Opinion ID: 1175961
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Heading: Validity of Anti-Stacking Clause

Text: We first address the validity of the anti-stacking clause in Ms. Greengo's PEMCO policy. Resolution of this issue is necessary regardless of the number of accidents because the clause limits on a per-accident basis. Ms. Greengo argues that such a per-accident limitation is invalid because (1) it is not authorized by the UIM statute and (2) it undermines the public policy underlying our UIM statute. We have recognized the Legislature intended broad UIM coverage when it enacted our UIM statute. Mid-Century Ins. Co. v. Henault, 128 Wash.2d 207, 212, 905 P.2d 379, 59 A.L.R.5th 789 (1995) (citing Clements v. Travelers Indem. Co., 121 Wash.2d 243, 251, 850 P.2d 1298 (1993)). This court has averred it will liberally construe the statute to uphold this legislative mandate and will scrutinize exclusionary clauses to ensure the mandate for broad coverage is neither whittled away nor eroded. Mid-Century, 128 Wash.2d at 212, 905 P.2d 379 (quoting Clements, 121 Wash.2d at 251, 850 P.2d 1298). In determining the validity of a UIM exclusionary clause the court applies a two-part test which asks: Does the proposed exclusion conflict with the express language of the UIM statute? If not, is the exclusion contrary to the UIM statute's declared public policy? Bohme v. PEMCO Mut. Ins. Co ., 127 Wash.2d 409, 412, 899 P.2d 787 (1995) (citing Kyrkos v. State Farm Mut. Auto. Ins. Co., 121 Wash.2d 669, 674, 852 P.2d 1078 (1993)). A UIM exclusionary clause will be upheld only if we can answer both inquiries in the negative. Bohme, 127 Wash.2d at 412, 899 P.2d 787. Turning to the first inquiry, we ask whether the exclusion violates the express language of the UIM statute. Ms. Greengo does not reference any express language of the UIM statute which might be violated by the exclusion at issue. After independently reviewing the statute, we are satisfied the exclusion at issue does not violate the express statutory text. On the contrary, we find the UIM statute explicitly permits anti-stacking clauses of the type at issue here. The UIM statute authorizes insurers to prohibit external stacking, which is the practice of adding together different policy coverages to increase available coverage limits: The policy may provide that if an injured person has other similar insurance available to him under other policies, the total limits of liability of all coverages shall not exceed the higher of the applicable limits of the respective coverages. RCW 48.22.030(6). In the UIM context, [t]he term `similar insurance' is appropriately understood to be other underinsured motorist insurance coverages. 3 Alan I. Widiss, Uninsured and Underinsured Motorist Insurance § 40.1, at 238 (2d ed.1995). Therefore, the exclusion at issue is statutorily authorized by RCW 48.22.030(6) to the extent it limits the total UIM liability per accident to the single highest UIM liability limit when an insured is covered under more than one UIM policy. Ms. Greengo argues that there is no other similar insurance available to her (RCW 48.22.030(6)), reasoning that even if there is but one accident, her UIM recovery to date represents compensation for only one of the two underinsured motorists. However, RCW 48.22.030(5) unambiguously authorizes insurers to set liability limits on a per accident basis regardless of the number of vehicles involved in the accident: The limit of liability under the policy coverage may be defined as the maximum limits of liability for all damages resulting from any one accident regardless of the number of covered persons, claims made, or vehicles or premiums shown on the policy, or premiums paid, or vehicles involved in an accident. RCW 48.22.030(5). Ms. Greengo suggests this subsection authorizes per-accident limitations only in the internal stacking context, which is the adding together of various coverages within a single policy in order to increase coverage limits. Although we have described RCW 48.22.030(5) as authorizing internal anti-stacking limitations, see Britton v. Safeco Ins. Co., 104 Wash.2d 518, 532, 707 P.2d 125 (1985), we have never held its authorization is limited only to this context [1] and have noted subsections (5) and (6) may be read together. See Safeco Corp. v. Kuhlman, 47 Wash.App. 662, 664, 737 P.2d 274 (1987) (RCW 48.22.030(5) and (6) allow insurers now to include provisions limiting coverage for liability for one accident and preventing an insured person from stacking coverages for multiple automobile policies;....) (emphasis added), review denied, 108 Wash.2d 1037 (1987). In any event, lack of express statutory authorization for the precise exclusion is not the focus of our inquiry. Instead we look to whether such exclusion conflicts with the statute. [2] We conclude the exclusion does not conflict with the statute and, in fact, view RCW 48.22.030(5) and (6) as permitting the same. As the Court of Appeals pointed out, external anti-stacking limitations virtually identical to that in the present case have been upheld as consistent with our UIM statute. Greengo, 81 Wash.App. at 485, 914 P.2d 786 (citing Doyle v. State Farm Ins. Co., 61 Wash.App. 640, 642, 811 P.2d 968, review denied, 118 Wash.2d 1005, 822 P.2d 288 (1991); Federated Am. Ins. Co. v. Erickson, 67 Wash.App. 670, 673-74, 838 P.2d 693 (1992); Furlong v. Farmers Ins. Co., 44 Wash.App. 458, 460-61, 721 P.2d 1010, review denied, 107 Wash.2d 1017 (1986)). Next we inquire whether the exclusion at issue violates the public policy underlying the UIM statute. Ms. Greengo argues the exclusion is void as against public policy because it would deny her UIM benefits before she is fully compensated, and it would deny UIM benefits to a named insured who has paid a separate premium. We begin by addressing the nature of UIM and its underlying public policy. Originally we declared the public policy underlying the predecessor uninsured motorist statute to be full compensation. See, e.g., Cammel v. State Farm Mut. Auto. Ins. Co., 86 Wash.2d 264, 543 P.2d 634 (1975), overruled by statute as stated in Millers Cas. Ins. Co. v. Briggs, 100 Wash.2d 1, 4, 665 P.2d 891 (1983). However, in 1980 the Legislature overruled Cammel by statutory amendment adding underinsured motorist coverage. Laws of 1980, ch. 117, § 1. In so doing the policy shifted from full compensation to provision of a second layer of floating protection. Indeed, the newly added RCW 48.22.030(5) and (6), which allow anti-stacking to take effect before full compensation is effectuated, would clearly be at odds with an alleged policy of providing full compensation. Since the 1980 amendments we have most consistently adhered to the statement that the policy underlying UIM is the creation of a second layer of floating protection, not full compensation. See, e.g., Millers Cas. Ins. Co. v. Briggs, 100 Wash.2d 1, 8, 665 P.2d 891 (1983); Elovich v. Nationwide Ins. Co., 104 Wash.2d 543, 549, 707 P.2d 1319 (1985); Blackburn v. Safeco Ins. Co., 115 Wash.2d 82, 87, 794 P.2d 1259 (1990). Any doubts on the issue were put to rest in Tissell v. Liberty Mut. Ins. Co., 115 Wash.2d 107, 795 P.2d 126 (1990). While the two-judge lead opinion stated full compensation to be the policy underlying our UIM statute, a seven-judge concurrence expressly disagreed and held the underlying policy is creation of a second floating layer of compensation: [T]he [lead opinion's] fixation on the UIM statute's public policy of full compensation is misplaced.... The [lead] opinion improperly translates the statutory purpose of assuring a dual layer of recovery into an overriding policy of ensuring full compensation for accident victims. Majority, at 108, 111, 112 [795 P.2d at 126, 127, 128]. Our prior cases dispute this analysis.... It is the UIM statute's policy to assure a second floating layer of compensation. Tissell, 115 Wash.2d at 120, 795 P.2d 126 (Callow, C.J., concurring) (citing Elovich, 104 Wash.2d at 549-50, 707 P.2d 1319). We recognize the two-judge lead opinion in Tissell has been cited for the proposition that full compensation remains the rule. [3] However, we take this opportunity to stress that the actual rule is stated in the Tissell concurrence. See, e.g., Bohme v. PEMCO Mut. Ins. Co., 127 Wash.2d 409, 415, 899 P.2d 787 (1995) (`UIM coverage is a second layer of coverage for the injured party'. In Tissell, a majority of the court was critical of an opinion that translated the purpose of UIM coverage from assuring a dual layer of recovery into ensuring full compensation for accident victims. (citation omitted)) (quoting Blackburn v. Safeco Ins. Co., 115 Wash.2d 82, 87, 794 P.2d 1259 (1990)). Thus, the public policy underlying UIM is creation of a second layer of floating protection for the insured. In the present case the per-accident, external anti-stacking clause does not violate this policy because the anti-stacking clause applies only after the insured has received a full UIM recovery, thus satisfying the requirement that the insured receive a second layer of protection. The clause at issue acts only to prohibit a third layer of recovery, and the UIM statute does not go that far. Accordingly, we find the anti-stacking clause in the PEMCO policy before us does not violate public policy underlying the UIM statute. Ms. Greengo also argues her status as a named insured who paid a separate premium for her UIM coverage effects such outcome. Ms. Greengo relies on Tissell v. Liberty Mut. Ins. Co., 115 Wash.2d 107, 795 P.2d 126 (1990) for the proposition that exclusions which deny UIM benefits to a named insured who has paid a separate premium are void as against public policy. Yet, status as a named insured was not the dispositive criterion for the court's decision. At issue in Tissell was the validity of an internal anti-stacking provision which excluded from the definition of underinsured vehicle any vehicle to which liability coverage under the policy applied. The plaintiff was injured while riding as a passenger in the family car and subsequently died. Through her guardian, the plaintiff made a claim under both the liability and UIM portions of her policy. The insurer paid the liability limits but denied UIM coverage based on its exclusion. This same exclusion was upheld as applied to third-party insured passengers in Millers Cas. Ins. Co. v. Briggs, 100 Wash.2d 1, 665 P.2d 891 (1983) and Blackburn v. Safeco Ins. Co., 115 Wash.2d 82, 794 P.2d 1259 (1990). The Briggs and Blackburn courts reasoned that the passengers had not paid a premium for the coverage, that honoring the exclusion would not leave them uncompensated because they could collect under the tortfeasor's liability policy, and that they could have purchased their own UIM coverage. Briggs, 100 Wash.2d at 7, 665 P.2d 891; Blackburn, 115 Wash.2d at 91, 794 P.2d 1259. The same exclusion, however, was held invalid in Tissell. The majority distinguished the validity of the exclusion as applied to a third-party insured on the basis that the plaintiff, as a named insured, had paid a separate premium, had not been compensated under both the liability and UIM provisions of the tortfeasor's coverage, and had no other UIM coverage. Tissell, 115 Wash.2d at 119, 795 P.2d 126 (Callow, C.J., concurring). Therefore, the plaintiff prevailed, not because she was a named insured, but because her status as named insured would otherwise have deprived her of her only source of UIM recovery. Thus, the dispositive criterion in Tissell was whether the policy exclusion would operate to foreclose any possibility of UIM recovery. By foreclosing the plaintiff's only source of UIM benefits, the exclusion would have undermined the public policy of providing a second layer of recovery. Ms. Greengo's status as a named insured does not alter our conclusion that the anti-stacking provision in question does not violate the public policy underlying the UIM statute. Therefore, we must repair to the fundamental rule that all parties to a contract are held to language of the contractand insurance contracts are no exception. We find the exclusion at issue is valid on a per-accident basis because it does not conflict with the text or policy of the UIM statute. However, we must still address whether there was one accident or two. If there was but one accident then the exclusionary clause limits Ms. Greengo's UIM recovery to the $100,000 she recovered from Unigard. If, however, there were two accidents, the exclusionary clause limits Ms. Greengo from collecting UIM benefits from PEMCO for the first accident but not for the second.