The California Court of Appeal has held that a vehicle is not “uninsured” where a personal umbrella policy provides bodily injury liability coverage to the owner and operator of an otherwise uninsured motor vehicle. ( California Capital Insurance Company v. Nielsen (2007) WL 2181499)
Facts
Carla Brown owned a vehicle which she loaned to her son, Bryan Jones. Jones drove the vehicle while intoxicated and with a suspended license. When Jones lost control of the vehicle and crashed into a pole, Douglas Nielsen, a passenger, was thrown from the car and rendered a quadriplegic.
At the time of the accident, the vehicle was not covered by any auto liability insurance policy. However, Brown had a $1 million personal liability umbrella policy with State Farm which provided coverage for both Jones and Brown. State Farm paid Nielsen $1 million in settlement of Nielsen’s action against Jones and Brown.
At the time of the accident, Nielsen’s father had an auto liability policy issued by California Capital Insurance Company (CCIC). The CCIC policy provided uninsured motorist coverage of $100,000 to family members, and defined an “uninsured motor vehicle” as one “[t]o which no bodily injury liability bond or policy applies at the time of the accident.”
Nielsen made a claim CCIC. However, CCIC declined to provide uninsured motorist benefits to Nielsen, asserting that the vehicle Jones owned and Brown operated was not an “uninsured motor vehicle” in light of the State Farm personal liability umbrella policy. CCIC filed then a declaratory relief action against Nielsen. The trial court ruled that the vehicle that Jones owned and Brown operated was not an “uninsured motor vehicle,” and Nielsen appealed.
Holding
The Court of Appeal affirmed, holding that where alleged tortfeasors have bodily injury liability insurance applicable to cover their liabilities pursuant to a personal umbrella policy, a vehicle is not an “uninsured motor vehicle” and an injured person is not entitled to uninsured motorist benefits. CCIC’s policy defined an “uninsured motor vehicle” as one “[t]o which no bodily injury liability bond or policy applies at the time of the accident,” and this definition was substantially similar to the definition of “uninsured motor vehicle” contained in Insurance Code section 11580.2 (b).
Comment
This case illustrates that when a person injured in an automobile accident recovers against an owner’s or operator’s liability policy—even if the policy is not an auto liability policy—the involved vehicle cannot be considered an “uninsured motor vehicle.”