The Pennsylvania Superior Court re-visits the stacking waiver issues from Sackett v. Nationwide.

On June 6, 2014, the Superior Court of Pennsylvania issued an new opinion on the requirement of waivers under Sec. 1738 of the MVFRL for stacked UM/UIM (Uninsured/Underinsured motorist coverage) in Bumbarger v. Peerless Indemnity Insurance Company, 2014 PA Super 115; 2014 Pa. Super. LEXIS 1172 (Pa. Super. 2014).

Peerless Indemnity Insurance Company issued Bumbarger an automobile policy for motor vehicle coverage on her two vehicles.  At the time of the application, Bumbarger executed the Sec 1738 form rejecting stacked UM/UIM coverage.  There is no dispute that the forms were valid at inception.  Approximately two months later, she purchased a third vehicle and Peerless added it through an endorsement.  Just over two years later, she purchased a fourth vehicle.  This vehicle was not added to the policy by an endorsement but by an amended declarations page.

Thereafter, while driving her third vehicle, Bumbarger was involved in a motor vehicle accident with an uninsured vehicle and submitted a claim for UM benefits.  She claimed that she was entitled to stacked UM benefits.  Peerless claimed that her executed waiver of stacked UM/UIM benefits applied.  Bumbarger filed suit alleging breach of contract for failure to provide stacked UM benefits in the absence of new waivers after the purchase of the third and fourth vehicles.

The trial court declared that Bumbarger was entitled to stacked coverage due to the fact that Peerless did not obtain new stacking waivers when she added the subsequent vehicles.  The court referenced Sackett v. Nationwide Mutual Ins. Co., 919 A.2d 194 (Pa. 2007) in its decision.

Peerless appealed the decision to the Superior Court, which affirmed the trial court.  Peerless then requested reconsideration en banc, which was granted.  The opinion affirming the trial court, again, and noted that the Supreme Court in Sackett addressed the issue where stacked coverage was waived and there was the addition of a new vehicle to a multi-vehicle automobile policy, via endorsement.   In that scenario, in the absence of an updated Sec. 1738 waiver, the policy provides stacked UM/UIM limits.

The Bumbarger court referenced the text of Sec. 1738(c), which states that the addition of a vehicle to an existing insurance policy constitutes a new purchase of insurance coverage.  The court noted that the third and fourth vehicles were not added to replace a vehicle already covered under the policy.  Also, because a car was added pursuant to the endorsement provision after being purchased and placed on the declarations’ page, the “after-acquired vehicle clause” was not applicable.  The court also pointed out that Peerless’ policy makes a distinction between newly acquired automobiles that an insured added and those that it acquires as a replacement for vehicles already insured under the policy.   The Bumbarger court noted that the “former requires notice to the insurer, the latter does not as the policy extends coverage automatically for replacement vehicles.”

The court concluded, “because the Bumbargers added their third vehicle to the policy by way of endorsement, the new vehicle was covered under the general terms of the Peerless policy and not its after-acquired vehicle clause.”  Further, because it was added to the policy before the accident, Peerless was required to obtain a new stacking waiver.  Because Peerless did not offer or obtain the stacking waiver, Bumbarger was entitled to stack UM coverage in this case.