On Oct. 16, 2007 the Supreme Court of Pennsylvania heard reargument¹ in the matter of Sackett v. Nationwide Mutual Insurance Company²(hereinafter referred to as “Sackett I”). On Dec. 27, 2007 the Supreme Court of Pennsylvania modified the original opinion of Sackett I to hold that “…the extension of coverage under an after-acquired-vehicle provision to a vehicle added to a pre-existing multi-vehicle policy is not a new purchase of coverage for purposes of Section 1738(c), and thus, does not trigger an obligation on the part of the insurer to obtain new or supplemental UM/UIM stacking waivers. However, where coverage under an after-acquired-vehicle clause is expressly made finite by the terms of the policy, see, e.g., Bird, 165 P.3d at 346-47, Sackett I controls and requires the execution of a new UM/UIM stacking waiver upon the expiration of the automatic coverage in order for the unstacked coverage option to continue in effect subsequent to such expiration^”3.

While this holding reaffirmed the result of Sackett I in this particular instance, the effect of the Court’s reinterpretation of Section 1738(c) of the Motor Vehicle Financial Responsibility Law⁴ (hereinafter referred to as “MVFRL”) will have far reaching consequences on those seeking to argue that stacked coverage was not adequately waived following the purchase of a new vehicle.

The pertinent facts upon which the Sackett I court relied follow:

Prior to July 25, 2000, the Appellants, Victor M. and Diana L. Sackett, insured two vehicles on an automobile insurance policy issued by Appellee Nationwide Mutual Insurance Company. Mr. Sackett was the first named insured under the policy issued by Appellee. On July 26, 2000, the Appellants acquired a third vehicle, a 2000 Ford Windstar, which required the Sacketts to purchase additional insurance. On August 5, 2000, Appellant Victor M. Sackett was injured in a motor vehicle. Mr. Sackett was riding as a passenger in a vehicle driven by Robert J. Bulger. The Bulger vehicle was struck by a vehicle driven by an underinsured motorist, Charlynne A. Dicks. Mr. Sackett sustained injuries as a result of the accident.

In 1998, when the subject policy incepted, Mr. Sackett selected $100,000.00 in UIM coverage, but rejected stacked limits of that coverage by executing a waiver as prescribed by the MVFRL. When the Sacketts subsequently acquired a third vehicle, Mr. Sackett, the first named insured, was not provided an opportunity to waive stacked UIM coverage.

Following the accident, and after settling with Bulger and Dicks, Appellants asserted a claim for stacked UIM benefits under the Nationwide policy. Nationwide denied coverage. Appellants filed a declaratory judgment action asserting that the UIM coverage available is $300,000.00 (the sum of $100,000.00 for each of their three vehicles).

The court in Sacket I found the issue to be “whether the Sacketts’ purchase of underinsured motorist coverage upon the addition of the Ford Windstar to the existing policy triggered a duty on Nationwide’s part to provide Mr. Sackett with another opportunity to waive stacked UM/UIM coverage”.

The Sackett I Court held that, the named insured purchased uninsured and/or underinsured coverage when he added third vehicle to policy, and, thus, the insurer should have provided opportunity to waive stacked limits at that time, and that the remedy was the sum of stacked coverage limits for the three vehicles.

Following this holding, the Application for Reargument was filed and granted. The Supreme Court of Pennsylvania heard this matter and decided as aforementioned. As a result, whether an additional stacking waiver is necessary is governed by the language of the policy. In those instances where the policy language concerning an after-acquired-vehicle is finite by its terms, an additional stacking waiver is required. Conversely, where the automatic coverage provided for by an after-acquired-vehicle clause is infinite, no additional waiver is necessary.

Important documents for further consideration of this issue:

Brief for Pennsylvania Trial Lawyers Association, Amicus Curiae in Support of Appellant Victor M. Sackett and Diana L. Sackett, 2006 WL 2923056 (Jul. 26, 2006).

Brief of Amici Curiae, the Pennsylvania Defense Institute, the Insurance Federation of Pennsylvania, and the Property Casualty Insurers Association of America, in Support of Appellee Nationwide Mutual Insurance Company, 2006 WL 2923055 (Jul. 25, 2006).

Sackett v. Nationwide Mutual Insurance Company, 591 Pa. 416, 919 A.2d 194 (2007).

Sackett v. Nationwide Mutual Insurance Company, --- A.2d ----, 2007 WL 4553438 (Pa.)

1 Application for Reargument at 934 A.2d 1155.

2 Sackett v. Nationwide Mutual Insurance Company, 591 Pa. 416, 919 A.2d 194 (2007).

3 Sackett II, --- A.2d ----, 4, 2007 WL 4553438 (Pa.).

4 75 Pa. C.S. 1701, et seq.

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