Owners Insurance Co. v. Walsh: Non-Stacking of UIM Benefits When No Scheduled Vehicle Is Involved

Introduction

Owners Insurance Company v. Jeffrey Walsh is a 2025 Fourth Circuit decision clarifying the availability of underinsured motorist (UIM) coverage stacking under South Carolina law when the insured is injured in a non-scheduled vehicle. The decedent, Edward Joseph Walsh III, was fatally struck while riding his personal lawn mower—an unscheduled vehicle—by an underinsured driver. Walsh’s estate held a personal auto policy listing two automobiles, each with $100,000 UIM bodily injury limits. After recovering $150,000 (the single-vehicle limit), the estate sought the full $200,000 by “stacking” both vehicles’ UIM coverage. The insurer denied stacking; the district court agreed and granted summary judgment. On appeal, the Fourth Circuit affirmed, establishing that under South Carolina’s UIM statute and the policy’s clear terms, stacking is unavailable where no scheduled vehicle is involved in the accident.

Summary of the Judgment

The insured died when an underinsured motorist struck his lawn mower—a vehicle not scheduled or required to be insured under his auto policy.
Walsh’s estate claimed $200,000 by combining (stacking) the $100,000 UIM limits of both covered autos; Owners paid $150,000, the single-vehicle limit under the policy.
The district court held that South Carolina law and the policy language disallowed stacking absent a covered vehicle’s involvement; summary judgment was entered for Owners.
The Fourth Circuit affirmed: (1) the UIM statute prohibits stacking when the accident involves no scheduled or separately insured vehicle; (2) the policy’s Section 4.a and 4.b unambiguously limit the insurer’s liability to the single-vehicle limit in these circumstances.

Analysis

1. Precedents Cited

South Carolina UIM Statute, § 38-77-160: Requires insurers to offer UIM coverage up to liability limits but caps recovery to the coverage on the vehicle involved; if no scheduled vehicle is involved, recovery is limited to one vehicle’s UIM limit.
State Farm Mut. Auto. Ins. Co. v. Windham (882 S.E.2d 754, 2022): Defines Class I insureds (covered vehicle involved) versus Class II (no covered vehicle involved); only Class I may stack.
Ohio Cas. Ins. Co. v. Hill (473 S.E.2d 843, 1996): Explains stacking is limited to Class I insureds under § 38-77-160.
Continental Ins. Co. v. Shives (492 S.E.2d 808, 1997): Held that a bicycle accident (non-scheduled vehicle) precludes stacking of auto UIM coverage.
Ruppe v. Auto-Owners Ins. Co. (496 S.E.2d 631, 1998): Recognizes stacking is “permitted unless limited by statute or valid policy provision,” but does not override explicit policy limits.
Diamond State Ins. Co. v. Homestead Indus., Inc. (456 S.E.2d 912, 1995): Warns against “torturing” policy language to extend unintended coverage.

2. Legal Reasoning

The Fourth Circuit’s reasoning proceeded in two steps:

Statutory Interpretation: The court examined § 38-77-160’s language capping UIM recovery to the coverage on the vehicle involved. South Carolina’s case law classifies insureds as Class I or II; here, Walsh was a Class II insured because the lawn mower—though arguably a “vehicle”—was neither scheduled nor required to be insured. Under precedent, Class II insureds may not stack.
Policy Text Analysis: Turning to the insurance policy, Section 4.a outlines four scenarios for stacking, two of which permit aggregation—but only when the insured occupies a scheduled auto or a separately insured unscheduled auto. Section 4.b reinforces that no liability limit increases by the number of scheduled vehicles except as § 4.a expressly provides. Because Walsh was riding an unscheduled (and uninsured) vehicle, neither § 4.a stacking provision applied, and § 4.b precluded any other aggregation.

The court emphasized standard contract-interpretation maxims: ambiguities must be resolved in favor of the insured, yet courts cannot rewrite unambiguous policy terms to create coverage the parties did not intend.

3. Impact

This decision carries significant implications for insurers, agents, and policyholders in South Carolina and in jurisdictions following similar UIM frameworks:

Clarity on Stacking: Insurers can rely on explicit policy language to limit UIM stacking when accidents involve non-scheduled vehicles, so long as the statutory baseline is met.
Contract Drafting: Insurers should ensure that UIM forms clearly articulate stacking scenarios and exclusions to withstand judicial scrutiny.
Consumer Expectations: Policyholders and insurance agents must recognize that paying premiums on multiple vehicles does not automatically entitle them to combine benefits unless a covered vehicle is involved or such coverage is expressly purchased.
Future Litigation: Courts will likely follow Owners v. Walsh in denying stacking claims where non-scheduled vehicles are involved, barring a clear contractual provision to the contrary or legislative change.

Complex Concepts Simplified

Underinsured Motorist (UIM) Coverage: Insurance that steps in when the at-fault driver’s liability limits are insufficient to cover an insured’s losses.
Stacking: The practice of combining UIM limits from multiple vehicles on the same policy to increase total recovery.
Class I vs. Class II Insured: Class I: An insured involved in an accident while occupying a scheduled vehicle.
Class II: An insured involved in an accident while occupying no scheduled or separately insured vehicle.
Summary Judgment De Novo Review: The appellate court reviews the district court’s grant of summary judgment without deference, applying the same legal standards.

Conclusion

Owners Insurance Co. v. Walsh affirms that under South Carolina law and clear contractual terms, insureds cannot stack UIM coverage when the accident involves a non-scheduled, uninsured vehicle. The Fourth Circuit’s decision underscores the primacy of statutory definitions and unambiguous policy provisions in delimiting insurers’ obligations. For policyholders, it highlights the importance of understanding precisely which vehicles trigger stacking rights; for insurers, it validates careful drafting of coverage limitations. This ruling will guide future disputes over UIM stacking and contributes to the settled law governing underinsured motorist benefits.