INSURANCE-FINANCIAL RESPONSIBILITY LAW-UNDERINSURANCE-STACKING-SINGLE VEHICLE-FRAUD

Hudson v. AAA Ins. Co., 2023 U.S. Dist. LEXIS 205151, 2023 WL 7928679 (E.D. Pa. November 16, 2023) (McHugh, U.S. D.J.) Plaintiff was struck by a motor vehicle while a pedestrian in a crosswalk. Plaintiff settled with the tortfeasor and sought underinsurance from her insurance carrier, AAA Insurance Company. She was insured with a single vehicle. In asserting her underinsurance claim, because she had elected “stacked” coverage, she contended that her limits of coverage should be doubled. Her insurer has rejected the claim. She sued for breach of contract and common law fraud. Her fraud is based on the premise that she has paid a premium for illusory coverage, because she contends that there is no case where a carrier could be responsible to pay stacked benefits under a single vehicle policy. While that is true, that is the system, said the court, and therefore there is no fraud. Insurers are not only permitted, but they are required to offer stacked coverage in Pennsylvania, even to single-vehicle policyholders. The assessment of premiums for stacked coverage of single-vehicle policies has been endorsed by the Pennsylvania Insurance Department. This issue was addressed by Pennsylvania courts in the case of In re Insurance Stacking Litigation, 2000 Pa. Super. 170, 754 A.2d 702 (Pa. Super. 2000).