and auto 4 on the other.  The appellate court found that this was sufficient to create ambiguity, which was then resolved in favor of the insured.  Hess v. Estate of TJay Klamm, 2019 IL App (5th) 180220 (Feb. 11, 2019)(Moore, Welch, Chapman).