• Progressive Choice Ins. Co. v. California Automobile Assn. Inter-Ins. Bureau (2013)---- Cal.App.4th----
  • November 11, 2013
  • Law Firm: McCormick Barstow Sheppard Wayte Carruth LLP - Fresno Office

    On March 27, 2006, Benjamin White was injured in a traffic collision while riding as a passenger in a vehicle operated by Scott Tortora. The adverse driver who caused the collision was underinsured. White was insured under two automobile insurance policies. The first policy, issued by Progressive to Tortora, insured the vehicle Tortora was operating at the time of the accident. The Progressive policy provided underinsured motorist benefits (UIM) bodily injury coverage with limits of $100,000 per person. The second policy, issued by CSAA to White, provided UIM bodily injury coverage with limits of $50,000 per person. White settled with the adverse driver's automobile insurance company for the policy limit of $25,000. White then made a claim for UIM benefits under the Progressive and CSAA policies. CSAA denied coverage. Progressive paid the sum of $62,500 to White.

    Progressive demanded that CSAA reimburse Progressive $20,833.33, the pro rata share of the payment made to White based upon the applicable policy limits. CSAA denied any obligation to contribute and reimburse Progressive. Progressive and CSAA filed competing motions for summary judgment. CSAA contended that under Insurance Code section 11580.2(c)(2), its policy provided no UIM coverage to White because the Progressive policy already provided "similar UIM coverage." Progressive contended it did not provide "similar" UIM coverage. The trial court ruled that CSAA was obligated to pay its pro rata share of the settlement.

    On appeal, Progressive disavowed its successful argument that section 11580.2 (c)(2) was inapplicable because the Progressive policy was not "similar" to the CSAA policy. Rather, Progressive contended that section 11580.2 (c)(2) was inapplicable because CSAA failed to include the necessary language to invoke the statutory exclusion in its policy.

    The appellate court held that UIM coverage is to be determined by the terms of the policy, provided the policy grants benefits at least equal to those required by the terms of section 11580.2. (Darrah v. California State Automobile Assn. (1968) 259 Cal.App.2d 243, 246.) The court analyzed CSAA's policy exclusions and the language of section 11580.2 (c)(2). Subdivision (c)(2) excludes UIM coverage for "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." However, exclusionary language similar to section 11580.2(c)(2) was not included in the CSAA policy. The court also concluded that section 11580.2(c)(2) is not "read" into the policy and thus would not govern the question of whether the CSAA policy covered the loss.

    The court also noted that the "Other Insurance" provision in the CSAA policy did not establish that there would be no UIM coverage at all, but rather stated that it would be excess insurance to any other UIM coverage afforded by another applicable policy. The Progressive "Other Insurance" clause provided that it would be deemed pro rata to any other applicable UIM coverage. California law does not require disregarding the pro rata provision in favor of the CSAA excess provision relating to UIM coverage. The cases of Prieto v. State Farm Mut. Auto. Ins. Co. (1969) 268 Cal.App.2d 891, Allstate Ins. Co. v. Mercury Ins. Co. (2007) 154 Cal.App.4th 1253, and Planet Ins. Co. v. United Services Auto. Assn. (1994) 23 Cal.App.4th 1256 have each held, based on the so-called "anti-stacking provision of Insurance Code section 11580.2 (d), that when two automobile insurance policies provide uninsured motorist coverage, and one policy contains an excess coverage clause in its "Other Insurance" provision while the other contains a statutory proration clause, the proration clause takes precedence.

    In order to deny coverage based on the exclusionary language of Insurance Code section 11580.2 (c)(2), where another insurer has provided UM or UIM coverage for a loss, an insurer's policy must incorporate the specific language of section 11580.2 (c)(2) in the policy. The statutory exclusionary language will not be implied or written into the policy by the courts. The Progressive case also confirms that courts will disregard an excess UIM or UM provision in preference to a proration clause based on policy limits to the extent a second applicable policy includes such a pro rata provision.

    This opinion is not final. It may be withdrawn from publication, modified upon rehearing, or review may be granted by the California Supreme Court. These events would render the opinion unavailable for use as legal authority.