October 21, 2016
In a new opinion, the Kentucky Supreme Court addresses – and allows auto insurers to avoid – stacking of underinsured motorist coverage (UIM). Philadelphia Indemnity Insurance Company, Inc. v. Tryon, 2014-SC-354. More specifically, the Supreme Court held that “so long as the plain meaning of the policy clearly and unambiguously excludes” UIM coverage for “a motor vehicle owned by the insured but not scheduled for coverage under the owner’s policy,” Kentucky public policy does not prohibit the exclusion. This is a departure from Kentucky case law regarding uninsured motorist (UM) benefits, Chaffin v. Kentucky Farm Bureau Insurance Co., 789 S.W.2d 754 (Ky. 1990), which provides that public policy prohibits anti-stacking provisions for UM coverage. Justice Wright authored a lengthy dissent, explaining the difficulties that a “reasonably prudent person” faces in understanding these types of technical insurance exclusions.