Oregon Court of Appeals Rules that Anti-Stacking Clause Bars UIM Coverage for Parents’ Damages

By: Sean W. Carney

Fall 2007

In Heffner v. Farmers Ins. Co., 213 Or App 289, 162 P3d 277 (2007), the Oregon Court of Appeals upheld an anti-stacking clause that limited the total amount of underinsured motorist (UIM) coverage, available under multiple policies issued by the same insurance group, to "the limits provided by the single policy with the highest limits of liability."

Accordingly, there was no coverage for medical expenses the insureds paid on behalf of their daughter, because the insurer already agreed to pay the daughter the highest limit of UIM coverage under any of its three policies to cover her noneconomic damages.

The same insurance group issued the insureds three automobile policies, one for each of their three vehicles. Each policy provided UIM coverage up to $100,000 for any person, in any one occurrence. Each policy also provided that the UIM coverage was excess over other collectible insurance, and applied only in the amount by which its limit exceeded the sum of the limits of all other collectible insurance. Further, each policy provided that, if any other applicable insurance was issued by the same insurer or insurer group, the total amount payable under all those policies could not exceed "the limits provided by the single policy with the highest limits of liability."

The insureds’ daughter was injured in a car accident that did not involve any of the insureds’ vehicles. The driver of the other vehicle was underinsured. The insurers agreed to provide the daughter $100,000 in UIM coverage for her noneconomic damages, but denied coverage for the $50,000 in medical expenses that the insureds paid for her injuries. The insurers contended that UIM coverage was exhausted under their policies, while the insureds claimed that they were entitled to recover a total of $50,000 from the other two policies. The trial court agreed with the insurers and entered judgment in their favor.

The Court of Appeals held that the anti-stacking clause found in each policy was enforceable and barred UIM coverage for the $50,000 in medical expenses. The court reasoned that the clause was no less favorable to the insureds than the UIM model provisions in ORS § 742.504(9)(b) (2003). Consistent with that statute, the anti-stacking clause limited total UIM coverage to the highest coverage limit under any single policy among multiple policies ($100,000).

Moreover, the statute does not require multiple UIM insurers to prorate their coverage. Finally, the insureds were not entitled to an additional $100,000 in UIM coverage as separate insureds, because their claim for their daughter’s medical expenses arose out of the same bodily injury as the daughter’s claim.