Monday, September 24, 2007

An Insurance Clause Requiring Proration of an Unisured Motorist Claim Prevails Over A Policy With a Conflicting Clause

A Proration Clause Based Upon Insurance Code Section 11580.2(d) Prevents the Application Of An Excess Insurance Clause in Another Applicable Policy

Allstate Insurance Company v. Mercury Insurance Company (Sept. 5, 2007, B189977, Second District)
7 p. opinion

It's always nice to see an insurance coverage case in which an insurance company (or in this case, two insurance companies) have acted appropriately. When the opinion is also brief and clear, that's even nicer.

A boy who was driving his parents car had a girl passenger. An uninsured motorist ran a red light and hit the car, injuring the girl. Two insurance policies applied, the Mercury policy issued to the boy's parents and the Allstate policy issued to the girl's parents. The girl filed claims under the uninsured motorist provisions of both policies. The Mercury policy had an uninsured motorist limitation of $30,000 per person and the Allstate policy had an uninsured motorist limitation of $250,000 per person.

The Mercury policy had a clause that provided for proration of uninsured motorist coverage damages based upon the coverage limits of the applicable policies. The language of this clause tracked Insurance Code section 115080.2(d) which permits such clauses. The Allstate policy had a clause providing that it was excess to the coverage of the uninsured motorist coverage covering a vehicle that the Allstate insured did not own.

The insurance companies appropriately settled the girl's claim for personal injuries jointly for $52,200, agreeing to litigate their dispute about the amount each was required to pay afterward, in this action.

The trial court's decision, affirmed by the Court of Appeal was that language of the Mercury policy was controlling. When an uninsured motorist insurance policy contains the statutory proration clause of section 11580.2(d) it must be given deference. To decide otherwise would nullify the statute.
Presiding Justice Gilbert wrote the opinion. Justices Yegan and Coffee concurred.

: Allstate clearly wanted to know how section 11580.2(d) affected all the policies that it wrote in California rather than being concerned with this single claim. The amount in dispute, just under $25,000, wasn't worth litigating, much less taking up on appeal. The good faith behavior of these insurance companies, shown by their decision not to let the conflict between them delay the insured's settlement, is a contrast to the bad faith behavior of the insurance company in Baron v. Fire Insurance Exchange.

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