Multiple Limits of Liability Do Not Render Anti-Stacking Provision Ambiguous

In an unanimous decision, the Illinois Supreme Court, applying Illinois law, reversed the lower courts’ judgments and held that a multi-vehicle automobile insurance policy is not so ambiguous that the liability limit for all covered vehicles may be stacked in violation of an anti-stacking policy provision.

TJay Klamm caused a serious auto accident, resulting in his death, the death of two others, and the serious injuries of a minor.  The administrators and guardians of the estates sued Klamm and his auto insurer, State Auto Insurance Companies, d/b/a Meridian Security Insurance Company (“Meridian”).  The plaintiffs sought a declaratory judgment declaring the policy ambiguous as to the amount of bodily injury liability coverage.  They alleged that the ambiguity should be construed in their favor by aggregating or “stacking” the coverage.  Meridian argued that the policy unambiguously sets forth a maximum limit of liability of $100,000 per person and $300,000 per accident.  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 and both declaration pages included the limits of liability.  The policy also contained an anti-stacking provision: “The limit of liability shown in the Declarations for each person for Bodily Injury liability is our maximum limit of liability for all damages …  Subject to this limit for each person, the limit of liability shown in the Declarations for each accident for Bodily Injury Liability is our maximum limit of liability for all damages for ‘bodily injury’ resulting from any one auto accident.”

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.  The appellate court agreed with the lower court’s ruling but found that the limits should only be stacked two times.  The appellate court applied the “Bruder dicta” from Bruder v. Country Mutual Insurance Co., 156 Ill. 2d 179 (Ill. 1993).  In Bruder, the Illinois Supreme Court found that if the liability limit is listed only once, it is reasonable to conclude that the policy provides only that amount of coverage per person, regardless of how many vehicles are listed and how many separate premiums are paid.  However, in dicta the Bruder court went on to state that multiple printings on a declarations page of policy limits for various covered automobiles could create an ambiguity.

The Illinois Supreme Court disagreed with the lower courts and found that although the liability limits are technically listed twice, the policy was not ambiguous with respect to stacking.  It reasoned that there was no ambiguity because the policy at issue did not list liability limits separately for each covered vehicle, but rather once on the first page to the left of autos 1-3 and once on the second page to the left of auto 4.  “The only reasonable explanation for restating the liability limits on the second page is that the information for all four vehicles could not fit on one physical page … When read together with the declarations, we find that the anti-stacking clause unambiguously prohibits stacking of bodily injury liability coverage.”  Thus, the coverage was limited to $100,000 per person and $300,000 per accident.  Hess v. Estate of TJay Klamm, 2020 IL 124649 (Jan. 24, 2020).