‘Disambiguator’ Language Helps Negate Stacking of Policy Limits

By Don R. Sampen, published, Chicago Daily Law Bulletin, August 8, 2023

The 4th District Appellate Court, reversing the trial court, recently held that an auto policy covering seven vehicles unambiguously limited coverage to $1 million per vehicle, such that the limits could not be “stacked” to provide $7 million in coverage.

The case is Kuhn v. Owners Insurance Co., 2023 IL App (4th) 220827 (June 28). The insurer, Owners Insurance, was represented by Dinsmore & Shohl LLP of Chicago. Sumner Law Group LLC of St. Louis represented the claimants, Mark and Karen Kuhn.

In 2019, an accident occurred between a semi-truck owned by Jason Farrell and a school bus driven by Mark Kuhn, resulting in fatalities and other injuries. Kuhn and others brought suit against Farrell Trucking, which was insured by Owners.

The Owners policy covered a total of seven vehicles, including three semi-trucks and four trailers. The insuring agreement provided that Owners would pay damages for bodily injury and property damage up to the limit shown in the policy declarations.

The declarations pages contained two schedules, each listing the seven vehicles for which coverage was provided. One schedule contained a chart outlining different types of coverage with limits and separate premiums for each type of coverage, but also stating a “combined liability” coverage of $1 million. The second schedule set forth additional coverage and listed the $1 million limit separately for each vehicle.

The policy also contained a separate “Limit of Insurance” section indicating, among other things, that the limit for coverage “may not be added to the limits for the same or similar coverage applying to other autos insured by this policy to determine the coverage for any one accident.”

The claimants nonetheless argued that the policy’s references back to the declarations pages were, at minimum, ambiguous and that coverage of $7 million should apply to the damages arising from the accident. In a 73-page opinion on cross-motions for summary judgment, the trial court agreed with the claimants and entered judgment in their favor. Owners took this appeal.

Analysis

In an opinion by Justice Robert J. Steigmann, the 4th District reversed. His opinion relied in part on Hess v. Estate of Estate of Klamm, 2020 IL 124649, where the Illinois Supreme Court addressed an anti-stacking provision in an auto policy, found it was not ambiguous, and held for the insurer. In the process, the court held that anti-stacking provisions are not contrary to public policy.

In the instant case, Steigmann found it necessary for Owners to have used a multiple-page declarations section for the policy because the policy provided different coverage for seven different vehicles.

He further stated that the “combined liability” language used in one of the schedules and the $1 million limit listed for each vehicle in the second schedule conveyed the same information in different ways, thus limiting coverage to $1 million per accident per vehicle.

Even if that language was ambiguous, however, the anti-stacking language in the Limit of Insurance section cleared up any ambiguity. That language stated explicitly that the limit stated for one vehicle could not be added to the limit for another vehicle for any one accident.

For this interpretation, Steigmann referenced a 7th U.S. Circuit Court of Appeals opinion by Judge Frank H. Easterbrook in Grinnell Select Insurance Co. v. Baker, 362 F.3d 1005 (7th Cir. 2004), which described such language as a “disambiguator,” such that “even if” some other language in the policy might suggest the possibility of stacking, this language negated the possibility.

The 4th District therefore reversed the trial court and remanded with directions to enter summary judgment for Owners.

Key Points

• Anti-stacking provisions in liability insurance policies are not contrary to public policy.
  
• Even if certain language in a policy might give rise to an ambiguity regarding the stacking of coverage, explicit language in another section of the policy may be used to negate the ambiguity.