Supreme Court Addresses Uninsured Motorist Insurance and Stacking Coverage

John Koeppel

On Thursday the Florida Supreme Court reversed a decision by the First District Court of Appeal regarding uninsured motorist (UM) insurance, Travelers Commercial Ins. Co. v. Harrington, 86 So. 3d 1274 (Fla. 1st DCA 2012), and held that a family vehicle exclusion in an automobile insurance policy was not invalid due to conflict with section 627.727(3), Fla. Stat. (2009); and that uninsured motorist benefits are not stackable under section 627.727(9) if the named insured or purchaser of the policy made a non-stacking election, as such a waiver applies on behalf of all insureds under the policy. Travelers Comm. Ins. Co. v. Harrington (SC12-1257).
Harrington, the plaintiff below, was injured in a car accident while traveling in her father’s car, driven with permission by a friend. As Harrington’s damages from the auto accident exceeded the combined liability payments from the bodily injury coverage provided by her mother’s Travelers policy and the driver’s separate policy with Nationwide, she also sought to recover stacked UM benefits she believed were available under her mother’s Travelers policy. Travelers, however, denied her claim on the ground that the vehicle in question was excluded from UM coverage pursuant to the “family vehicle exclusion” provision, which on its face excluded the vehicle in which Harrington was.
At the trial court, summary judgment was granted in favor of Harrington upon finding that the policy provision excluding family vehicles from UM coverage was invalid due to conflict with section 627.727(3)(b) and (c), Fla. Stat. The trial court also concluded that the waiver executed by the plaintiff’s mother, electing non-stacking UM, coverage did not apply to the plaintiff because Travelers did not obtain a knowing acceptance of the limitation of non-stacking UM coverage from the plaintiff personally.
On appeal, the First District affirmed the trial court’s ruling on both the coverage and stacking issues, but reversed the amount of the UM benefits awarded and the attorney’s fees awarded because “Travelers’ asserted other defenses which might impact the amount of the benefits due under the policy.” Harrington, 86 So. 3d at 1278.
The first question before the Florida Supreme Court was whether the family vehicle exclusion conflicts with subsection (b) or (c) of section 627.727(3), Fla. Stat.
The Court found that exclusion did not conflict with the statute. With respect to subsection (b), which defines an uninsured motor vehicle to include an insured vehicle with “limits of bodily injury liability for its insured which are less than the total damages sustained by the person legally entitled to recover damages,” the Court reasoned that “the statute clearly states that the term ‘uninsured motor vehicle’ is subject to the terms and conditions of the policy,” and a policy may contain conditions affecting coverage so long as the conditions are unambiguous and consistent with the purposes of the statute.
In finding that the family vehicle exclusion did not conflict with section 627.727(3)(c), which defines an uninsured motor vehicle in part to include an insured vehicle that exclude from coverage if driven by a nonfamily driver, the Court reasoned that the policy does not exclude coverage for non-family members because “the Harrington’s liability policy, consistent with the purposes of subsection (3)(c), covers any person who drives, with permission, any of the vehicles insured under the policy, and also provides that an insured vehicle is considered uninsured for purposes of UM coverage if the liability policy excludes coverage for non-family members whose operation of the vehicle cause injury to the named insured or the named insured’s family.”
The second question before the Court was whether UM benefits are stackable under section 627.727(9) when the named insured and purchaser of the policy expressly elected non-stacking UM coverage, but the insured claiming the UM benefits did not expressly make a non-stacking election. The Court answered this question in the negative as well, as “the contract unambiguously stated that the coverage selection applied on behalf of all insureds under the policy.” Furthermore, “not only would this put the additional insureds in a better position than the named insured— giving them a benefit they did not pay for—but it also prevents the insurer from receiving the ‘reduced liability risk’ that they bargained for.” Lastly, the Court noted that UM coverage premiums are always calculated based on the coverage selected for the policy as whole rather than providing individualized UM coverage. As such, “the First District’s interpretation creates the potential predicament that individuals under the same policy will elect both stacked and non-stacked UM benefits, making the calculation of a single UM premium impractical, as well as virtually impossible.”
Accordingly, along with its holding that “the family vehicle exclusion does not conflict with section 627.727(3),” the Court held that “a waiver executed by the named insured electing non-stacking UM coverage is binding on all insureds under the policy under section 627.727(9).” Thus, family members seeking UM benefits are limited in the UM coverage available to them by the selection made by the family member that buys the insurance.