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Insurance Law

The Right to Stack UM Coverage Can Be Waived

Barry Zalma   By Barry Zalma, Attorney and Consultant

People who insure their cars in Pennsylvania have the right to stack coverages for uninsured motorist ("UM") or underinsured motorist ("UIM") coverages if they insure more than one vehicle with their insurer. The Pennsylvania statutes allow an insured to waive the right to stack coverages and thereby generate a lower premium. In Glenn B. Shipp and Denise A. Shipp v. the Phoenix Insurance Company, 2012 Pa.Super. 167 (Pa.Super. 08/14/2012) a Pennsylvania appellate court was asked to resolve a dispute over the effectiveness of a waiver of stacking after the trial court allowed stacking even though there had been a waiver.

The Phoenix Insurance Company ("Phoenix") appealed the entry of an order granting summary judgment in a declaratory judgment action filed by the administrators of the Estate of Shipp ("the Shipps").


Plaintiff Glenn B. Shipp applied for personal automobile insurance and signed a rejection of stacked underinsured coverage form on September 12, 2002. The form was signed in the presence of his insurance agent. The policy was issued by the Phoenix Insurance Company. Plaintiffs paid less for non-stacked coverage than they would have paid for stacked coverage. The amount of underinsured motorist benefits available under the policy was $100,000.

This insurance policy was renewed every six months and the declaration sheets issued to Plaintiffs showed underinsured motorist benefits in the amount of $100,000 non-stacked. On February 3, 2006, Plaintiffs' minor son, Michael R. Shipp, was severely injured in a motor vehicle accident. He was a passenger of a motor vehicle driven by William R. Flemming, who admitted liability for the accident. Michael died on February 11, 2006 as result of the injuries sustained in the accident.

On the date of the accident, Plaintiffs and their son were insured 2005 Toyota Corolla and the 2004 Toyota Highlander. Both vehicles had collision and comprehensive coverage.

Following the accident and Michael's death, Plaintiffs made a claim to Defendant for the limits of underinsured motorist benefits in the amount of $200,000. This amount is the $100,000 underinsured motorist benefit stacked for two vehicles. Defendant responded by tendering $100,000 for the undisputed underinsured motorist benefit limit, but denied that Plaintiffs were entitled to stacked coverage.

On appeal, Phoenix contends that the entry of summary judgment was in error because Phoenix was not compelled to obtain a second waiver of stacked uninsured/underinsured ("UM/UIM") coverage limits when the Shipps replaced an existing vehicle with a new vehicle under the insurance policy between Phoenix and the Shipps.


This case involves the interpretation of the statute that allows for stacking of uninsured and underinsured benefits and option to waive the limit for each vehicle. When more than one vehicle is insured under one or more policies providing uninsured or underinsured motorist coverage, the stated limit for uninsured or underinsured coverage shall apply separately to each vehicle so insured. Notwithstanding the provisions of the statute, a named insured may waive coverage providing stacking of uninsured or underinsured coverages in which case the limits of coverage available under the policy for an insured shall be the stated limits for the motor vehicle as to which the injured person is an insured.

Car Accident

The wrinkle in the case before the court was the fact that there was no additional vehicle being added to the policy; rather, the new vehicle was a replacement for an existing vehicle. Thus, where the policy went from covering two vehicles to three, the policy continuously covered two vehicles only. The coverage on the replacement vehicle would continue uninterrupted as long as the Shipps give notice to Phoenix. The initial waiver signed by the Shipps, because only two cars were covered, was found to be still valid and bar the stacking of coverage.

The fact that the Shipps' added collision coverage when they bought the Toyota in 2005 does not constitute a purchase of a new policy for the purpose of triggering the need to obtain another waiver as to stacking. The matter of importance in all of these cases is whether a new waiver of stacked coverage is required. Indeed, both before and after the purchase of the 2005 Toyota, the UM/UIM coverage available to the Shipps' remained at all times $200,000 stacked, $100,000 unstacked.

Since no new insurance coverage was purchased under such circumstances, Phoenix would not need to re-obtain a waiver of stacked coverage from the Shipps. Of course, it is possible that under the terms of some hypothetical insurance policy, a replacement vehicle could somehow be interpreted as the acquiring of new coverage; however, under the terms of the policy, it was not. For all these reasons the appellate court found that it was error to permit the recovery of stacked limits.


When auto insurance is purchased every state requires that the insured be provided an option to buy UM or UIM coverage and, in states like Pennsylvania, they also have the right to stack the limits for each vehicle. Such provisions always authorize the insured to save premium by waiving UM/UIM or stacking provisions. The insured in this case waived it and tried imaginative arguments to try to get the insured an additional $100,000.

All insureds should consider the potential effect of a waiver. Good practice would be to carry at least as much UM/UIM coverage to protect yourself that is equal to that bought to protect others you may injure negligently.

Reprinted with Permission from Zalma on Insurance, (c) 2012, Barry Zalma.

Barry Zalma, Esq., CFE, is a California attorney, insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud. Mr. Zalma serves as a consultant and expert, almost equally, for insurers and policyholders. He founded Zalma Insurance Consultants in 2001 and serves as its senior consultant. He recently published the e-books, "Zalma on Insurance;" "Murder and Insurance Don't Mix;" "Heads I Win, Tails You Lose - 2011," "Zalma on Rescission in California," "Zalma on Diminution in Value Damages," "Arson for Profit" and "Zalma on California Claims Regulations," and others that are available at Zalma Books. Mr. Zalma can also be seen on World Risk and Insurance News' web based television program "Who Got Caught".

Mr. Zalma can be contacted at Barry Zalma or, and you can access his free "Zalma on Insurance Fraud" newsletter at Zalma's Insurance Fraud Letter.

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