Los Angeles Uninsured Motorist Attorney Barry P. Goldberg is concerned that most insureds and many personal injury lawyers do not understand some of the unfair anomalies created when accident victims with excellent Uninsured Motorist Coverage are in multi-car collisions. Often an unfair result is created where the “at fault” party has insurance, but because of a multiplicity of injured claimants, each injured claimant receives a pro-rated amount, rather than the full available policy limit. In such cases, the accident victim not only receives less than he is entitled to from the third party, he loses much, if not all of the benefit of the Uninsured/Underinsured Motorist Coverage he had the foresight to purchase from his own insurer.
This “confusing inequity” plays out daily on our streets and freeways. Consider some of the reported scenarios which have made it to the California Courts of Appeal.
Scenario One.
In this case, there were two separate 3rd party drivers that contributed to cause a serious accident. In the accident, there was injury to one other claimant, the client, and wrongful death of client’s wife. One of the of the at-fault drivers was uninsured. The other at fault driver only carried the California minimum limits of $15,000 per claim and $30,000 per accident. The client’s own damages damages, and damages for the wrongful death of his wife are each in excess of the $30,000, and his aggregate damages well in excess of $60,000. Obviously, the client has not been “made whole” by payment of the $30,000 limits from the minimally insured at fault driver.
The client argued that he could be paid the $30,000 and still recover his own “uninsured motorist” benefits as against the other uninsured at fault party. The insurer contended that the “anti-stacking” rules applied to prevent additional recovery. The Court held that the anti-stacking rules did not apply because the policy could be considered without a set-off or reduction as against the totally uninsured driver. So long as it did not conflict with the wording of the statute, the Court interpreted the law to make the client “whole,” subject to his own policy limits. See, Security National Insurance v. Hand (1973) 31 Cal. App. 3d, 227.
Scenario Two.
In this case, there were two separate 3rd party at fault drivers that contributed to cause a serious accident. In the accident, the client’s daughter was a passenger in party number one’s vehicle and was killed. Party number one’s insurance company paid the single person policy limit of $15,000 to the clients.
The clients contended that their own Uninsured Motorist coverage applied to the other driver in vehicle two which was uninsured. The insurer contended that the “anti-stacking” rules applied to prevent additional recovery. The Court followed the reasoning inSecurity National Insurance vs. Hand (1973) 31 Cal. App. 3d, 227 and held that the clients were entitled to the benefits of their own Uninsured Motorist policy, as against the uninsured driver of vehicle number two. The Court again reasoned that the clients had not been “made whole” by payment of the first $15,000 from driver number one’s insurance company. See, CSAA v. Huddleston (1977) 68 Cal.App. 3d. 1061.
Scenario Three.
The client is one of several people injured by a 3rd party who only has a California minimum policy of $15,000 per person, $30,000 per accident. The client’s damages are well in excess of the $15,000 per person 3rd party policy limit. Because there are several victims, the 3rdparty’s minimum policy limit is apportioned pro-rata among the several victims. In this case, the client only received $10,000, instead of the maximum per person minimum limit of $15,000.
The client contended that he was entitled to obtain the $5,000 difference as between his own Underinsured Motorist policy and the $10,000 he recovered from the 3rd party’s policy. The Court held that the 3rd party vehicle was not “underinsured” according to the wording of the Uninsured Motorist statute. Since the 3rd party was not “underinsured,” it did not matter what amount was actually recovered by the client. This is a classic case of a client not “getting what they paid for.” As discussed below, there are movements in the legislature to remedy this inequity. (See, Schweitwerman v. Mercury Ins. Co. (1991) 229 Cal.App.3rd 1044.
Scenario Four.
The clients are a wife and children and heirs of wrongful death victim killed in a serious accident. The death victim was a passenger in party number one’s car who was an at fault driver. In addition, there was a design defect in party number two’s Toyota vehicle which was a contributing factor in the accident. The clients’ damages were in excess of $1,000,000.
At fault driver number one’s insurer policy paid its $30,000 liability policy limit. Toyota paid an additional $466,667 on account of its alleged liability. The clients contended that they should be permitted to collect the balance of their $100,000 Underinsured Motorist policy—i.e., the difference between $100,000 and party number one’s policy limit of $30,000, since they had not been “made whole.”
The Court disagreed reasoning that the specific language of §11580.2(p)(4) precluded any additional recovery from the Underinsured Motorist policy. In calculating the available 3rdparty coverage, the Court the combined contributed amounts of all persons and organizations that may be held legally liable for the injury. Since the total amount received of over $500,000 exceeded the underinsured policy limit, the Clients’ underinsured motorist insurer had no further obligation to its insureds. See, Mercury Insurance Company v. VanWanseele-Walker (1996) 41 Cal. App. 4th 1093.
Scenario Five.
In this case, the client was a passenger in party one’s vehicle and was one of many persons injured in a serious accident with at fault party number two’s uninsured vehicle. Both party one and party two were at fault. The client received party number one’s per person insurance liability limit of $15,000. Since the client did not receive any Uninsured Motorist benefits under party one’s insurance policy, the client contended that she should be able to make a recovery under his own personal Uninsured Motorist policy. Arguing that she was not “made whole,” the client reasoned that this was not contrary to the “anti-stacking” provisions of the Uninsured Motorist laws because she was not receiving any other Uninsured Motorist benefits.
The Court held that the client was not eligible to receive benefits from her own policy. Since her Uninsured Motorist policy was equal to party one’s policy, further payment would represent an actual stacking of Uninsured Motorist benefits, contrary to §11580.2(q). See.Interinsurance Exch. Of Automobile Club of So. Calif. v. Alcivar (1979) 95 Cal. App. 3d, 252.
Scenario Six.
The client was injured in a two vehicle accident as a passenger in party number two’s vehicle. Both party number one and party number two were equally at fault for the accident. The client’s total damages were in excess of $120,000. The client accepted a per person policy limit of $50,000 from party number two’s insurer. Party number one was uninsured.
The client contended that since the uninsured party number one caused damages in excess of $60,000, that his own Uninsured Motorist policy with limits of $60,000 per person should be available. There was some confusion whether the client was entitled to $10,000—the difference between $50,000 received from party two’s insurer and his own $60,000 policy limit; or $60,000 representing the damages caused by the Uninsured Motorist number one; or $70,000—the $60,000 Uninsured Motorist limit and the $10,000 difference between the amount received and the balance of his Underinsured Motorist limit.
The Court held that the client was limited to the $10,000 balance under his Underinsured Motorist Policy policy as to vehicle number two. Applying §11580.2(p)(4), the Court reasoned that the client’s insurer was entitled to a credit for all sums received from all parties legally liable. See, Holcomb v. Hartford Ins. Co. (1991) 230 Cal.App.3d, 1000.
One of the “quirks” in the Court’s reasoning is that if vehicle number two had a $60,000 or greater per person policy instead of $50,000, Uninsured Motorist law would have applied rather than the “Underinsured Motorist” law. In that case, the client would have received all his damages up to $120,000– $60,000 from party number two’s policy as well as $60,000 from his own Uninsured motorist policy!
Over the years, there have been attempts to modify the Uninsured/Underinsured Motorist laws to allow “stacking” of policies purchased by accident victims by eliminating the “credit” of the at-fault driver’s payment or liability policy amount to eliminate some of the “quirks.” This seems to make some logical sense so that a purchaser of Uninsured/Underinsured Motorist gets what he or she actually pays for. Insurers are against “stacking” because it eliminates the “windfall” received by the insurer when the at-fault party has significant liability insurance. It is no surprise that these efforts have been extinguished by the insurance lobby, most recently in 2011.
Los Angeles Uninsured Motorist Attorney Barry P. Goldberg is currently advocating passage of California Assembly Bill AB 862. In fact, he has been contacted by a legislative analyst for his comment and input. Mr. Goldberg contends that the Bill is a logical first step in empowering responsible California motorists to be able to adequately insure themselves against the epidemic of uninsured and underinsured drivers in the State of California. In short, the Bill will allow California motorists to purchase “enhanced” Underinsured Motorist Coverage which will actually and predictably protect them and their family when involved in an accident wherein the adverse driver did not have sufficient liability insurance.
The new Bill AB 862 eliminates some of the opposition to the prior attempt by allowing insurers to sell “enhanced” underinsured motorist coverage as an option for an additional premium. In other words, a consumer could buy the cheaper coverage (as it exists today) or could buy the “non set off” version of the coverage. Currently, insurers cannot even offer that “enhanced” coverage due to an oversight in the way the statute was originally and in-artfully drafted. Basically, a consumer could buy the coverage desired and have some predictability about how much coverage they are entitled to in the event of an “underinsured” accident. There is a certain fundamental fairness in allowing a consumer to get the coverage paid for rather than have it eliminated or reduced depending on who happened to cause an accident.
This Bill is not a cure all for California’s broken Financial Responsibility Laws. It is simply a logical and practical first step which begins to acknowledge that the minimum liability limits are outdated and out of step with the costs of modern driving. At least a responsible California motorist should be able to insure against the “underinsured” epidemic caused by the Legislature’s complete failure to address the grossly inadequate minimum limits in the state.
Remarkably, the insurance industry opposes the new Bill. This should raise some red flags for even the most casual observer. Why would insurers not want to sell additional insurance coverage for additional premiums? That’s what they do—-sell insurance. Now, they don’t want to even sell the stuff!
The answer should be obvious—-insurers like the current inadequate coverage scheme and are raking in record profits by having Californians “underinsured.” Insurers like the current “credit” or “set off” and enjoy the profit of selling an Uninsured Motorist Policy for a certain amount, and then possibly walking away or reducing that amount based on the happenstance of who caused the accident or how many vehicles were involved.
As Mr. Goldberg told the legislative analyst, as an advocate for California Motorists injured by uninsured or underinsured drivers, I cannot think of a decent understandable reason why AB 862 should not become the law.
For more information about the article author and attorney Barry Goldberg’s uninsured and underinsured motorist expertise, please visit his web page, Los Angeles Uninsured Motorist Attorney. www.barrypgoldberg.com/
For a free consultation, Please call Barry P. Goldberg at (818)222-6994
