In Pergolese v. The Standard Fire Insurance Co., the Pennsylvania Superior Court was tasked with determining whether an insured was entitled to stacking of underinsured motorist benefits.  At issue was whether an added vehicle to a preexisting insurance policy provided coverage under its general terms or triggered that policy’s after-acquired vehicle provision.  The distinction was significant with respect to whether the insurer was required to obtain a new stacking waiver.

In the early 1990s, the Pergoleses purchased an auto insurance policy from Standard.  That policy contained a continuous after-acquired vehicle provision.  Over the years, the Pergoleses replaced and sometimes reduced the inventory of their vehicles. In May of 1996, the Pergoleses had four vehicles insured under their policy.  The Pergoleses also signed a rejection of stacked UIM in May of 1996 in relation to the policy.   In April of 1998, the Pergoleses contacted their insurance agent and requested insurance coverage for a vehicle that they were purchasing that day but did not yet own.  Their agent provided them with an insurance card for the vehicle and amended the Pergoleses’ auto insurance policy’s declaration page to include the new vehicle in addition to the three that were already covered under the policy.  Standard did not request a new waiver of stacked UIM coverage from the Pergoleses at that time.

In 2001, Mr. Pergolese suffered severe injuries when he was rear ended by a drunken driver.  He submitted a claim to Standard and asserted that he was entitled to stacked benefits. Standard denied the stacked benefits claim, and the Pergoleses filed a declaratory judgment action.  After discovery, the parties filed cross motions for summary judgment.  The court denied Standard’s and granted the Pergoleses’ motion.

The appellate court affirmed relying on its opinion in Bumbarger v. Peerless Indem. Ins. When an insured takes ownership of a vehicle and simultaneously informs his insurer of the new vehicle, the language and purpose of the after-acquired vehicle provision in the policy is never triggered.  An after-acquired vehicle provision merely extends existing coverage to a new vehicle until the insured notifies the insurer that he wishes to insure the new vehicle under his policy with the insurer. The after-acquired vehicle clause extends temporary, stop-gap coverage, thereby protecting the insured until the policy can be amended.  However, once an insured advises its insurer that an new auto is to be added,  the after-acquired vehicle provision is not applicable.  In such event, the Pennsylvania Supreme Court’s holding in Sackett v. Nationwide, 919 A.2d 194 (2007) (“Sacket I”) is controlling.  There the Supreme Court held that the addition of a new vehicle to an existing multi-vehicle policy constitutes a purchase for which the insurer must obtain a new waiver of stacked coverage.

Thanks to Marcus Washington for his contribution.

For more information, contact Denise Fontana Ricci at .