In Berendes v. Farmers Insurance Exchange (No. C068066, filed 11/18/13), a California appeals court held that underinsured motorist coverage did not extend to a nonresident adult child of the named insured when she was a pedestrian, despite the fact that she was a “listed driver” with respect to the policy’s liability coverage.
In Berendes, the named insured’s adult daughter was killed by an underinsured motorist when she was a pedestrian. She did not reside with the named insured, and was insured under coverage she shared with her husband. The heirs collected benefits from the underinsured motorist’s insurer, as well as the woman’s own insurer, but were denied further benefits from Farmers, which insured her father under multiple policies, including umbrella insurance.
The woman’s father had two Farmers primary auto policies, one covering his own car and a second covering a car he’d bought for the woman, but kept in his own name. She was specifically listed as a driver on the latter policy, and both policies were primary to the father’s umbrella policy. The heirs sued Farmers, contending that because the woman had been listed on the one policy as an insured for liability coverage, she was likewise entitled to all the benefits of underinsured motorist coverage. The trial court disagreed, and entered summary judgment for Farmers.
On appeal, the court first rejected an argument that the uninsured/underinsured (UM/UIM) motorist statute specifically mandated coverage for the woman, because she was a listed insured under one policy, and had not waived UM/UIM coverage in writing. The court pointed out that the woman did qualify as an insured under the UM/UIM statute, but only for injury suffered in, upon or alighting from a covered vehicle. Under Insurance Code section 11580.2, named insureds, resident spouses and resident relatives are insured against injuries caused by uninsured or underinsured motorists without regard to the covered auto, including injuries those persons may suffer while pedestrians. All other persons must be in, upon or alighting from the insured vehicle to qualify for UM/UIM coverage. And since the woman was not a resident of the named insured’s household she fell into the latter category, and the court found no statutory mandate for coverage.
The appeals court also rejected a claim that the policy itself was ambiguous because the woman was unqualifiedly insured for liability coverage, but not underinsured motorist coverage. The liability coverage part of the policy defined “insured” as including any “listed person,” but the UM/UIM coverage part paralleled the UM/UIM statute, covering the named insured and resident relatives for all purposes, but insuring all others only when in, upon or alighting from the insured vehicle. The heirs argued this created an ambiguity, because the definition of insured was inconsistent across the different coverage parts of the policy.
The court disagreed, stating that “the express terms of the policies provided distinct definitions of ‘insured person’ for each of the two relevant parts of the policy. It cannot be argued that the definition of ‘insured person’ found in PART I – LIABILITY of the policies applied to the provisions of PART II – UNINSURED MOTORISTS without ignoring the express policy language.”
Finally, the Berendes court dismissed a “reasonable expectations” argument, not only because it found the policy unambiguous, but because the evidence proffered was in the form of after-the-fact evidence, which the court said could not logically have caused a reasonable expectation of coverage before the loss.
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