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Stacking UIM Policies in DC

September 1, 2017 By Mark A. Kohl

On August 31, 2017 the District of Columbia Court of Appeals reversed the ruling of a Superior Court judge which held that an insured could “stack” (or aggregate the limits) of multiple underinsured motorist policies.  The case, Illinois Farmers Insurance Company v. Hagenberg, is a slip opinion and is subject to revision.  Because the policies in question were issued in Illinois, the DC courts relied primarily upon Illinois law.

The Plaintiff was injured when his bicycle was struck by an underinsured motorist.  The tortfeasor’s insurance carrier tendered the limits of its $25,000 liability policy.  The limits of the Plaintiff’s UIM policy with Illinois Farmers were $500,000.  The Plaintiff’s parents also had  policies with Illinois Farmers providing $500,000 each in UIM limits.

The case was stayed while it was submitted to arbitration as required by the policy.  The arbitrator, assessing only damages and not coverage, returned an award of $750,000.  Illinois Farmers offered $475,000, but the Plaintiff amended his complaint after the stay was lifted, arguing that his parents’ two $500,000 UIM policies stacked on top of his.

The Superior Court, relying on an unpublished decision from Illinois (where the UIM policies were issued), held that the language of the policies’ anti-stacking clauses was ambiguous and entered an order permitting them to be stacked on top of each other.  The UIM carrier appealed and the Court of Appeals reversed, finding that the policy language providing against stacking was clear, and was not rendered ambiguous by “creative” interpretations.

The Court of Appeals made clear it was applying Illinois law, which explicitly permits anti-stacking provisions.  It deferred consideration of whether enforcement of anti-stacking provisions would be contrary to the public policy of the District of Columbia, leaving open whether and to what extent such provisions would be enforceable in DC.