Georgia Supreme Court Blocks ‘Stacking’ of Auto Insurance Policies

The Georgia Supreme Court has ruled that injured motorists are not entitled to maximize their insurance coverage by combining commercial auto insurance policies on several vehicles to cover one accident, a tactic known as stacking.

The state’s high court reversed a lower court decision in an automobile insurance case that involved State Sen. Cecil Staton and State Farm Insurance.

In a 5-to-2 decision written by Justice Hugh P. Thompson, the state’s high court concluded that the Court of Appeals had erred in 2008 when it ruled that Staton was entitled to stack the uninsured motorist coverage from his employer’s insurance policies, which covered vehicles that were not involved in the car accident in which he was injured.

In 2003, Staton was severely injured in an automobile collision. The vehicle he was driving was owned by Smyth & Helwys Publishing, Inc. and insured by State Farm. Staton was an officer and majority shareholder in the publishing firm. The policy identified the “named insured” as the “first person named” on the declarations page. Smyth & Helwys was the first and only name listed on that page.

Smyth & Helwys owned two other vehicles which were insured separately by State Farm, but which were not involved in the collision. These policies also identified Smyth & Helwys, and only Smyth & Helwys, as the named insured on the declarations pages.

There was $100,000 in uninsured motorist (UM) coverage on each policy. This UM coverage protects policyholders from drivers who are uninsured or underinsured . Staton wanted to stack the three policies to provide UM coverage totaling $300,000. State Farm opposed this, arguing that Staton was not the named insured on any of the policies and that, therefore, he could seek UM coverage ($100,000) on the policy covering only the vehicle he was driving at the time of the collision but could not access the coverage on the other two polciies.
The trial court sided with the insurer and held the total available to Staton was $100,000 because he personally was not the “named insured” on any of the policies. Staton appealed.

But the Court of Appeals later sided with Staton and reversed, holding that the term “named insured” in State Farm’s policies was ambiguous for UM purposes because the “named insured” was defined as “the first person named in the declarations” while Smyth & Helwys, the corporate entity named as insured on the declarations page, was not a person, which was elsewhere defined as a “human being.”

The Court of Appeals construed the term “named insured” as including Staton because he was the “‘first person named in the declarations’ and found that the evidence demonstrated that he had a reasonable expectation that the policies would be stacked. The Court of Appeals also concluded that Staton could stack the policies for UM purposes because he was the named insured on each policy.

In its Oct. 19 decision overturning the appeals court, the Supreme Court said the “named insured” term and the policies were not ambiguous as the appeals court had maintained and said it was clear that Smyth and Helwys was the only named insured.

“In spite of the fact that only Smyth and Helwys is named as the insured, the Court of Appeals determined that the identity of the named insured was ambiguous because the policy defined a person as a ‘human being,’ and Smyth and Helwys, a corporation, is not a human being. We cannot accept this analysis,” Justice Thompson wrote in the high court’s rebuke.

“[T]he policies plainly state that the named insured is the first person named on the declarations page. Only the name Smyth and Helwys appears on that page. The plain and ordinary meaning is readily apparent — Smyth and Helwys is the named insured. To the extent that the pre-printed portion of the policies — which define a person as a human being — are in conflict with the written portion, i.e., the name appearing on the declarations, the written portion must prevail,” the decision states.