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Missouri Appellate Court Finds Ambiguity in Anti-Stacking Provision, Allows Stacking of Limits of Liability in Four Separate Auto Liability Policies

February 1, 2018

The Missouri Court of Appeals, Southern District, issued an opinion on Jan. 31, 2018, in Shelter Mutual Insurance Company v. Lester that allowed stacking of full auto liability coverage policy limits on four separate policies. The underlying matter involved bodily injury claims brought by multiple claimants. Each of the auto insurer’s liability policies had applicable bodily injury limits of $50,000 per person / $100,000 per accident. Each policy also had the following anti-stacking provision:

If more than one policy issued by Shelter Mutual Insurance Company or Shelter General Insurance Company provides coverage for a single loss, this policy covers only the proportion of the total amount payable that its limits bear to the total limits of all such policies. The total maximum amount payable under all such policies is the highest limit of any one coverage applicable to the loss.

The policies did not define the term “loss.” The insurer argued that “single loss” meant “either a single injury-producing event or the total financial obligation he owes to the injured parties.”

The appellate court, however, held that the term “loss” could be “narrower than and something less than all losses arising out of the accident, which supports the reasonableness of the conclusion that ‘loss’ means the death or personal injury of a person” (emphasis added). When the adjective “single” is added to “loss,” the court held that an ordinary person of average understanding purchasing insurance could reasonably conclude that “a single loss” consists of “one loss as opposed to or in contrast with many losses.”

As a result, the Southern District concluded that the insurer’s anti-stacking provision is triggered “when more than one Shelter policy provides coverage for one person’s death or personal injury, but is not triggered when more than one Shelter policy provides coverage for more than one person’s death or personal injury” (emphasis added). Because this matter involved multiple claimants, and therefore multiple “losses” according to the court, the anti-stacking provision did not apply. The court therefore allowed stacking of each of the four separate policies’ per accident limits of $100,000.

The Southern District’s reading of the “single loss” phrase is particularly interesting in light of the language of Missouri’s Motor Vehicle Financial Responsibility Law, which sets forth the required per person and per accident limits applicable for any “loss.See Mo. Rev. Stat. § 303.190.2(2) (emphasis added). Based on this language, the Missouri general assembly appears to have contemplated the term “loss” to include all claims asserted by any one person or for any one accident, contrary to the Southern District’s conclusion. Notably, the Southern District does not appear to have considered the language of the statute.

While the holding in Lester is certainly limited to the particular policy language at issue in that case, Missouri policyholders and auto liability carriers alike will want to take note of this appellate opinion.