Case Review - Ambiguity in Insurance Policies
In Williams v. Silvola the appellate court considered whether Missouri or Kansas law would apply to stacking of insurance policies. The plaintiff, Jaynes, was a resident of Kansas and had purchased seven automobile insurance policies from Farmers Insurance Co. and Mid-Century Insurance Co. (collectively called "Farmers") in Kansas, which prohibits the stacking of policies. While driving her sister's vehicle in Missouri, Jaynes was rear-ended by Silvola, who was uninsured. The sister's vehicle was insured and registered in Missouri. Farmers paid Jaynes $50,000, which was the limit per person per occurrence under each of Jaynes' insurance policies. Farmers' position was that Kansas prohibited stacking and Jaynes was not entitled to any more money under the policies even though her medical bills were over $350,000. Jaynes sued for breach of the insurance policies and vexatious refusal to pay on the grounds that each of the insurance policies contained language in the "Limits of Liability" section that contained the phrase that the limits were "subject to the laws of the state of the occurrence" and Missouri was the state of the occurrence and allowed stacking.
The trial court ruled that the insurance policies purchased by Jaynes were ambiguous due to the above-stated provision and other limiting clauses in the policies prohibiting stacking and found against Famers Insurance Co. for $250,000 and against Mid-Century Insurance Co. for $50,000. Farmers appealed. The appellate court found that under the law of both Missouri and Kansas, where there is ambiguity in an insurance policy the ambiguity must be construed against the insurer and in favor of the insured. Ambiguity is found where different constructions of the language can reasonably be made; the language will be given the ordinary interpretation understood by the layman who bought the policy. The appellate court found that the trial court did not err in its ruling.
Source: Williams v. Silvola, Missouri Court of Appeals, Western District, WD66055, April 10, 2007
