PREMIUMS ON 'DECLARATIONS PAGE' NOT AUTOMATICALLY AMBIGUOUS

May 20, 2004

Steven P. Garmisa
Hoey & Farina Attorney
garmisa@hoeyfarina.com
1-888-425-1212

Based on controversial dicta in an Illinois Supreme Court case, some judges have ruled that when the declarations page of an automobile insurance policy enumerates several vehicles -- with separately listed liability limits for each vehicle -- there is an automatic ambiguity in the meaning of the policy's anti- stacking provisions.

Rejecting a per se approach, the 2d District of the Illinois Appellate Court reversed a ruling that permitted stacking of policy limits. Estate of Striplin, 2004 WL 797567 (2d Dist., April 13).

Dillon Striplin died in an accident caused by an underinsured motorist. His father, Terry Striplin, had an auto policy from Allstate Insurance Co. covering two vehicles.

The Allstate policy -- which contained a separate declarations page for each of the vehicles -- had anti-stacking provisions that said the per-person limit of liability for accidents caused by an underinsured motorist was $100,000.

Dillon Striplin's estate received the $50,000 liability limit of the tortfeasor's insurance policy, and Allstate paid an additional $50,000.

Terry Striplin, as administrator of his son's estate, argued that he was entitled to stack coverages under the Allstate policy and that the insurance company was obligated to pay $200,000 (with a credit for the $50,000 received from the tortfeasor).

Based on comments the Illinois Supreme Court made in Bruder v. Country Mutual Insurance Co., 156 Ill.2d 179 (1993), a Lake County judge agreed with Striplin. But Allstate appealed, and the Appellate Court reversed.

Here are some highlights of Justice R. Peter Grometer's opinion (with various omissions not noted in the quoted text):
"Because of its central role in the trial court's decision and in the parties' arguments on appeal, we begin with a discussion of Bruder. There, Ruth Bruder was injured in an accident with two uninsured drivers.

"Among several insurance policies that provided coverage was a business auto policy covering two trucks owned by her husband, John Bruder. The Bruders attempted to stack the uninsured motorist coverage applicable to the two trucks.

"The policy contained a provision that unambiguously prohibited stacking coverages. However, the Bruders contended that the layout of the declarations page, listing separately the premiums paid for each coverage for each truck, created an ambiguity. The court rejected this argument. It observed that, although the declarations page listed separate premiums for each truck, it showed only once the limits of liability applicable to both trucks.

"The court continued as follows: 'It would not be difficult to find an ambiguity created by such a listing of the bodily injury liability limit for each person insured. It could easily be interpreted that an insured should enjoy a total limit of $200,000 in coverage because a figure of $100,000 would be shown for each pickup truck. There would be little to suggest in such a listing that the parties intended that coverage was to be limited to that provided for only one of the two pickup trucks. It would be more reasonable to assume that the parties intended that, in return for the two premiums, two $100,000 coverage amounts were afforded.'

"How to interpret what has become known as the Bruder dicta has divided this state's Appellate Court ever since. The 5th District had apparently taken the position that, regardless of anti-stacking language in the policy, any listing of multiple liability limits automatically creates an ambiguity that must be resolved in favor of the insured. See Yates v. Farmers Auto Insurance Association, 311 Ill.App.3d 797 (2000); Pekin Insurance Co. v. Estate of Goben, 303 Ill.App.3d 639 (1999).

"In its most recent opinion, however, the 5th District retreated from its previous position, holding that the presence of multiple liability limits, in combination with other language, may create an ambiguity. Hall v. General Casualty Company of Illinois, 328 Ill.App.3d 655, 660 (2002).

"In Domin v. Shelby Insurance Co., 326 Ill.App.3d 688 (2001), the 1st District expressed some doubt about the soundness of the Bruder dicta but did not consider the issue further because the policy there, like that in Bruder, contained only a single listing of the liability limits rather than a 'confusing columnar arrangement.'
"The 4th District, without discussing Bruder, held that listing multiple liability limits on the declarations page did not create an ambiguity in the face of clear anti-stacking language elsewhere in the policy. Pekin Insurance Co. v. Estate of Ritter, 322 Ill.App.3d 1004, 1005 (2001). Two federal courts have discussed the issue as well. See Allen v. Transamerica Insurance Co., 128 F.3d 462 (7th Cir. 1997); Moehring v. Allied Property & Casualty Insurance Co., No. 00-CV-4234-JPG (S.D. Ill. 2001).

"Having considered these cases and their various rationales, we cannot accept a per se rule that any listing of multiple limits of liability creates an ambiguity. There are several reasons for this. First, such a holding would be inconsistent with later supreme court precedent.

"Two years after Bruder, the Supreme Court decided Grzeszczak v. Illinois Farmers Insurance Co., 168 Ill.2d 216 (1995), a case involving an attempt to stack underinsured motorist coverages under two separate policies. The court initially stated that anti-stacking clauses will be enforced as written if they are unambiguous and do not violate public policy.

"The court then held that clauses in both policies, stating that the 'total limit' of the defendant's liability under all policies would not exceed the highest applicable limit under any one policy, unambiguously prevented the insured from aggregating, or stacking, coverage under multiple policies.

"Although the court did not explicitly say so, because Grzeszczak involved two separate policies, the only logical inference is that each policy included its own declarations page listing the liability limits for the vehicle covered by that policy. However, the court held that the anti-stacking provisions clearly prevented stacking the coverages in the separate policies.

"We see no meaningful distinction between two declarations pages attached to separate policies and, as is the case here, two declarations pages attached to the same policy.

"The problem with a per se approach is further illustrated by the following example. Here, as in Bruder, the liability limits for the two covered vehicles are identical. However, if different limits applied to the two vehicles, under a broad reading of Bruder, defendant could never unambiguously prohibit stacking. The different coverage limits would have to be set out somewhere, and this would always trump an anti-stacking clause, no matter how clearly the latter was written. Nothing in Bruder suggests such a result.

"Another problem with the per se approach is that, by focusing solely on the layout of the declarations page, it ignores the command that all portions of an insurance policy must be construed together. Although seldom stated, the reason for this rule is obvious.

"Documents are written with the intention that they be read as a whole. A question left unanswered by one portion of the document may be answered quite clearly by another portion of it.
"We agree with the cases holding that listings of multiple liability limits may create an ambiguity in conjunction with other language in the policy. In Hall, the court emphasized that 'it is not the number of times the limit of liability is listed on the declarations page that creates the ambiguity in the case at bar.' Hall, 328 Ill.App.3d at 660. However, the court held that an ambiguity was present because the declarations page stated that, 'Insurance is provided where a premium is shown.'

"Because multiple premiums were shown together, the declarations page could be reasonably construed to mean that the liability limit was provided for each vehicle, even though the policy listed the limits of liability only once.

"In Allen, the court held that a policy's anti-stacking provision, when read in conjunction with the layout of the declarations page, created an ambiguity.

"The anti-stacking provision at issue stated that 'the limit of liability shown in the schedule or in the declarations for each accident for underinsured motorists coverage is our maximum limit of liability' and was the most the defendant would pay regardless of the number of insureds, claims made, vehicles or premiums shown in the declarations, or vehicles involved in the accident. The declarations page contained four columns, showing premiums paid and coverage amounts for each of two vehicles.

"Significantly, the Allen court stated that the central question it had to answer was, '[W]hat is the limit of liability referred to in the provision?' Relying on Bruder, the court held that the Illinois Supreme Court would find the policy ambiguous concerning stacking because the 'limit of liability' referred to in the anti-stacking clause could mean the limits of liability for either vehicle or for both combined.

"The policy here does not contain any of the language that made the policies in Hall and Allen ambiguous. The declarations pages do not contain a statement that coverage is provided where a premium is shown. The pages merely state 'Coverage for Vehicle #1' and 'Coverage for Vehicle #2.' "

Besides which, Grometer continued, the "Combining Limits of Two or More Autos Prohibited" section "does not merely refer to the 'limits of liability' in the declarations pages, as in Allen. The section specifically provides that, 'The limits of liability applicable to any one auto shown on the policy declarations will not be combined with or added to the limits of liability applicable to any other auto shown on the policy declarations.'

"Moreover, the provision goes on to explain what happens in the precise situation that occurred here: 'If none of the autos shown on the policy declarations is involved in the accident, the highest limits of liability shown on the policy declarations for any one auto will apply.'

"In Allen, it was the failure of the anti-stacking clause to define 'limits of liability' that led to the finding that the policy was ambiguous. Here, the 'Combining Limits of Two or More Autos Prohibited' section specifically answers that question. It specifically states what happens where, as here, an insured has an accident involving neither of the two autos insured. The anti-stacking clause simply is not ambiguous when read in conjunction with the declarations pages.

"In Pekin Insurance Co. v. Estate of Ritter, 322 Ill.App.3d 1004 (2001), the court was faced with a policy similar to the one at issue here. The court observed that, 'The entries in the columns on the declaration page in this policy do nothing more than indicate the amount of coverage provided for each vehicle and the amount of the total premium allotted to that coverage.' The court went on to explain, 'To the extent that there could be some confusion arising out of whether the coverages could be "stacked," the UIM coverage limitation provision clarifies that question.'

"We agree with this analysis," Grometer and his colleagues concluded. "Any provision of a lengthy document is bound to be ambiguous in the sense that it creates questions that can be answered only with reference to other portions of the document. That is why all provisions of an insurance policy must be construed together.

"Here, the declarations pages arguably leave open the question whether the liability limits for the two vehicles may be added together in a case where neither of the vehicles is involved in the accident. However, the 'Combining Limits of Two or More Autos Prohibited' section provides the answer: they may not."

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