To Stack or Not to Stack? California Supreme Court Prepares to Resolve Split Among Appellate Courts


On March 18, 2009, the California Supreme Court granted review of an issue that is potentially worth billions of dollars to policyholders and insurers alike. Specifically, the Court will decide whether policyholders are entitled to “stack” (i.e., aggregate) the limits of policies triggered by a single occurrence that has caused damage over a period of time.

In January, the California Court of Appeal for the Fourth Appellate District held that an insured was entitled to stack limits across multiple policy periods. See State of California v. Continental Ins. Co., 170 Cal. App. 4th 160 (2009). In doing so, the Fourth District expressly disagreed with the Sixth Appellate District?s ruling of eleven years ago in FMC Corp. v. Plaisted and Cos., 61 Cal. App. 4th 1132 (1998). In FMC, the court had rejected stacking of policy limits across policy periods on the ground that it afforded the policyholder more coverage than had been bargained or paid for. The California Supreme Court now appears ready to address this clear split in authority.

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