Stacking Claim Properly Denied Because of Waiver

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Tina Bubonovich was involved in a two-car vehicular accident. After recovering the available limits of the other driver’s liability coverage and her own underinsured motorist (UIM) coverage, she filed a claim seeking the proceeds from her resident son’s UIM coverage. When that claim was denied, she sued State Farm Mutual Automobile Insurance Company (State Farm Auto), State Farm Fire and Casualty Company (State Farm Fire), and State Farm, claiming that she was entitled to “stack” her son’s UIM coverage on top of her own recovery.

In Tina Bubonovich v. State Farm Mutual Automobile Insurance Company; State Farm Fire And Casualty Company; State Farm; No. 21-1611; United States Court of Appeals, Third Circuit (July 6, 2022) the District Court dismissed State Farm Fire from the suit because it did not issue the disputed insurance policies, and it also dismissed State Farm because State Farm “is not a proper legal entity.” The Court then granted State Farm Auto’s motion for summary judgment, ruling that Plaintiff could not “stack” her son’s UIM coverage because he had executed a valid stacking waiver.

FACTS

Plaintiff resides with her son, Nicholas Bubonovich. Nicholas is the named insured on his own State Farm Auto insurance policy. That policy does not list Plaintiff’s Scion as an insured vehicle and has a limit of $100,000 for UIM coverage. Nicholas, however, executed a UIM stacking rejection waiver as to his policy.

Plaintiff made a UIM claim under Nicholas’s coverage, but State Farm Auto denied the claim based on Nicholas’s waiver of his right to “stack” coverage. 

The Pennsylvania Supreme Court’s reasoning was clear. It and the Third Circuit could only look to the policy under which the claimant is trying to recover to determine if coverage is available. As such, whether Plaintiff waived coverage is beside the point.

Denying stacking here does not deprive either the Plaintiff or her son of the “benefit of the bargain”: they both get the insurance coverage they’ve paid for.

ZALMA OPINION

People who buy auto insurance often carry more insurance for their liability to third persons yet keep minimal UM/UIM coverages. The case teaches that the purchaser of auto insurance should buy the same limits to protect herself as she bought to protect third parties.

(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, is available at http://www.zalma.com and [email protected].

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