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Progressive Choice Insurance Co. v. California State Automobile Association Inter-Insurance Bureau

In Progressive Choice Ins. Co. v California State Automobile Association Inter-Insurance Bureau, 218 Cal.App.4th 1145 (August 12, 2013), the California Second District Court of Appeal affirmed the entry of judgment in favor of Progressive Choice Insurance Company (“Progressive”) in connection with its claim for pro rata contribution from California State Automobile Association Inter-Insurance Bureau (“CSAA”) in connection with an underinsured motorist claim paid, in full, by Progressive on behalf of CSAA’s named insured, Benjamin White. The parties’ dispute arose out of an automobile collision, wherein, Mr. White was riding as passenger in a vehicle operated by Scott Tortora, and the party that caused the collision was underinsured. As a result, after settling with such party, Mr. White made a claim for underinsured benefits under the Progressive policy issued to Mr. Tortora and his own automobile insurance policy issued by CSAA.

Ultimately, Progressive settled Mr. White’s underinsured motors claim in its entirety for $62,500. Subsequently, it filed a contribution lawsuit against CSAA arguing that it was obligated to contribute on a pro-rata basis to Mr. White’s UIM claim. Thereafter, Progressive and CSAA filed cross-motions for summary judgment. The trial court agreed with Progressive and entered judgment in its favor, requiring CSAA to reimburse Progressive on a pro rata basis for its payment of Mr. White’s UIM Claim.

In affirming the trial court’s decision, the Court of Appeal rejected CSAA’s argument that it was entitled to rely on Insurance Code section 11580.2(c)(2). This subdivision states in relevant part as follows:

The insurance coverage provided for in this section does not apply either as primary or as excess coverage: . . .

“(2) To 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 CSAA policy did not include an exclusion as permitted by section 11580.2(c). Rather, it included an “other insurance” clause which stated that its policy would be excess if the insured is entitled to similar insurance available to the insured under the policy affording coverage for the subject motor vehicle. In rejecting CSAA’s arguments, the Court of Appeal stated as follows:

Notably, the statutory exclusion of section 11580.2, subdivision (c)(2) is not among those listed in the CSAA policy’s exclusions. The CSAA policy does not exclude UIM coverage where an insured suffers bodily injury “while in or upon or while entering into or alighting from a motor vehicle other than the . . . motor vehicle if the owner thereof has insurance similar to that provided in this section.” (§ 11580.2, subd.(c)(2).)

CSAA contends the “Other Insurance” provision of its policy expressly incorporates section 11580.2, subdivision.(c)(2). That provision provides: “With respect to bodily injury to an insured person occupying a motor vehicle not owned by you, the coverage under this Part applies only as excess insurance over any similar insurance available to such insured person and covering such automobile as primary insurance . . . If there is other similar insurance on a loss covered by this Part, we will pay our proportionate share as our limit of liability bears to the total limits of all applicable similar insurance. But, any insurance for a vehicle you do not own is excess over any applicable similar insurance.”

The “Other Insurance” provision, however, does not contain language substantially similar to that set forth in section 1158.2, subdivision (c)(2). The contractual provision states that where an insured is injured while occupying a vehicle belonging to a third party, the policy will provide UIM coverage, although it will be as excess insurance. In contrast, the statutory exclusion of section 11580.2, subdivision (c)(2) States that there will be no UIM coverage at all. We note that when CSAA has wished to include the statutory exclusion provided by section 11580.2, subdivision (c)(2), it has done so. In the 1968 case of Darrah, the appellate court noted that CSAA had issued an automobile policy containing the following exclusionary language: “With respect to bodily injury sustained by any insured occupying any automobile, other than one owned by the named insured, the insurance hereunder shall not apply if the owner of such automobile has insurance similar to that provided for herein.” (Darrah, supra, 259 Cal.App.2d at p. 246 [holding UIM coverage in CSAA policy did not apply because of exclusionary language in policy].) Thus, the “Other Insurance” clause is insufficient to invoke the statutory exclusion of section 11580.2, subdivision(c)(2).

CSAA contends it need not expressly incorporate the langue of section 11580.2, subdivision (c)(2) in order to exclude the UIM coverage that it provided to the insured. This argument was rejected in Utah Property & Casualty Ins. Etc. Assn. v. United Services Auto. Assn. (1991) 230 Cal.App.3d 1010 (Utah Property) and Lumberman’s Mut. Cas. Co. v. Wyman (1976) 64 Cal.App.3d 252. Those cases held that where an insurer provides greater coverage than required under the law, the insurer may not rely on statutory restrictions on coverage that were not expressly incorporated into the insurance policy.

. . .

Absent the statutory exclusion set forth in section 11580.2, subdivision (c)(2), both the CSAA and Progressive policies are implicated. Although the CSAA policy’s “Other Insurance” clause contains an excess coverage provision, CSAA may not rely on that provision because the Progressive policy has a pro-rata provision. As explained above, under section 11580.2, subdivision (d), the pro-rata provision in the Progressive policy takes precedent over the excess coverage provision in the CSAA policy. (See Prieto, supra, 268 Cal.App.4th at pp. 893-894 [insurance policy containing the pro-rata provision permitted by section 11580.2, subdivision (d) takes precedence over an insurance policy providing that it is excess coverage]; Planet, supra, 23 Cal.App.4th at p. 1262 [same].) Thus, the UIM loss must be allocated on a pro-rata basis between Progressive and CSAA.

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