Ambiguity between policy language and declarations page allows for stacking of limits

The Illinois appellate court for the Fifth District, in an opinion written by Judge Goldenhersh, applied Illinois law and affirmed summary judgment in favor of an insured holding that despite anti-stacking language in a policy, a declarations page that printed the policy limit more than once could reasonably be interpreted as providing a policy limit that equaled the sum of the printed limits.  The appellate court found there was an ambiguity in the policy which could reasonably be interpreted as favoring aggregation of the 16 vehicles’ limits of liability for underinsured motorist coverage.

Plaintiff filed an underinsured motorist claim (“UIM”) against defendant, State Farm Mutual Automobile Insurance Company (“State Farm”), after he was injured in an accident while driving one of his employer’s 16 vehicles.  All 16 vehicles were insured by State Farm.  Plaintiff claimed that the limits of liability for UIM on all of his employer’s 16 vehicles should be stacked.  The parties filed cross-motions for summary judgment on the stacking issue.

The issue was whether underinsured motorist coverage under the policy in question can be stacked.  Plaintiff argued that the policy is ambiguous as to the limits of underinsured motorist coverage and that he should be allowed to stack the underinsured motorist coverage for all 16 vehicles for a total of $4 million.  State Farm argued that the limits could not be staked because the policy contained unambiguous anti-stacking language and because the premiums were listed separately for each vehicle.  The trial court agreed with plaintiff that the policy was ambiguous and allowed underinsured motorist coverage to be stacked.  The appellate court affirmed.

The policy’s limit of liability section directs the insured to find the limit of UIM coverage on the declarations page.  On the declaration page, a “W”, which stands for UIM coverage, is repeated 16 times, once for each vehicle covered by the policy.  The policyholder paid 16 separate premiums for UIM.  While the policy does not specifically address the term “stacking,” the language set forth in the body of the policy is what is commonly referred to as an anti-stacking clause.  Stacking involves combining or aggregating the policy limits applicable to more than one vehicle where the other vehicles are not involved in the accident.

The appellate court determined that when the contents of the body of the policy conflict with the language on the declarations page, an ambiguity exists that must be construed in favor of the insured.  The language in the body of the policy does nothing to cure the ambiguity created on the declarations page.

Accordingly, the appellate court affirmed the trial court’s decision granting plaintiff $4 million in UIM, a sum arrived at by aggregating the $250,000 limit for UIM on each of the 16 vehicles on the plaintiff’s employer’s insurance policy.  Barlow v. State Farm Mut. Auto. Ins. Co., 2018 IL App (5th) 170484 (Nov. 29, 2018).