Lead Opinion
In April 2007, this Court issued its opinion in the above matter, implementing a plain-meaning approach to Section 1738(c) of the Motor Vehicle Financial Responsibility Law (the “MVFRL”). See Sackett v. Nationwide Mut. Ins. Co.,
Nationwide Mutual Insurance Company, which was the appellee, filed an application for reargument. While the application was under consideration, this Court invited the Insurance Commissioner, the cabinet-level official charged with the administration and enforcement of the MVFRL, to file an amicus statement. In response,
In his statement, the Insurance Commissioner offers his respectful disagreement with Sackett I’s central conclusion that that the addition of a new vehicle to an existing multivehicle policy unambiguously constitutes a new purchase of coverаge. The Commissioner observes that the Insurance Department enforces the MVFRL’s requirement that, as a precondition for automobile insurers to issue policies with unstaeked UM/UIM coverage, the carriers must first obtain written waivers from the policyholders. However, the Commissioner explains that, throughout Section 1738’s seventeen-year history, once policies have been put into place, the Department has not treated the addition of a new vehicle, known in the industry as an “add-on,” as a new purchase of coverage. Rather, the Department has deemed this to be an extension of pre-existing coverage. Thus, the Department has not required carriers to issue, or policyholders to execute, serial waivers when vehicles are added to multi-vehicle policies in order to reaffirm the continuation of unstacked UM/UIM coverage.
The Commissioner explains that the mechanism by which vehicles generally are added to existing policies is via “newly acquired vehicle clauses,” which are made practically necessary by the mandate of the MVFRL for financial responsibility as a prerequisite to operation of a motor vehicle, see 75 Pa.C.S. § 1786, and are included universally within automobile insurance policies issued in Pennsylvania. The clause explicitly permits consumers to extend existing coverage, with the same applicable typеs of coverage and limits, to new and/or substitute vehicles, with coverage applying automatically upon acquisition, subject to various conditions, including a requirement of timely subsequent notice to the insurer. According to the Commissioner, this procedure facilitates immediate consumer transactions and affords predictability and certainty in terms of the availability and scope of coverage. The Commissioner argues that Saekett I effectively nullifies the newly-аcquired-vehicle clause in policies and strips policyholders of the associated benefits.
The Commissioner expresses further concern that insurers have relied for seventeen years on its interpretation as developed above, and that the invalidation of thousands of policyholders’ UM/U1M stacking waivers may retrospectively render existing premium rates “inadequate” under various regulatory statutes,
The Sacketts differ substantially with the Insurance Commissioner’s portrayal of Saekett I’s import. According to their brief, there will always be “lag timе” between the purchase of a new vehicle and the issuance of an updated policy and execution
Significantly, the Sacketts agree with the Department that the automatic coverage extending under a newly-acquired-vehicle clause does not constitute a new purchase of coverage. See Appellant’s Brief In Response at 8 (“The Amicus Statement of the Insurance Department is correct in that when a nеw vehicle is purchased under the ‘newly acquired vehicle’ clause there is not a purchase of new coverage in the sense contemplated by Section 1738.”). The Sacketts claim, however, that coverage under such clauses persists only for the duration of the period within which the policyholder is required to provide notice to the insurer. See id. at 5-6 (“The contractual relationship of the parties [during the reporting period] is merely that the insured has agreed to accept and the insurer has agree to afford coverages during the reporting period for this new vehicle equal to the coverage on his existing vehicles in exchange for the luxury of delaying the arrangement for formal coverage at a later date.”). Thus, the Sacketts concede that, during this reporting period, the insured would retain unstacked UM7UIM coverage on the new vehicle if a valid waiver was previously executed in сonnection with the policy. See id. at 6. It is the Sacketts’ position, however, that upon the arrangement for formal coverage during the reporting period, new UM/UIM insurance is purchased on the vehicle, and thus, Section 1738 requires insurers to provide the opportunity to accept or waive stacked UM/ UIM coverage. The Sacketts believe that automatic coverage under a newly-acquired-vehicle clause extends only during the reporting pеriod, and Department’s assumption that such coverage continues throughout the life of the policy represents a fatal fallacy in its argument.
The parties and the Insurance Commissioner pursue several other lines of argument, touching on public policy, further effects of the Sackett I decision on the insurance industry, and points that were ably developed by Justice Castille in his dissenting opinion upon our initial review. Our interest in reargument, however, is focused on the contention that Sackett I can be read as negating the effect of after-acquired-vehicle clauses of automobile insurance policies, particularly since the mechanics of such provisions were not meaningfully developed in the initial proceedings in this case, and as we are aware that our initial decision has a broader effect than merely resolving the dispute between the present parties.
It remains to consider the disagreement concerning the duration of the automatic coverage under an after-acquired-vehicle provision. Decisions from other jurisdictions suggest that both varieties of after-acquired-vehicle clauses (those that afford closed-term coverage solely during the reporting period and those that contemplate continuing сoverage) are utilized in automobile insurance policies. For example, in Bird v. State Farm Mutual Automobile Insurance Company,
We hold that the extension of coverage under an after-acquired-vehicle provision to a vehicle added to a preexisting multi-vehicle policy is not a new purchase of coverage for purposes of Section 1738(c), and thus, does not trigger an obligation on the part of the insurer to obtain new or supplemental UM/UIM stacking waivers.
The opinion in Sackett I,
Notes
. Specifically, the Commissioner references the Motor Vehicle Insurance Rate Review Procedures Act, 75 Pa.C.S. §§ 2001-2009, and the Casualty and Surety Rаte Regulatory Act, 40 P.S. §§ 1181-1199.
. The Sacketts acknowledge this Court’s decision in Craley v. State Farm Fire & Cas. Co.,
. In response to Justice Castille’s assertion that our approach unduly narrows the scope of reargument, neither Nationwide nor the Insurance Commissioner raises all of the contentions which Justice Castille pursued in his Sackett I dissent. For example, Section 1791 of the Vehicle Code is not raised or discussed by Nationwide or the Insurance Commissioner in their reargument papers. Therefore, at least one of the Dissent’s main points is plainly outside the appropriate scope of the reargument proceedings.
. At a minimum, the substantial context furnished by the Insurance Commissioner reveals an ambiguity in Section 1738(c), which permits the application of principles of statutory construсtion, including the precept that the intention of the General Assembly may be ascertained by considering, among other matters, the administrative interpretation of the statute. See 1 Pa.C.S. § 1921(c)(8). Given the Insurance Department's legislatively prescribed role in the administration and enforcement of the MVFRL, its substantial expertise, and its possession of the tools necessaiy to verily the impact of its interpretations upon the remedial purposes of the MVFRL, see, e.g., 75 Pa.C.S. §§ 1799.5, 1799.6, we afford substantial deference to its interpretation in the present instance insofar as it is consistent with actual policy terms as further discussed below. We also note that, at least where the named insured remains unchanged, the execution of the initial waiver by the named insured provides actual notice that the entitlement to stack benefits has been foregone, thereby satisfying the objective of Section 1738(c).
. Our present holding is confined to the scenario involving the addition of a vehicle to a multi-vehicle policy. We do not resolve the Sacketts’ arguments concerning situations involving additions to single-vehicle policies, which they contend are affected by factors other than the proper construction of the word “purchase” within Section 1738, including the Legislature’s concomitant use of the modifying phrase “for more than one vehicle,” 75 Pa.C.S. § 1738(c), as well as the intraversus inter-policy distinction regarding stacking. See supra note 2.
. The Sacketts attached to their complaint copies of the declarations page, the initial UM/UIM waivers, and the UIM provisions of their policy with Nationwide. The general provisions of the policy, including the after-acquired-vehicle clause or clauses and associated definitions, were not invoked by Nationwide in its answer to the complaint and do not otherwise appear in the record. Since we cannot determine the duration of coverage extended under the particular after-acquired-vehicle clause pertaining to this case, we find insufficient basis on reargument to disturb the result obtaining under this Court's initial decision.
While Justice Castille indicates that there is no cause for concern over what the pertinent after-acquired vehicle clause actually says, we reiterate that the Insurance Commissioner's explanation concerning why there is no new purchase оf coverage upon the addition of a new vehicle to an existing policy hinges on the mechanics of the clause. Thus, unlike Justice Castille, we do not regard evidence and argument concerning the operation of an after-acquired vehicle as "strong, additional support'' for his previous dissenting opinion; rather, we view it as necessary support which previously was lacking (and remains absent in material part).
Dissenting Opinion
dissenting.
I respectfully dissent.
I concur in the Majority’s Opinion on Reargument to the extent that, going forward, it minimizes the damage caused by Sackett v. Nationwide Mut. Ins. Co.,
The Majority states that it is merely “clarifying” the holding in Sackett I. But the linchpin of the analysis in Sackett I, and a primary point of dispute in the competing opinions, concerned whether the addition of a new vehicle was a new “purchase” of insurance. The four-Justice Sackett I majority said “yes,” Justice Eakin and I said “no” in dissent, and today’s Mаjority also appears to say “no.” This does more than “clarify” Sackett I.
The submissions on reargument provide strong, additional support for my dissenting position in Sackett I. Accordingly, with respect to the Court’s failure to go further and recall the mandate in Sackett I, I continue to find myself in respectful dissent. The Majority states that the Court’s interest in reargument is limited, i.e., that it is focused only on the contention that Sackett I can be read as negating the effect of after-acquired vehicle clauses. Maj. Op. at 15-18,
Today’s Court Majority does not engage the issue as posed in Sackett I. Proceeding from its narrower focus, the Majority does
I prefer the simpler route of recalling the automotive lemon that was Sackett I. Because I respectfully disagree with the narrow scope of review the Majority exercises on reargument, I continue to believe that the plain language of the MVFRL dictates the result urged in my original dissent: that no new waiver is required when a vehicle is added to an existing multi-vehicle poliсy, and the terms of the policy in effect at the time the additional vehicle is added remain the terms of the policy. Section 1738 contains no language requiring an additional waiver upon the purchase of an additional vehicle. 75 Pa.C.S. § 1738. Further, Section 1791 of the MVFRL specifically provides that an opportunity to reject coverage must be given “at the time of application for original coverage, and no other notice or rejection shall be required.... ” 75 Pa.C.S. § 1791 (emphasis supplied). In my view, this appeal remains one involving a simple issue of statutory construction that is easily resolved by resort to the MVFRL, specifically Sections 1738 and 1791. The plain language of those two Sections, as well as nearly two decades of Insurance Commissioner-approved industry practice, compels a conclusion that no new waiver of stacking is required when an insured adds an additional vehicle to an existing multi-vehicle policy. I would not alter the issue on appeal and make the result depend upon the language of an after-acquired vehicle provision.
I respectfully dissent.