Babcock Business Advisor
May 4, 2005 - Vol. 2 No. 004

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Injured Party May Collect Two Liability Limits Under One Policy

When an insured owns two vehicles under a single policy and both are involved in an accident, can a injured person recover two liability limits? Or, would that be stacking? Last week, the Louisiana Third Circuit Court of Appeal answered this question. Cooks v. Rental Service Corporation, et al., 04-1646 (La. App. 3 Cir. 4/27/05). Since each car is insured, the court ruled, the terms of the policy must apply equally to each car. Both cars were involved in the accident, thus the insurer must fulfill its obligations under the policy covering each car.

William Lockhart was driving a Toyota truck south on MacArthur Drive in Alexandria while pulling towing a Chevrolet truck. Lockhart owned both vehicles, and both were insured under one policy issued by American National Property and Casualty Company (ANPAC) with liability limits of $10,000. As he was driving, the truck disconnected from the trailer, crossed the median and struck Paul Cooks who was driving north on the same road. Mr. Cooks was killed.

ANPAC admitted coverage and deposited $10,000 plus interest into the registry of the court. The insurer then sought summary judgment asking the court to declare that $10,000 was the only amount available for bodily injury under its policy agreement with Lockhart. The trial court granted a declaratory judgment reasoning that the text of the policy limited ANPAC’s liability to $10,000 in cases where only one person suffered injury.

On appeal, ANPAC argued the Cooks family’s attempt to collect the limits for both cars amounting to stacking, which is prohibited under Louisiana law. (Stacking occurs when an insured person whose damages exceed the amount provided by any one policy attempts to cumulate the coverage amounts provided either by multiple policies or by a single policy that insures more than one vehicle.)

The Third Circuit disagreed, finding stacking did not apply in this instance. Relying upon the case of Boullt v. State Farm Mutual Automobile Insurance Co., 99-942, p. 7 (La. 10/19/99), 752 So.2d 739, 743, the court explained that in order for the issue of stacking to arise, the “individual seeking to stack coverages must in fact be an insured as to the particular loss under more than one policy or a single policy covering multiple vehicles.” Thus, we would advise you that a stacking claim involves the relationship between an insured party and an insurance company. This case involved an injured party and a liable party’s insurance company.

Further, the court disagreed with ANPAC’s interpretation its policy language which expressly limited its liability to $10,000 regardless of the number of vehicles insured in the policy, finding that although Lockhart had both vehicles listed on the declaration paid of one physical document, “the practical effect of covering two cars under one policy document is that each car is separately and completely covered by the terms of the policy. The fact that there is only one physical document does not alter this effect. Thus, there was one policy insuring two vehicles, each for $10,000.”

Two separate vehicles insured under the same policy caused the damage, the court said. The language in the General Provisions means that where there is an accident involving an insured vehicle, the highest limit available under the policy is the cap on total recovery. This language, however, does not limit liability to the amount available for one insured car if two insured cars were involved in the accident. Similarly, the language in the Amendatory Endorsements caps the amount to be paid per person at $10,000, per accident, per policy. In this case, however, there are effectively two policies covering two vehicles. Therefore, the amount to be paid under each policy is $10,000.00.

Thus, the policy became activated as to both insured cars with the Cooks family entitled to recover the limit available for each, based upon a finding of liability vis'-a-vis' each vehicle.

Despite this interpretation, the injured party must still prove the liability of each vehicle to collect under both policies. Here, the court’s ruling seems proper since it was the vehicle being towed which dislodged causing the accident. As the court noted, “ANPAC has not attempted to argue that only one car is responsible for the accident in this case. Certainly, one car without the other could not have caused Mr. Cooks’ death.”

As an aside, we think that the court would find a different result if the facts showed that only the first vehicle caused the accident.

Babcock Law Firm is one of a very select number of firms that are included in Best's Directory of Recommended Insurance Attorneys in the state of Louisiana. We represent insurance and surety companies in nearly every parish in the state. We also assist other insurance defense firms seeking assistance with their complex cases, writs, motions and appeals. For more information, visit www.babcockfirm.com.

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