United States: Haering v. Topa Insurance Company

(Because Uninsured / Underinsured Motorist Coverage is Considered First Party Coverage, Excess Policy Affording Third Party Coverage Did Not Provide Uninsured / Underinsured Motorist Coverage, Notwithstanding Following Form Insuring Agreement)

In Haering v. Topa Ins. Co., 244 Cal.App.4th 725 (February 3, 2016), the California Second District Court of Appeal affirmed the trial court’s entry of judgment in favor of Topa Insurance Company (“Topa”) relative to whether an excess following form policy issued by Topa afforded uninsured / underinsured motorist coverage.

The plaintiff, Larry Haering, is the owner of California Fleet, Inc. (“California Fleet”) which was an insured under a primary insurance policy issued by State National Insurance Company with a policy period of December 9, 2011 to December 9, 2012. California Fleet was also an insured under an excess liability policy issued by Topa Insurance Company for the same policy period. The Topa policy designated the State National policy as the underlying primary policy. The State National policy afforded uninsured motorist / underinsured motorist (“UM / UIM”) coverage of $1 million.

The insuring agreement for the Topa policy provided as follows:

"To indemnify the insured for the amount of loss which is in excess of the applicable limits of liability, whether collectible or not, of the Underlying Insurance inserted in-Item 6' of the Declarations, provided that this policy shall apply only to those coverages for which a limit of liability is inserted in Item 5 of the Declarations. If such scheduled Underlying Insurance contains a sub-limit in a lesser amount than the scheduled limit, the Insurance afforded by this policy shall apply in the same manner it would have applied had the scheduled limit been maintained and not reduced by the sub-limit. Provided further that the limit of the Company's liability under this policy shall not exceed the applicable amount inserted in Item 5 of the Declarations.

“The provisions of the immediate underlying policy are incorporated as a part of this policy except for:

"(a) any obligation to investigate, defend, or pay for costs incident to the same;

"(b) the amount of the limits of liability;

"(c) any 'other insurance' provision, and

"(d) any other provisions therein which are inconsistent with the provisions of this policy.

"lf the applicable coverage in the immediate underlying policy insures accidents, rather than occurrences, then 'accident' is substituted for 'occurrence' in the applicable coverage of this policy."

The Topa policy also defined the term “loss” as “the sum paid in settlement of losses for which the insured is liable after making deduction for all recoveries, salvages or other insurance . . . (whether recoverable or not, and shall include all expenses and costs.).”

On October 14, 2012, Mr. Haering was injured in a motor vehicle accident caused by a negligent driver who was an insured under a policy with a $25,000 liability limit. Subsequently, in February 2013, Haering settled his claim against the negligent driver by accepting the $25,000 limit under the driver’s policy. In May 2013, Haering submitted a claim to State National and eventually recovered the policy limit under the $1 million UIM endorsement to the State National policy. Thereafter, on July 23, 2013, Haering submitted a claim to Topa for $1 million in excess coverage. Haering maintained that the Topa policy followed form to the State National policy and incorporated the $1 million UM/UIM endorsement, notwithstanding an exclusion in the Topa policy barring coverage for UM and UIM claims.

Thereafter, Haering filed an action against Topa for breach of contract and bad faith. Subsequently, Haering filed a motion for summary adjudication of a single issue, whether the Topa policy obligated Topa to provide UM / UIM coverage for his injuries sustained as a result of the October 14, 2012 accident. Following a July 14, 2014 hearing on plaintiff’s summary adjudication motion, the trial court denied the motion, and found that Topa’s policy only covered third party liability claims, and not a first party UM / UIM claim for benefits for injuries sustained by the insured. Thereafter, plaintiff and Topa entered into a stipulation for entry of judgment, and such judgment was entered in Topa’s favor. Haering then appealed the judgment.

In affirming the trial court’s decision, the Court of Appeal described UM / UIM coverage as follows:

Insurance Code section 11580.2 requires insurance policies that cover the ownership, maintenance, or use of any motor vehicle to provide coverage for damages caused by an uninsured or underinsured vehicle. (Ins. Code, § 11580.2) "Section 11580.2 mandates two separate types of coverage — UM and UIM coverage. UM coverage requires the insurer to pay its insured, up to specified limits, damages for bodily injury or wrongful death the insured would be entitled to recover from the owner or operator of an uninsured motor vehicle. [Citation.] UIM coverage allows an insured to recover from his or her own insurer the difference between the amount of the insured's own underinsured motorist policy limits and whatever is available from the negligent driver's liability insurance. [Citations.]" (Daun a USAA Cas. Ins. Co. (2005) 125 Cal.App.4th 599, 606.)

The statutory requirement for UM/ UIM coverage does not apply, however, to excess insurance policies. (Ins. Code, § 11580.2, subd. (a)(1); Furlough v. Transamerica Ins. Co. (1988) 203 Cal.App.3d 40, 47 ["neither statutory nor decisional law requires that insurance furnished on an umbrella or excess basis include uninsured motorist coverage"] )

The Court of Appeal also noted the distinction between primary insurance coverage and excess insurance coverage with respect to policies affording “following form” coverage. The Court of Appeal stated as follows:

The distinction between primary insurance coverage and excess insurance coverage is also pertinent to our analysis. Primary insurance provides immediate coverage upon the happening of an occurrence that gives rise to liability. (Century Surety Co. v. United Pacific Ins. Co. (2003) 109 Cal.App.4th 1246, 1255.) Excess insurance provides coverage after a predetermined amount of primary coverage has been exhausted. (Ibid.)

A "following form" excess policy incorporates by reference the terms and conditions of the underlying primary policy. (Coca Cola Bottling Co. v. Columbia Casualty Ins. Co. (1992) 11 Cal.App.4th 1176, 1182 (Coca Cola).) A following form excess policy generally will contain the same basic provisions as the underlying policy, with the exception of those provisions that are inconsistent with the excess policy. (Seaman & Kittridge, Excess Liability Insurance: Law and Litigation (1997) 32 Tort & Ins. U. 653, 658.) Any inconsistency or conflict between the provisions of a following form excess policy and the provisions of an underlying primary policy is resolved by applying the provisions of the excess policy. "It is well settled that the obligations of following form excess insurers are defined by the language of the underlying policies, except to the extent that there is a conflict between the two policies, in which case, absent excess policy language to the contrary, the wording of the excess policy will control. [Citations.]" (Ostrager & Newman, Handbook of Insurance Coverage Disputes (17th ed. 2014) § 13.01; see also Home Ins. Co. v. American Home Products Corp. (2d Cir. 1990) 902 F2d 1111, 1113 [although both primary and excess policies must be examined in determining the scope of excess insurer's obligations, excess policy controls if there is any conflict between the two insuring agreements].)

Some excess insurance policies include, by endorsement, a "broad as primary" provision. A "broad as primary" endorsement enlarges the scope of coverage to include a loss that is within the scope of the underlying primary policy, even though that loss otherwise would have been excluded under the terms of the excess policy. (Ostrager & Newman, Handbook of Insurance Coverage Disputes, supra, § 13.01(b); see Housing Group v. California Ins. Guarantee Assn. (1996) 47 Cal.App.4th 528, 533-535 [broad as primary endorsement applies to any loss within the scope of primary policy's coverage].)

The Court of Appeal then held that the insuring agreement in the Topa excess policy only afforded indemnity coverage for third party claims. The Court of Appeal held as follows:

The plain language of the Topa policy's insuring agreement limits the insurer's indemnity obligation to "losses for which the insured is liable," i.e., third party liability claims.' (Montrose, supra, 10 Cal.4th at p. 663; Garvey, supra, 48 Cal.3d at pp. 407-408.) Plaintiff's claim for first party UM/UIM benefits does not come within the scope of that agreement. (Waller, supra, 11 Cal.4th at p. 16 [insured bears the burden of brining a claim within the scope of the policy's insuring agreement].)
. . .
The language of the Topa policy that incorporates the provisions of the State National policy also expressly excepts from incorporation those provisions "which are inconsistent with" the Topa policy. The Topa policy's insuring agreement expressly limits coverage to third party liability claims, and first party UM/UIM coverage would be inconsistent with that limitation. There is no "broad as primary" endorsement. Given these circumstances, the provisions of the Topa policy govern the scope of coverage. (Ostrager & Newman, Handbook on Insurance coverage Disputes, supra, § 13.01, and cases cited.)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.