The Adjuster – March 2008

The Roth Report: Use of a Covered Auto

James M. Roth, Esq., The Roth Law Firm

​The California Court of Appeal has been busy indeed. Here are a few decisions that have been handed down which discuss competing “other insurance clauses”; when coverage under the “use of a covered auto” provision does not exist; and when the proration provision in an automobile policy takes precedence over the excess provision for uninsured motorist coverage.

WHERE TWO INSURANCE POLICIES WHICH INSURED DIFFERENT INSUREDS AND APPLIED TO THE SAME RISK, THE RELATIVE APPLICATION OF THE POLICY IS GENERALLY DETERMINED BY THE EXPLICIT PROVISIONS OF THE RESPECTIVE “OTHER INSURANCE” CLAUSES.

​In Burns v. California Fair Plan (2007) 152 Cal.App.4th 646, 61 Cal.Rptr.3d 809, the Second District Court of Appeal Appellate District held that a life tenant and trust which held remainder interest in residence destroyed by fire could each only recover on a pro rata basis under their separate fire insurance policies, which each contained “other insurance” provisions. Ann Burns held a life estate on a residence and the Kent Burns Trust held the remainder interest. Both separately purchased fire insurance policies on the home from different insurance companies. A fire destroyed the home. Burns and the Trust brought an action each seeking to obtain the full value of the residence under their respective insurance policies, a total amount in excess of the damage to the residence. The court found that the pro rata payments under the separate fire insurance policies of $279,410 to Ms. Burns destroyed by fire and $198,792.99 to the Trust which held the remainder interest fully compensated them for the loss of the residence, which had estimate cash value of $474,000. Ms. Burn’s “other insurance” provision only required her insurer to pay covered losses in excess of the amount due from other insurance, the Trust’s “other insurance” provision limited liability to the 41% proportion of the insurance policy limit to the total coverage between the two policies. The combined payment, noted the court, was more than the actual cash value of the property and more than the reconstruction estimate.

NO COVERAGE UNDER THE “USE OF A COVERED AUTO” PROVISION FOR THE CLAIMS BY A SHUTTLE SERVICE PASSENGER FROM THE SEXUAL ASSAULT BY THE SHUTTLE DRIVER WHEN THE USE OF THE VEHICLE WAS NOT THE PREDOMINATING CAUSE OR A SUBSTANTIAL FACTOR IN THE PASSENGER’S INJURIES.

In R. A. Stuchbery Others Syndicate 1096 v. Redland Insurance Company (2007) 154 Cal.App.4th 796, 66 Cal.Rptr.3d 80, the First District Court of Appeal held that the alleged injuries of a shuttle service passenger from the sexual assault by the shuttle driver did not result from “use of a covered auto” within the coverage of the shuttle service’s business automobile insurance, since the use of the vehicle was not the predominating cause or a substantial factor in the passenger’s injuries; rather, the shuttle was used merely to drive the passenger to the driver’s apartment where the alleged assault took place. In its analysis, the appellate court explained that under the “predominating cause/substantial factor test” for determining whether an injury resulted from the use of a vehicle, and thus is covered by auto insurance, a mere “but for” connection between the use of the vehicle and the alleged injuries is insufficient to bring the claim within the scope of coverage. The court concluded that the shuttle was merely used to transport the victim to the locale of the assault. Her injury resulted from the driver’s conduct and not from the “use” of the shuttle.

​THE PRORATION PROVISION IN AN AUTOMOBILE POLICY TAKES PRECEDENCE OVER THE EXCESS PROVISION FOR UNINSURED MOTORIST COVERAGE.

​In Allstate Ins. Co. v. Mercury Ins. Co. (2007) 154 Cal.App.4th 1253, 65 Cal.Rptr.3d 451, the Second District Court of Appeal held that the proration provision in an automobile policy takes precedence over the excess provision for uninsured motorist coverage. This case concerned a dispute between two insurance companies regarding which of two competing clauses in their respective uninsured motorist insurance policies apply to compensate a passenger injured in an automobile collision with an uninsured motorist. The Mercury insurance policy contained the following pro-rata provision: “[I]f the insured has insurance available to the insured under more than one

The Roth Law Firm, APLC

Find Us
15373 Innovation Drive, Suite 385
San Diego, CA 92128

View Map

Phone:
858.592.6250

Fax:
858.451.3643