An uninsured motorist insurer could not deny coverage based on an exclusion which was allowed by statute, but which was not actually included in the policy. ( Progressive Choice Ins. Co. v. California State Automobile Association Inter-Ins. Bureau (2013) 218 Cal.App.4th 1145)
Facts
An underinsured motorist caused a collision with another vehicle driven by Scott Totora (Totora) and occupied by Benjamin White (White). As a result, White suffered injuries.
The injured party, White, was an insured under two automobile policies with underinsured motorist (UIM) coverage. The first policy was Tortora’s policy through Progressive Choice Insurance Company (Progressive), which had UIM bodily injury limits of $100,000 each person. The second policy was White’s own policy through California State Automobile Association Inter-Insurance Bureau (CSAA), which had UIM bodily injury limits of $50,000 each person.
White settled with the at-fault driver’s automobile liability insurer for that insurer’s liability limit of $25,000. White then claimed an additional $62,500 in damages under the UIM provisions of both the Progressive and CSAA policies. CSAA denied coverage, asserting that since White was covered under the Progressive policy, Insurance Code section 11580.2(c)(2) relieved CSAA of any duty to pay. Following CSAA’s denial of coverage, Progressive paid White the entire $62,500 amount.
Progressive then filed a contribution action against CSAA, asserting that the $62,500 UIM loss should be allocated between the two companies pro-rata based on the applicable limits of the two policies. The trial court agreed, and ruled that Progressive was entitled to recover $20,833.33 from CSAA. CSAA appealed.
Holding
The Court of Appeal affirmed.
The appellate court acknowledged that Insurance Code §11580.2 contains a number of statutorily allowable exclusions to UIM coverage. One of those exclusions is set forth in section 11580.2(c)(2), which states that “the insurance coverage provided for in this section does not apply either as primary or as excess coverage … [t]o bodily injury of the insured while in or upon or while entering into or alighting from a motor vehicle other than the described motor vehicle if the owner thereof has insurance similar to that provided in this section.” The appellate court agreed that if the CSAA policy had contained this statutorily authorized exclusion, it would have defeated coverage in this case. However, CSAA’s policy did not include this exclusion.
Nor could CSAA’s policy be deemed to automatically “incorporate” the statutory exclusion. It is true that where an insurance contract does not provide mandated coverage, statutory provisions governing the mandated coverage will be incorporated into the insurance contract by law. Here, however, CSAA provided the mandated UIM coverage, and thus CSAA could not rely upon statutory exclusions that would have applied if CSAA had not provided the mandated coverage.
Last, while the CSAA policy’s “other insurance” clause contained language that was somewhat similar to section 11580.2(c)(2) and that purported to make the CSAA policy “excess,” it was not the same as the statutorily authorized exclusionary language. According to the appellate court, CSAA’s “other insurance” clause was insufficient to invoke the statutory exclusion of section 11580.2(c)(2).
Under the circumstances, both the Progressive and the CSAA policy applied. Pursuant to 11580.2(d), the $62,500 UIM loss had be allocated on a pro-rata basis between Progressive and CSAA. Thus, Progressive was entitled to recover $20,833.33 from CSAA.
Comment
CSAA could have avoided the problem in this case simply by including the statutorily allowable exclusion in its policy. Having omitted the exclusionary language from the policy, Progressive could not later invoke the exclusion to deny coverage.