STACKING OF LIABILITY COVERAGE: UNSTACKED
Gerald M. Finkel
On September 14, 1990, Sonja Ruppe was killed in a head-on automobile collision
when another vehicle entered Interstate 85 in the wrong direction. The
driver of that vehicle and her husband owned two cars, both of which were
covered for liability insurance by Auto-Owners Insurance under a combined
liability policy. In its claim, Ruppe’s estate sought to stack the
liability coverage, but was met with resistance by the insurer. Arguing
that a "Limit of Liability" provision in the policy prevented
intra-policy stacking, the carrier rejected the Estate’s claim and
instead paid coverage under only one vehicle ($100,000.00). Not satisfied,
the Estate instituted a declaratory judgment action to determine the applicable
limits of coverage. The trial court ruled that the liability coverage
could be stacked. Auto-Owners appealed.
Ruppe v. Auto-Owners Ins., 323 S.C. 425, 475 S.E.2d 771 (Ct. App. 1996), The South Carolina Court
of Appeals affirmed, with some modification, the ruling of the trial court.
The Court began its analysis by stating that "stacking is generally
permitted unless limited by statute or by a valid policy provision.
Id. at 428, 774. However, "a policy provision attempting to limit stacking
of statutorily-required coverage is invalid; and liability insurance is
Id. (referring to S.C. Code Ann. § 38 -77-140 (1989)). In this regard,
intra-policy stacking is permissible where "coverage on each vehicle
in a multiple vehicle coverage policy is treated as a ‘theoretical
Thompson v. Continental Ins. Co., 291 S.C. 47, 351 S.E.2d 904 (Ct. App. 1986)).
The Court concluded that the coverages were indeed two theoretically separate
policies because the cars were not identical, separate premiums were paid
for each and only one vehicle was listed on each declaration. The Court
held that the insurer was precluded from "restricting the stacking
of liability coverages in a single policy covering multiple vehicles as
to sums required to be provided by statute."
Id. at 429, 775. The Court stopped short, however, of awarding Plaintiffs
an additional $100,000.00. Noting that S.C. Code Ann. § 38-77-140
only requires liability coverage in the amount of $15,000.00 as the result
of bodily injury in any one accident, the Court further held that Plaintiff
could only stack the coverages in the amount of an additional $15,000.00.
This new rule was destined to live a short life. On February 9, 1998, the
South Carolina Supreme Court reversed the Appeals Court’s holding.
Ruppe v. Auto-Owners Ins. Co., Op. No. 24761 (S.C. Sup. Ct. filed Feb. 9, 1998) (Davis Adv. Sh. No.
6 at 18). The Estate again argued stacking of statutorily required coverage
cannot be contractually prohibited, but the Supreme Court dismissed this
argument as an "oversimplification of our stacking law."
Id. The Court explained:
First, stacking of uninsured and underinsured coverages, which are both
statutorily required coverages, is governed specifically by statute.
SeeS.C. Code Ann. § 38-77-160 (Supp. 1996). Construing specific statutory
language, we have held an insured is entitled to stack underinsured or
uninsured coverage on the vehicle involved in the accident.
S.C. Farm Bureau Mut. Ins. C. v. Mooneyham, 304 S.C. 442, 405 S.E.2d 396 (1991). To this extent, stacking cannot
be contractually prohibited.
Nationwide Mut. Ins. Co. v. Howard, 288 S.C. 5, 339 S.E.2d 501 (1985). Where none of the insured’s
vehicles is involved in the wreck, however, stacking of underinsured or
uninsured coverage may be prohibited. [
Brown v. Continental Ins. Co., 315 S.C. 393, 434 S.E.2d 270 (1993)].
Id. Accordingly, the Court concluded that the stacking of non-owned liability
coverage is controlled by
Jackson v. State Farm Mut. Auto Ins. Co., 342 S.E.2d 603 (S.C. 1986) and
Giles v. Whitaker, 376 S.E.2d 278 (S.C. 1989) wherein the Court had previously found that
"stacking of this type [of] coverage
may be prohibited by contract because it is
notstatutorily required coverage." [Emphasis theirs].
Id. Therefore, the Court held that Defendant insurer’s policy provision
prohibiting stacking of liability coverage is valid:
In this case, we look to § 38-77-140 which mandates liability insurance
in this State. This section requires coverage under a policy issued to
the owner of a motor vehicle for liability arising out of the ownership,
maintenance, or use of that motor vehicle. Liability coverage, therefore,
while statutorily required,
is limited to the particular vehicle for which it is purchased. The extent of liability coverage is thus statutorily defined by the amount
of coverage on the insured vehicle and does not encompass coverage applicable
to other vehicles. Accordingly, a policy provision prohibiting stacking
is consistent with statutory insurance requirements regarding liability
coverage. [Emphasis theirs].
Id. In short, the "guiding principle to be gleaned from our current
stacking law is that stacking may be prohibited by contract if such a
prohibition is consistent with statutory insurance requirements."