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January 14th, 2025
In Higgins v. Nationwide Affinity Ins. Co. of America, 2024 PA Super 312 (December 26, 2024), the Pennsylvania Superior Court affirmed the trial court’s dismissal of a class action claim seeking return of insurance premiums for stacking benefits that were allegedly not available to single-vehicle policy holders.
Higgins owned one (1) vehicle with no other drivers, vehicles, or policies in her household. Higgins purchased a Nationwide Affinity Insurance Company of America (“Nationwide”) auto-insurance policy (“policy”), including stacked uninsured motorist/underinsured motorist (“UM/UIM”) coverages.[1] Higgins, on behalf of a class of similarly situated persons sought declaratory relief, return of premiums, injunctive relief, unjust enrichment, fraud, and violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), claiming Nationwide Insurance (“Nationwide”) knowingly sold Higgins stacked coverage benefits that did not exist. More specifically, Higgins alleged that there was no stacking coverage benefit under a single-vehicle policy where there are no other policies in the household.
To state a claim under Pennsylvania’s UTPCPL, a plaintiff must allege facts from which the court can plausibly infer: (1) deceptive conduct or representations by the defendant, and (2) justifiable reliance by the plaintiff on the defendant’s deceptive conduct that caused the plaintiffs harm. See Jones v. Geico Choice Insurance Company, 617 F.Supp.3d 275, 288 (E.D. Pa. 2022). Deceptive conduct is viewed through the eyes of the “reasonable consumer.” See Landau v. Viridian Energy PA LLC, 223 F.Supp.3d 401, 417 (E.D. Pa. 2016).
Section 1738(a) of the Motor Vehicle Financial Responsibility Law (“MVFRL”) requires insurers to provide stacked UM and UIM coverage as the default coverage in Pennsylvania. Paldolf v. United Services Automobile Assoc., 2022 WL 16951954, at *3 (W.D. Pa., 10/27/22), Two (2) types of stacking exist under the MVFRL, i.e., intra-policy and inter-policy. Intra-policy stacking of UM/UIM benefits refers to the multiplication of the limits of UM/UIM coverage under a single insurance policy by the number of vehicles insured by that policy. Inter-policy stacking involves adding together the coverages for vehicles insured under separate policies of insurance. If a named insured chooses to waive stacked UM/UIM coverage, the MVFRL requires that the insured’s premiums be reduced to reflect the different cost of such coverage. See 75 Pa.C.S.A. § 1738(c).
Higgins was insured under only one vehicle; therefore, she argued there was no intra-policy stacking coverage benefit. She also argued that since there were no other policies in her household there was no inter-policy stacking coverage benefit. Thus, Higgins claimed she was wrongly charged additional premiums for stacking when that coverage did not provide her with a benefit.
However, the trial court determined a single-vehicle policy holder may confer a benefit from stacking UM/UIM coverage benefits under several circumstances. For instance, a single-vehicle policy holder may confer a benefit from stacking UM/UIM coverage where the individual is injured in a vehicle other than his own insured vehicle and is an insured under the non-owned vehicle’s policy, which also has uninsured motorist coverage.
Pennsylvania law does not “require an insurer to explain every permutation possible from an insured’s choice of coverage.” Berardi v. USAA Gen. Indemnity Company, 2023 WL 4418219 (3d Cir. 7/10/23) (citing Kilmore v. Erie Ins. Co., 595 A.2d 623, 626-27 (Pa. Super. 1991)). Instead, insureds have the “obligation to question [the] insurer at the time the insurance contract is entered into as to the type of coverage desired and the ramifications arising therefrom,” and to determine what coverage will best serve their needs. Id. at 627; see also Wisniski v. Brown & Brown Ins. Co., 906 A.2d 571, 579 n. 6 (Pa. Super. 2006) (stating that insureds have “the duty to inquire about the scope of insurance coverage”).
Because stacked UM/UIM coverage can confer a benefit in certain circumstances, the trial court determined and the Superior Court affirmed that Higgins was not entitled to declaratory relief, return of premiums, or injunctive relief. The Court also concluded Higgins had the choice to waive stacking coverage if she believed potential coverage scenarios would be inapplicable to her.
In addition, the trial court concluded Higgins did not state a claim for unjust enrichment because she entered a binding contract with Nationwide and a claim for unjust enrichment cannot be made when the parties entered a binding contract. See Wilson Area School Dist. v. Skepton, 895 A.2d 1250, 1254 (Pa. 2006) (“the doctrine of unjust enrichment is inapplicable when the relationship between the parties is founded upon a written agreement or express contract”).
Finally, the trial court also found Higgins’s fraud and UTPCPL claims mischaracterized Generette v. Donegal Mut. Ins. Co., 957 A.2d 1180 (Pa. 2008), and was based on a misconception that stacked UM/UIM coverage provided no benefits to her.[2] The trial court explained Nationwide was required by the MVFRL to provide stacked coverage benefits absent an express waiver from Higgins, and Nationwide did not deceive Higgins because there are benefits to stacking UM/UIM coverage. Accordingly, the trial court concluded Higgins failed to state a claim for fraud and a violation of UTPCPL.
The opinion in Higgins v. Nationwide Affinity Ins. Co. of America, 2024 PA Super 312 (December 26, 2024) can be accessed here.
[1] UM/UIM coverage allows an individual to recover from a third party that has either no auto insurance or has insufficient auto insurance, which does not fully cover an injured victim. “Stacking” coverage benefits allow an individual to combine coverage limits on a vehicle to increase the potential recovery.
[2] Stacking applies only to ‘insureds’ as provided in the MVFRL’s definition section, 75 Pa.C.S.A. § 1702, which does not include guest passengers.” Generette, 957 A.2d at 1190. The decision in Generette changed the law by holding [that] waiver of stacked UIM coverage only applied to policies between statutorily defined insureds. Jones, 617 F.Supp.3d at 283.
