Selective Insurance v. Duffy: UIM Non-Stacking for Nonfleet Commercial Vehicles & Single-Accident Cap

Introduction

In Selective Insurance Company of South Carolina v. Adam Duffy, the U.S. Court of Appeals for the Fourth Circuit clarified two key principles under North Carolina’s uninsured/underinsured motorist (“UIM”) law. First, policies covering more than five vehicles used in a commercial enterprise—“fleet” coverage—are not subject to the state’s anti-stacking requirement for nonfleet private passenger vehicles. Second, when an insurance contract contains an unambiguous single, per-accident limit that applies “regardless of the number of insureds,” that limit controls and cannot be divided or multiplied among claimants. The decision reaffirms strict enforcement of clear policy language and defines the boundary of statutory stacking under N.C. Gen. Stat. § 20-279.21(b)(4).

Background and Key Issues

In September 2016, Adam and Lydia Duffy were severely injured in a motorcycle accident. Their damages approached $2 million, but the at-fault driver’s policy covered only $200,000. The Duffys held multiple UIM policies—including one “Business Automobile” policy issued by Selective Insurance (the appellee). After other carriers paid $700,000 in aggregate, Selective tendered a $300,000 payment under its $1 million per-accident limit.

The Duffys sued for a declaration that (1) North Carolina law requires “stacking” of their various policies even though they cover more than five business vehicles and (2) Selective’s contract does not impose a single per-accident cap on all insureds. The district court granted summary judgment in favor of Selective, holding that (a) the Duffys’ policy covers a fleet of commercial vehicles and so is not subject to anti-stacking under North Carolina law, and (b) the policy’s clear, per-accident limit of $1 million applies once, no matter how many insureds are involved. The Duffys appealed; the Fourth Circuit affirmed.

Summary of the Judgment

Judge Gregory, writing for a unanimous panel, applied North Carolina substantive law and federal procedural standards. On the anti-stacking issue, the court concluded that the policy covered seven vehicles—four trucks and three trailers—used exclusively for a landscaping business. Under N.C. Gen. Stat. § 58-40-10(2), coverage of five or more business vehicles constitutes “fleet” coverage, and under § 58-40-10(1)(b), vehicles used for delivery or transportation of goods are not “private passenger motor vehicles.” Because the policy was fleet coverage for commercial vehicles, the state’s statutory stacking requirement did not apply.

On contract interpretation, the court enforced the unambiguous language providing a single $1 million per-accident limit “regardless of the number of covered ‘autos,’ ‘insureds,’ premiums paid, claims made, or vehicles involved in the ‘accident.’” Having determined that the Duffys’ combined damages exceeded $1 million and that other insurers had already paid $700,000, the court held that Selective owed the remaining $300,000. The severability clause did not transform the per-accident limit into separate per-insured limits. Summary judgment for Selective was affirmed.

Analysis

1. Precedents Cited

Hlasnick v. Federated Mut. Ins. Co. (524 S.E.2d 386): Held that coverage for more than four vehicles is fleet coverage and not subject to stacking.
Aetna Casualty & Surety Co. v. Fields (414 S.E.2d 69): Clarified that commercial use disqualifies a vehicle from the “private passenger” definition.
McCaskill v. Pennsylvania National Mutual Casualty Ins. Co. (454 S.E.2d 842): Held that a policy covering five commercial vehicles is fleet coverage.
N.C. Farm Bureau Ins. Co. v. Dana (866 S.E.2d 710): Interpreted per-person vs. per-accident limits, confirming unambiguous policy terms control.

2. Legal Reasoning

The court applied North Carolina’s statutory definitions. A “fleet” policy covers more than four vehicles owned by the insured; the Duffys’ policy covered seven. “Private passenger motor vehicle” excludes vehicles used for delivery of goods. All seven vehicles were commercial trucks or trailers, undisputed in the summary judgment record. Thus, the policy fell outside the anti-stacking provision of N.C. Gen. Stat. § 20-279.21(b)(4).

On contract interpretation, the court enforced clear, unambiguous language. North Carolina law prohibits rewriting insurance policies under the guise of interpretation. The per-accident limit applied once, and the “other insurance” clause required offsetting other insurers’ payments, leaving $300,000 due from Selective.

3. Impact

This decision underscores that North Carolina’s anti-stacking rule is limited to nonfleet private passenger policies. Insurers issuing commercial “business automobile” fleets may contractually limit coverage on a per-accident basis and offset payments from other carriers. Policy drafters and insurers can rely on unambiguous per-accident limits; policyholders should verify vehicle classifications and statutory applicability. Future litigants will look to this precedent when challenging fleet vs. nonfleet status and when interpreting multi-insured UIM limits.

Complex Concepts Simplified

Stacking: Combining coverage limits of multiple insurance policies to increase total payout.
Fleet vs. Nonfleet: “Fleet” covers five or more vehicles owned or leased by a business; “nonfleet” is four or fewer. Only nonfleet private passenger policies may be stacked under North Carolina law.
Private Passenger Motor Vehicle: A light personal vehicle (truck or van under 14,000 lbs) not used for commercial delivery, maintenance, or transport of goods.
Per-Accident Limit: A maximum amount an insurer will pay for all injuries in a single accident, regardless of the number of people injured.

Conclusion

In Selective Insurance v. Duffy, the Fourth Circuit affirmed that North Carolina’s statutory anti-stacking rule does not reach commercial fleet policies and that clear per-accident limits in UIM contracts are binding. Insurers issuing business automobile policies can reliably employ single-accident caps and offset other insurers’ payments. Policyholders and counsel should carefully analyze vehicle classifications and policy terms to assess stacking rights and coverage limits under North Carolina law.