The California Court of Appeal has held that underinsured motorist coverage was not triggered where the injured party’s bodily injury limit was equal to the tortfeasor’s “combined single limit” for all bodily injury and property damage. ( Explorer Ins. Co. v. Gonzalez (2008) 164 Cal.App.4th 1258)
Facts
Dwaine Gonzalez was injured in an automobile collision caused by Benjamin Fernandez. At the time of the accident Fernandez was insured by a Fireman’s Fund Insurance Company auto policy with “combined single limits” in the amount of $100,000 for all bodily injury and property damage caused by any single accident. Gonzalez was insured by an Explorer Insurance Company policy that included uninsured and underinsured motorist benefits of $100,000 for all damages from bodily injury sustained by one person in one accident. Fireman’s Fund paid Gonzalez $78,415.89 for bodily injury and $21,584.11 for property damage arising from the collision, thus exhausting the limits of the $100,000 Fireman’s Fund policy.
Gonzalez then made a claim against the underinsured motorist bodily injury provision of his Explorer policy for $21,584.11 (i.e., the difference between the $78,415.89 he received from Fireman’s Fund for bodily injury and the $100,000 limit of his Explorer underinsured motorist coverage). Explorer denied Gonzalez’s claim, asserting that the $100,000 combined single limit for liability in Fernandez’ policy through Fireman’s Fund afforded bodily injury limits of liability of up to $100,000, and therefore, was not “less than” the underinsured motor vehicle bodily injury liability limits of Gonzalez’s policy through Explorer.
Explorer later filed a declaratory judgment action against Gonzalez to confirm its position. The trial court ruled in favor of Explorer and Gonzalez appealed.
Holding
The Court of Appeal affirmed the judgment in favor of Explorer. The appellate court reasoned that under Insurance Code section 11580.2(p)(2), an “underinsured motor vehicle” means “a motor vehicle that is an insured motor vehicle but insured for an amount that is less than the uninsured motorist limits carried on the motor vehicle of the injured person.” Here, the Fireman’s Fund policy carried by Fernandez provided “combined” coverage of up to $100,000 for all bodily injury and property damage caused by any single accident. The Explorer policy carried by Gonzalez provided coverage up to $100,000 for all damages from bodily injury sustained by any one person in a single accident. Because the amount of the potential coverage was equal, Fernandez’ vehicle was not “underinsured” within the meaning of Gonzalez’s policy through Explorer.
Comment
According to the appellate court, it was irrelevant that the $100,000 coverage of Fernandez’ Fireman’s Fund policy was for all bodily injury and property damage combined, whereas the $100,000 coverage of Gonzalez’s Explorer policy was for bodily injury only. That is because under the “narrow coverage” of uninsured/underinsured benefits in California, the comparison in coverage is based on the potential for recovery, not what is actually recovered in a particular case.