June 17, 2009 

Written By Attorneys Claudia D. McCarron and Kevin J. McCloskey

Note: This article is an interpretation of current law and is offered for informational purposes only. This material is not legal advice and should not be construed or used as a substitute for the advice of an attorney.

In State Auto Property & Casualty Insurance Company v. Pro Design, P.C., the Third Circuit predicted that the Pennsylvania Supreme Court would extend the rule of Sackett II, and held that a stacking waiver signed at the inception of a single vehicle policy remains valid upon the addition of subsequent vehicles to the same policy. State Auto Property & Casualty Insurance Company v. Pro Design, P.C., 2009 WL 1292892 (3d Cir. April 16, 2009); see Sackett v. Nationwide Mutual Insurance Co. (Sackett II), 940 A.2d 329 (Pa. 2007).

In Sackett II, the subject of a previous alert, the Pennsylvania Supreme Court upheld the validity of an initial waiver of stacked UM/UIM as to vehicles subsequently added to an existing multi-vehicle policy based on the after-acquired vehicle provision. Id. In so holding, the Court concluded that § 1738(c) of MVFRL which requires a signed waiver on the purchase of a multi-vehicle policy does not apply when vehicles are added or substituted pursuant to the policies' after acquired vehicle clause. The Court specifically left unresolved instances involving additions to single vehicle policies. Id. at 334 n.5.

In Pro Design, the insured purchased a Business Auto Policy for a single vehicle with $35,000 in UIM coverage, and signed a written waiver of "stacked" UIM coverage. Three years later the insured added a second vehicle to the policy and another year after that added a third vehicle. Following two more annual renewals, an accident occurred. The insured sought to stack UIM coverage for all three vehicles. The District Court found that the insured's initial waiver of stacked UIM coverage was not valid.

In Pro Design, the Third Circuit was presented with the very factual scenario that the Pennsylvania Supreme Court left unresolved in Sackett II, specifically whether an initial waiver remains valid after additions to a single vehicle policy. The decision in Pro Design predicts that the Pennsylvania Supreme Court would extend Sackett II to single vehicle insurance policies.

In Sackett II, the Pennsylvania Supreme Court placed significant value on the Pennsylvania Insurance Commissioner's submission for re-argument of Sackett I. 940 A.2d 329; see also Sackett v. Nationwide Mutual Insurance Co. (Sackett I), 919 A.2d 194 (Pa. 2007). In Pro Design, the Third Circuit reasoned that the Insurance Commissioner's submission in support of re-argument of Sackett I did not distinguish between single and multi-vehicle policies when defining "purchase" under the MVFRL. Sackett II states that "the 'purchase' of UM/UIM coverage under § 1738(c) is a term of art in the automobile insurance arena that does not subsume the extension, under a contractual after-acquired-vehicle provision, of the pre-existing policy terms to a newly acquired automobile. Id. at 333-334.

Thus based on Pro Design, § 1738(c) of MVFRL does not require an insurer to provide an insured with the opportunity to waive stacking upon the addition of vehicles to a policy if a waiver was signed at the inception of the policy and coverage is extended under an after-acquired vehicle provision of the policy. Id.; see also 75 Pa. Cons. Stat. Ann. § 1738(c).