“Stacking” The Insurance Coverage of Cars on the Same Policy: The Virginia Farm Bureau v. Williams Case

Author: Attorney Chris A. Meyer

Very seldom do we discuss the details of Virginia Supreme Court decisions interpreting insurance contracts; these are true lawyer issues that can put normal folks to sleep. But this recent case is important if you are in an automobile accident and are seriously injured. So important that if you are seriously injured and don’t at least ask a lawyer about this you may leave a lot of money that should be yours in the insurance company’s pocket.

As you probably know automobile insurance contracts contain maximum limits of coverage. If a driver crashes into the rear of another car and injures someone, then the at-fault driver can be sued and his insurance company will pay the judgment. However, regardless of the amount of the verdict, the insurance company only has to pay its maximum limit of per person coverage stated in the policy.

The at-fault driver then has an excess judgment against them for the amount over the maximum limit, but very rarely does anyone have significant personal assets to pay such a judgment. Furthermore, most such excess verdicts can be eliminated in bankruptcy court. We have represented many people with crippling injuries, and hundreds of thousands of dollars in medical bills alone, who can only collect $25,000 or $50,000 because that is all the insurance the person who caused the accident has and there are no other reachable assets.

People can protect themselves from this problem by buying higher limits on own automobile insurance policy.  All automobile insurance policies in Virginia are required to include something called “underinsured motorist” coverage.  Basically this coverage provides that if you are in an accident and the defendant (the at-fault driver) has inadequate insurance coverage limits, say $25,000, but you as the injured person have an insurance policy with a higher coverage limit, say $100,000, then your insurance policy will pay the difference.  In this case example, your company would pay $75,000, in addition to the $25,000 paid by the at-fault driver’s insurance company, assuming that the injuries and liability are sufficient to warrant that much.

The Virginia Farm Bureau v. Williams case, which was decided by the Virginia Supreme Court on June 4, 2009, adds a complicated wrinkle to this analysis.  Suppose in our example the at-fault driver is on his or her cell phone, totally ignores the traffic in front, and smashes into the back of another car causing the driver of that stopped car to suffer numerous broken ribs and broken legs which requires months in the hospital to recover and the medical bills alone exceed $400,000.  Suppose that the at-fault driver has only a $25,000 policy, which is actually the minimum limit that is legal in Virginia.  Suppose the injured person has a policy that covers them up to $100,000 but there are three cars on that policy.  Before Virginia Farm Bureau v. Williams, we thought the law was that the injured person’s insurance carrier would have to pay only another $75,000.  In the Virginia Farm Bureau v. Williams case, the Virginia Supreme Court decided that in some circumstances the injured person’s insurance company might have to cover separately for each car on the policy.  After all, look at the declarations age.  The insurance company with three cars on the policy usually charges three separate premiums for underinsured motorist coverage, so why shouldn’t there be three separate coverages which can be added up or “stacked”?  In this example, the three coverages would total $300,000, by adding up the $100,000 limit for each of the three cars on the policy. After deducting the $25,000 that the at-fault driver’s own company would owe, there would be up to another $275,000 available from the injured person’s own insurance company.  This total of $300,000 would be a far better result that a mere $100,000.

The analysis is quite complicated and the case applies to Virginia insurance contracts only.  Other states have different rules. Lawyers disagree on the circumstances when this kind of stacking is allowed and when it is not.  However, if you are seriously injured by the fault of another driver and have insurance of your own, you owe it to yourself to seek the services of an attorney and ask whether this case might apply to your situation.  In the Virginia Farm Bureau v. Williams case, the injured person was eligible for an additional $550,000 based upon the particular policy language in that policy.

About the Author: Chris Meyer is a Richmond car accident lawyer with the firm Allen, Allen, Allen & Allen.