Ore. Supreme Ct. Voids State Farm ‘Anti-Stacking’ Uninsured Motorist Policy Limit

A provision in State Farm auto policies that limits payouts for uninsured motorist claims to the maximum amount allowed by a single policy cannot be enforced because it does not comply with state law, the Oregon Supreme Court ruled on Friday.

The high court’s unanimous en banc decision answered a certified question asked by the U.S. District Court in Oregon to resolve four lawsuits filed against State Farm by accident victims. Each of the plaintiffs was covered by multiple insurance policies, but State Farm argued that an “antistacking” provision in each of the policies limited its liability to the amount allowed by the single policy with the highest limit.

The Supreme Court said amendments to the uninsured motorist statute adopted by the state legislature in 2015 specifically disallow such “other coverage” limits. Oregon Revised Statute 742.504 requires every auto insurance policy to include uninsured motorist benefits according to a specific formula and prohibits carriers policy language that provides terms that are less favorable to the insured, the court said.

“Accordingly, State Farm’s ‘other coverage’ limitation is unenforcable,” the opinion says.

Travis Batten, Cesar Rivera and Lori Chisholm were each injured in separate crashes. John Wesley Counts was killed when he was struck by a vehicle while walking.

Batten was covered by three State Farm policies, each with a limit of $250,000. Counts was covered under two State Farm policies with the same limit. Chisholm and Rivera were covered under three State Farm policies, each with a $100,000 limit.

Separate lawsuits were filed on behalf of each victim after State Farm refused to pay more than a single policy limit: $250,000 for Batten and Counts; $100,000 for Chisholm and Rivera. Batten’s complaint alleges damages of almost $5 million. Counts’ estate is seeking more than $500,000 in damages, Chisholm more than $3 million and Rivera more than $600,000.

The U.S. District Court consolidated the lawsuits and asked the Supreme Court to settle a murky area of Oregon insurance law.

State Farm argued that the language of the statute requires carriers to provide coverage up to the amount allowed “under the terms of the policy.” Since each of the policies in question included the same language limiting payouts from “other coverage,” the provision complied with the statute, the carrier said.

The Supreme Court said that argument would require it to ignore the fact that the legislature required “every policy” to provide coverage up to minimum limits without including language to allow limits to that coverage. There would also be no reason to state in the statute that coverage must be “no less favorable in any respect to the insured or beneficiary than if (those) provisions were set forth in the policy,” the opinion says.

The high court also rejected an argument that a separate statute, ORS 742.506, allows the other coverage limit because it states that the “terms of the policy shall control” when multiple carriers who are jointly liable for an accident allocate responsibility. The court said that would require it to accept that the “comprehensive model coverage in ORS 742.504 is not actually comprehensive.”

“We cannot accept that conclusion,” the decision says.

Attorneys for the plaintiffs and State Farm could not be reached for comment on Friday.