Eighth Circuit Affirms Decision Applying Policies’ Anti-Stacking Provisions
February 16, 2016 |The U.S. Court of Appeals for the Eighth Circuit, affirming a decision by the U.S. District Court for the Western District of Missouri, has enforced the anti-stacking provisions in two insurance policies issued by one insurance company.
The Case
Thomas Campbell was attempting to remove a tree from property being developed for a residential subdivision. The tree fell on John Gohagan. Gohagan and his wife sued Campbell.
The parties later settled. The Cincinnati Insurance Company, which had issued a business owners package (“BOP”) and a commercial general liability (“CGL”) policy to Campbell, paid the $1,000,000 per-occurrence limit under the CGL policy.
The Gohagans then sued Cincinnati, contending that the BOP policy, which also had a $1,000,000 per-occurrence limit, provided additional coverage.
Cincinnati contended that the BOP and CGL policies’ anti-stacking provisions limited coverage to the $1,000,000 it already paid under the CGL policy.
The district court found that the language of the BOP and CGL policies prohibited the stacking of coverage when both policies covered the same injury. It ruled that the policies limited the maximum coverage for any one occurrence to the per-occurrence limit of $1,000,000.
The Gohagans appealed, arguing that the anti-stacking provisions of the BOP and CGL policies were ambiguous, particularly with respect to the meaning of “aggregate maximum limit of insurance.”
The Eighth Circuit’s Decision
The Eighth Circuit affirmed.
In its decision, the circuit court found that the policies’ anti-stacking provisions were “unambiguous.”
The Eighth Circuit reasoned that the tree-falling incident that allegedly resulted in Gohagan’s injury was the “occurrence” and that both policies had a per-occurrence limit of $1,000,000. It added that the policies both provided that the “aggregate maximum limit of insurance” under all policies issued by Cincinnati could “not exceed the highest applicable limit of insurance under any one policy.”
The circuit court explained that the “highest applicable limit of insurance” under either policy was equal to the per-occurrence limit. Thus, it found, the aggregate maximum limit of insurance under both policies combined could not exceed the per-occurrence limit under either policy – in this case, $1,000,000.
The Eighth Circuit rejected the Gohagans’ argument that the policies’ “Other Insurance” clauses provided primary coverage under each policy that was impermissibly limited by their anti-stacking provisions. The circuit court ruled that the “Other Insurance” provisions applied when policies covering the same injury were issued by Cincinnati and another insurance company, not when two policies were issued by Cincinnati.
Therefore, the Eighth Circuit concluded that the Gohagans had received the full amount of coverage owed to them under the BOP and CGL policies when Cincinnati had paid them $1,000,000 pursuant to the CGL policy.
The case is Gohagan v. Cincinnati Ins. Co., No. 14-3454 (8th Cir. Jan. 6, 2016).
