Indiana Court of Appeals Holds That Anti-Stacking and Offset Clauses Barred Insured’s Recovery Under Auto Policy

Michael R. Giordano

Glover v. Allstate Prop. & Cas. Ins. Co., 2019 WL 4399865 (Ind. Ct. App. 2019)

When two or more insurance policies apply to a loss, a dispute often arises over whether the insured can combine or “stack” the coverage limits of those policies to increase the total coverage for the loss. While Indiana law generally allows stacking coverage limits, it will enforce anti-stacking and offset provisions, as the case of Glover v. Allstate Prop. & Cas. Ins. Co. illustrates in the context of underinsured motorist (“UIM”) coverage.

The dispute in Glover arose out of a three-vehicle accident that killed a woman who was a passenger in one vehicle. After receiving $75,000 from the liability insurers of the other two vehicles, the woman’s estate received $50,000 in UIM coverage from her insurer and the insurer of the vehicle in which she was a passenger. The woman’s estate then sought UIM coverage from her parents’ insurer whose policy had a UIM coverage limit of $100,000 per person. The policy prohibited stacking of UIM coverage and stated that no matter the number of vehicles involved, persons covered, or claims made, “the limits shown in the policy’s declarations could not be added to the limits for similar coverages to determine the limit of coverage available.” The anti-stacking provision was followed by an offset provision, which reduced the limit of UIM coverage by “all amounts paid or payable by or on behalf of any person or organization that may be legally responsible for the bodily injury for which the payment is made, including, but not limited to, any amounts paid under the bodily injury liability coverage of this or any other insurance policy.” (Italics added). Hinging on the phrase “legally responsible,” the estate argued that the $100,000 limit of UIM coverage was reduced only by amounts paid for those directly liable for causing the bodily injury––the $75,000 paid by the insurers of the other two vehicles involved in the accident. Put differently, the $100,000 limit of UIM coverage was not reduced by the $50,000 in UIM coverage that the estate received from other insurers. The trial court and the Court of Appeals disagreed.

Although the UIM insurers that paid $50,000 to the estate were not “directly liable” for the negligent acts of the drivers of the other two vehicles, the Court of Appeals held that they were “legally responsible” under the policy. Because the estate had recovered more than $100,000 ($50,000 from UIM insurers and $75,000 from liability insurers), the policy’s limit of $100,000 was reduced to zero. Thus, the estate could recover no UIM coverage under the policy.

The decision in Glover may provide helpful guidance on the stacking of UIM coverage limits under multiple policies, but insurance practitioners should remain mindful that stacking can arise in other situations (such as when multiple vehicles or people are insured under one policy). In any case, evaluating stacking is fact-specific and can depend on many factors, including the types of coverages sought, the terms and conditions of those coverages, and the laws governing the enforcement or prohibition of stacking those coverages.