Follow-Form Fail: How an Ambiguous Clause Cost One Insurer

Massachusetts Appeals Court Rules on Ambiguous Follow-Form Provision in an Excess Policy

In a well-reasoned decision providing some clarity on the interpretation of excess insurance policies, the Massachusetts Appeals Court has ruled that an ambiguous follow-form provision in an excess policy cannot effectively incorporate underinsured motorist (UIM) coverage limitations from an underlying auto policy. The March 18, 2025, decision in Prestige Underwriters Reciprocal Exchange v. Callie Hilinski et al. (24-P-55) represents a victory for the insureds and underscores the necessity for insurers to draft policy provisions with precision and clarity.

Case background and factual context

In 2018, Callie Hilinski, the 16-year-old daughter of Lisa and Scott Hilinski, was injured while a passenger in a golf cart accident. At the time of the accident, the golf cart was owned by her father and driven by her friend, Audrey Connelly. Callie suffered a debilitating knee injury consisting of a dislocation, ACL, PCL, lateral meniscus, and medial meniscus tear, a tibial plateau fracture, and multiple muscle strains. As a result of the accident, Callie underwent four knee surgeries that left her with a residual permanent impairment that will ultimately require knee reconstruction.

The Hilinskis alleged that Callie’s damages exceeded $2,500,000 and collected the $100,000 policy limit covering the golf cart’s driver, Audrey Connolly.

At the time of the accident, the Hilinskis maintained two insurance policies with Privilege Underwriters Reciprocal Exchange (“PURE”): an automobile policy and an excess policy.

The auto policy’s underinsured motorist coverage

The auto policy provided $250,000 in bodily injury liability coverage and $250,000 in underinsured motorist coverage (“UIM”). The UIM insuring agreement stated:

A. We will pay compensatory damages which an “insured” is legally entitled to recover from the owner or operator of an “UIM” because of “bodily injury”:

Sustained by an “insured”; and

Caused by an accident.

The automobile policy’s UIM coverage broadly defined a motor vehicle as:

A land motor vehicle or trailer or any type to which a bodily injury liability bond or policy applies at the time of the accident, but its limit for bodily injury liability is less than the limit of liability for this coverage.

The excess policy’s underinsured motorist coverage

The excess policy provided $10,000,000 in excess liability coverage and $1,000,000 in excess UIM coverage, stating:

We will pay damages for bodily injury an insured is legally entitled to receive from the owner or operator of an uninsured or underinsured auto. We will only pay those damages in excess of the underlying insurance or the minimum required underlying limits, whichever is greater. The most we will pay as a result of an occurrence is the coverage limit for Excess Uninsured/Underinsured Motorists shown on your Declarations.

This coverage only applies for an occurrence during the policy period. This coverage will follow form. (Emphasis added).

PURE’s denial of excess liability coverage

Following the accident, the Hilinskis submitted claims under their liability and UIM coverages to PURE on Callie’s behalf.

In response to the claims for Callie’s injuries, PURE accepted partial coverage while denying other aspects of the claims.

PURE offered to pay the full $250,000 bodily injury liability limit under the Auto Policy. However, PURE disclaimed any obligation to provide any excess coverage. Specifically, PURE denied both excess liability coverage under the Excess Policy and underinsured motorist (UIM) coverage under both the Auto Policy and the Excess Policy.

PURE’s denial of excess liability coverage

PURE based its denial of any excess liability coverage for Callie on the Excess Policy’s family member exclusion. This exclusion stated the excess policy’s liability coverage  did not apply to  “personal injury to you or an insured under this policy.”

PURE maintained that because Callie was a family member of the named insureds (Lisa and Scott Hilinski), she qualified as an “insured” under the policy definitions, and therefore, her injuries were excluded from the Excess Policy’s liability coverage.

The dispute over the excess policy’s $1,000,000 UIM coverage

Regarding the excess policy’s UIM coverage, PURE based its denial on the Excess Policy allegedly following the form of the Auto Policy. In PURE’s opinion, the auto policy’s UIM coverage did not provide a basis for the Excess Coverage UIM to apply because the auto policy excluded UIM coverage because (1) the auto Policy’s UIM limit of $250,000 did not exceed the available bodily injury limit of $250,000 under the auto policy triggering the auto policy’s UIM coverage, and (2) the golf cart owned by Scott Hilinski and was “available for Callie’s regular use,” thereby triggering the owned/regular use exclusion in the Auto Policy’s UIM provisions.

Although the auto Policy’s UIM limit of $250,000 was not greater than the available bodily injury limits of $250,000 such that UIM coverage would apply in the first instance, the scope of the auto policy’s exclusions had importance for any UIM coverage under the Excess Policy.

The Excess Policy had a Follow Form provision that PURE argued incorporated all the exclusion of the Auto Policy’s UIM Coverage. This provision stated:

Follow Form

We will cover damages to the extent that they are both covered by the required underlying insurance and not excluded by this policy. The provisions of this policy supersede and replace similar provisions in the underlying policy. We will not provide broader coverage than the underlying policy. When coverage is provided on a follow-form basis and no underlying insurance exists, coverage will be determined as if we had sold the required underlying insurance.

PURE’s position was that this provision incorporated the Auto Policy’s UIM limitations and exclusions into the Excess Policy, thereby eliminating any obligation to provide excess UIM coverage.

PURE prevails in the Superior Court and the Hilinskis appeal

Pure’s denial of any excess coverage led to litigation, with PURE seeking a declaratory judgment in the Superior Court that there was no coverage for Callie’s claims beyond the $250,000 already offered. The Hilinskis counterclaimed on the coverage issues and for PURE’s alleged unfair claim practices.

The Superior Court, on summary judgment, accepted PURE’s coverage arguments and entered judgment against the Hilinskis. The Hilinskis file an appeal to the Appeals Court.

The Appeals Court’s analysis of two key issues

In their decision, the Appeals Court addressed the two central issues in the case:

Whether the excess policy’s exclusion for injured family members violates Massachusetts public policy

Whether the follow-form provision in the excess policy operated to incorporate UIM coverage limitations from the underlying auto policy

The family member exclusion in excess liability policies

On the first issue, the Appeals Court affirmed the Superior Court’s ruling in favor of PURE that the excess policy’s exclusion for injured family members did not violate Massachusetts public policy. The court noted that “there is no State law, and therefore no public policy arising from that law, that prohibits the exclusion in umbrella or excess insurance policies.”

The excess policy contained an exclusion of coverage for “damages, defense costs or any other costs or expenses… [f]or personal injury to you or an insured under this policy.” As a family member, Callie was considered an “insured” under the policy’s definitions, and therefore, her claim for liability coverage was excluded.

The court cited its previous holding in Hahn v. Berkshire Mut. Ins. Co., 28 Mass. App. Ct. 181, 185 (1989), where it rejected a similar public policy argument in the context of homeowners’ insurance: “We are persuaded in the present circumstances that a court should not proceed to act on a supposed public policy not announced by the Legislature, nor self obviously compelling.”

The Appeals Court also noted that the majority of states had upheld such exclusions, finding them neither arbitrary, unfair nor unconscionably one-sided. The court observed that such exclusions serve a legitimate purpose by making “broad excess coverage available at an economical cost by excluding from coverage ‘those in the family circle, who, on account of their close intimacy, may be expected to be riding at frequent intervals in the insured car.’”

The ambiguous follow-form provision

On the second issue—whether the follow-form provision in the excess policy incorporated UIM coverage limitations from the underlying auto policy—the Appeals Court reversed the Superior Court’s ruling.

PURE denied UIM coverage based on the auto policy’s definition of an underinsured motor vehicle as one with bodily injury liability limits “less than the limit of liability for this [UIM] coverage.” Since the bodily injury coverage ($250,000) was equal to the UIM coverage ($250,000), PURE argued there was no UIM coverage available. PURE also relied on an exclusion in the auto policy for vehicles “[o]wned by or furnished or available for the regular use of you or any ‘family member.’”

The success of PURE’s argument depended on whether the follow-form provision in the excess policy effectively incorporated these limitations. The court found that it did not. The court found:

Ambiguity in the Follow-Form Language: The court determined that the follow-form provision was “ambiguous and confusing, at least insofar as it purports to incorporate language from the auto policy’s UIM coverage provisions.” The provision first stated that PURE “will cover damages to the extent that they are both covered by the required underlying insurance and not excluded by this policy.” (Emphasis added).

The definition of “Underlying Insurance” does not include UIM. The term “underlying insurance” referenced in the excess policy’s Follow Form provision did not apply to UIM coverage. The excess policy defined “Underlying Insurance” as “all liability insurance providing coverage for damages that are covered by this policy.” (Emphasis added). As the court emphasized, “UIM coverage is not liability coverage,” citing Goodman v. American Cas. Co., 419 Mass. 138, 141-142 (1994).

Conflicting Provisions: The follow-form provision stated that “The provisions of this policy supersede and replace similar provisions in the underlying policy” while also stating, “We will not provide broader coverage than the underlying policy.” The court found these statements, when read together, created further ambiguity as to whether and how UIM coverage limitations were incorporated.

The court concluded: “The follow-form provision in PURE’s excess policy failed to unambiguously explain clearly how it incorporated the limitations and exclusions in the auto policy’s UIM coverage.”

Given this ambiguity, the court applied the established principle that ambiguities in insurance policies must be construed against the drafter (the insurer) and in favor of the insured. As the court stated in its ruling: “Because that ambiguity must be resolved against PURE, the company that drafted the policy, and in favor of the Hilinskis… Callie’s claim for such coverage should not have been denied.”

Some points to ponder on excess policy follow-form provisions

The Appeals Court provided some points to consider regarding the drafting of follow-form provisions.

The court observed that, unlike the straightforward provision in Allmerica Fin. Corp. v. Certain Underwriters at Lloyd’s, London, 449 Mass. 621, 630 (2007)—which clearly stated that the excess policy was “subject to the same conditions, limitations, and other terms… as are contained in or may be added to the Policy(ies) of the Primary Insurer(s)”—PURE’s provision was far more convoluted.

The court emphasized that “few purchasers of automobile insurance and liability policies come with a prior understanding of follow-form provisions and how they are supposed to work,” making it “essential that such a provision explain in a clear and unambiguous manner how the excess policy incorporates coverage limitations or exclusions in the underlying policy.”

The court’s comments remind insurers that the mere inclusion of the phrase “will follow form” is insufficient. As the court noted, citing the First Circuit’s observation in Insituform Techs., Inc. v. American Home Assur. Co., “‘follow form’ is a loose term,” and “even where a policy is described as ‘follow form,’ it does not necessarily provide coverage that is substantively identical to the underlying one.”

The Court’s final order

Conclusion. So much of the judgment in favor of Privilege and against the Hilinskis as denied Callie’s claim for liability coverage under the excess policy is affirmed. So much of the judgment in favor of Privilege and against the Hilinskis as denied Callie’s claim for UIM coverage under the excess policy is reversed. A new judgment shall enter declaring that the Hilinskis are entitled to UIM coverage under the excess policy for Callie’s injuries.

Twenty days to apply for further appellate review to the Supreme Judicial Court

The Massachusetts Appeals Court is an intermediate appellate court. The ultimate judicial authority resides with the Supreme Judicial Court. Parties dissatisfied with an Appeal Court’s decision may apply for further appellate review. However, the allowance of any further appeal is discretionary with the Supreme Judicial Court.

Since the Appeals Court gave a split decision for each party, under the Massachusetts Rules of Appellate Procedure, both PURE and Hilinski have twenty days, or Monday, April 7, 2025, to apply for further appellate review.

Based upon the decision of the Appeals Court to take away the Superior Court judgment in favor of PURE, there is a high likelihood that, at least, the insurer might apply to the Supreme Judicial Court for further appellate review.

Owen Gallagher

Insurance Coverage Legal Expert/Co-Founder & Publisher of Agency Checklists

Over the course of my legal career, I have argued a number of cases in the Massachusetts Supreme Judicial Court as well as helped agents, insurance companies, and lawmakers alike with the complexities and idiosyncrasies of insurance law in the Commonwealth.

Connect with me directly, by calling me at 617-598-3801.