California statutes did not require, and various automobile policies themselves did not provide, underinsured motorist coverage for the named insured’s adult, non-resident daughter who was killed while she was a pedestrian. ( Berendes v. Farmers Insurance Exchange (2013) 221 Cal.App.4th 571)
Facts
Kristina Berendes was married to and lived with Todd Berendes. While Mrs. Berendes was a pedestrian, she was struck and killed by a car driven by David Duril. Mr. Duril’s liability insurer paid its $50,000 limit to Mrs. Berendes’ surviving spouse, Mr. Berendes. Mr. Berendes also received $200,000 pursuant to the underinsured motorist (UIM) section of his own automobile policy which covered Mrs. Berendes as his spouse.
Mr. Berendes then submitted a UIM claim to Farmers Insurance Exchange under policies which Farmers had issued to Mrs. Berendes’ father, William Felix. The Farmers policies included (1) an auto policy for a Chrysler PT Cruiser which listed Mrs. Berendes as rated driver, and (2) an auto policy for a Mercedes-Benz ML350 which did not list any rated drivers. Farmers denied the claim on the ground that Mr. Felix’s non-resident daughter, Mrs. Berendes, was not an “insured person” under the Farmers policies with respect to UIM coverage.
Mr. Berendes subsequently sued Farmers for breach of contract and bad faith. Farmers moved for summary judgment, arguing that the Farmers policies did not include UIM coverage for Mrs. Berendes either by statutory mandate or contract interpretation. The trial court agreed with Farmers and granted the summary judgment motion. Mr. Berendes appealed.
Holding
The Court of Appeal affirmed the summary judgment in favor of Farmers. In reaching its decision, the Court rejected three separate arguments advanced by Mr. Berendes.
First, Mr. Berendes argued that California Insurance Code Section 11580.2 required Farmers to afford UIM coverage to Mrs. Berendes. The appellate court disagreed. That statute requires insurers to include a provision in automobile insurance policies covering the “insured” for the liability of an uninsured motorist. The statute then defines the “insured” so as to include “[1] the named insured [i.e., Mr. Felix], [2] the spouse of the named insured, [3] while residents of the same household, relatives of either while occupants of a motor vehicle or otherwise, [and] [4] heirs and any other person while in or upon or entering into or alighting from an insured motor vehicle….” Here, at the time of her death, Mrs. Berendes did not fit within any of these statutory categories. She was not the named insured. Nor was she the spouse of the named insured. Further, although she was the daughter of the named insured, she did not live in the named insured’s household. Last, because she was a pedestrian at the time of the accident, she was not engaged in an activity related to one of the covered vehicles. Since Mrs. Berendes was not an “insured,” Farmers was under no statutory obligation to provide her with coverage for the liability of an underinsured motorist.
Next, Mr. Berendes argued that the Farmers policies were ambiguous because the liability coverage (Part I) and UIM coverage (Part II) in the policies included different definitions of the term “insured person.” The appellate court rejected this argument as well. The court noted that auto liability and UIM coverages are distinct and serve different purposes, and thus the different definitions of “insured person” in those sections did not create an ambiguity. Further, while the Farmers policy for the PT Cruiser did include an endorsement which stated that any “rated” driver such as Mrs. Berendes was an “insured,” that endorsement by its own terms only applied to liability coverage, not UIM coverage.
Last, Mr. Berendes argued that the circumstances caused both the named insured, Mr. Felix, and the decedent, Mrs. Berendes, to “reasonably expect” that the Farmers policies included UIM coverage for Mrs. Berendes as a pedestrian. The appellate court disagreed. According to the court, because the policy language was clear and unambiguous, the policy language governs the coverage dispute. Thus, neither Mr. Felix, as named insured, nor Mrs. Berendes, the decedent, could have had any reasonable expectation of coverage.
Comment
Insurance Code section 11580.2 does not statutorily mandate UIM coverage for all individuals who may qualify as an insured under the separate auto liability portion of an automobile policy. Thus, the fact that Mrs. Berendes may have qualified as an insured under the liability section of the Farmers policies did not mean that she also qualified as an insured under the UIM section of those policies.