Todd Berendes, et al. v. Farmers Insurance Exchange, et al.
Court of Appeal, Third Appellate District (November 18, 2013)
Uninsured and Underinsured Motorist Coverage is primarily governed by Insurance Code Section 11580.2. This case considered whether a driver added as a scheduled driver on a policy but not otherwise a “named insured” was entitled to underinsured motorist benefits for an accident while a pedestrian.
Kristina Berendes was struck and killed by a car driven by David Scott Duril while she was a pedestrian. She was 39 years old at the time of her death. She was married to Todd Berendes, and they had a daughter named Taylor. For at least one year prior to the accident, Kristina had been living with Todd and Taylor, and not with her father, William Felix. Prior to the accident, Kristina’s father had taken out automobile policies on a 2001 Chrysler PT Cruiser and on a 2005 Mercedes Benz ML 350. Kristina paid an additional monthly premium to be listed as a rated driver on the PT Cruiser policy, and her father had given her the Mercedes-Benz as a gift for graduating college. However, the policy set up for the Mercedes did not list any rated drivers. Farmers also issued an umbrella policy to Felix for $1,000,000. After receiving the $50,000 limits of Duril’s automobile liability policy, Todd and Taylor sought recovery under the Farmers’ policies for an underinsured motorist claim. When Farmers refused to pay, Todd and Taylor filed suit. Farmers filed a motion for summary judgment and prevailed. Plaintiffs appealed.
The Court of Appeal affirmed. Plaintiffs’ first contention was that under section 11580.2, no policy of insurance can be issued unless “the policy also covers the person for [the liability of an underinsured motorist].” The Court disagreed, holding that the expressed legislative intent was to provide underinsured motorist coverage to the “insured” under the policy. In this case, under the statute, the insured was either the named insured (Mr. Felix), his spouse, or residents living within his same household while occupying a motor vehicle, or any other person while in or upon or entering or alighting from an insured motor vehicle. Kristina did not fit any of the statutory definitions of an “insured,” despite being added as a rated driver. Hence, Farmers was under no statutory obligation to provide her with coverage for the liability of underinsured motorists.
The Court turned next to plaintiffs’ argument that the use of the term “insured person” in the Liability (part I) and Uninsured Motorist (part II) parts of the policy with two separate definitions created an ambiguity that must be construed against Farmers. Both definitions included the named insured and persons living in the same household. However, part I of the policy also included as an “insured person” [a]ny person using your insured car.” This was not in part II of the policy, which instead also included “[a]ny other person while occupying your insured car.” An amendment to the PT Cruiser policy stated that the definition of “insured person” was changed to include any “listed driver,” such as Kristine. However, in at least three places, the endorsement stated that this definition applied to “PART I – LIABILITY” only. The Court disagreed that using two different definitions was ambiguous, and that in fact it was very clear that one definition applied to include Kristine as an “insured person” for liability purposes since she was a rated driver, but that there was nothing in the policy to add her as an “insured person” for purposes of underinsured motorist coverage. When she was hit and killed by Duril’s car, she was a pedestrian, and not an occupant of the insured car. Thus, under the express terms of the policy, she was not entitled to underinsured motorist coverage.
Lastly, the Court refused to give credence to plaintiffs’ arguments that because Kristine had paid premiums, and because her father had “intended” her to be covered under the policies, her “reasonable expectations” required that she be provided with underinsured motorist coverage. The Court refused to apply a reasonable expectations test, because the language of the policy was clear and ambiguous. Secondly, the court held that all of the facts provided by plaintiff confirmed a reasonable expectation of coverage for liability, but not a reasonable expectation that she would be covered for underinsured motorist liability if she were a pedestrian.
Judgment in Farmers’ favor was affirmed.
This case is a reminder that simply being a rated driver may provide that person with liability coverage, but does not necessarily mean they are entitled to UM or UIM benefits. For that reason, it is important to know the statutory definitions of an “insured person” under Insurance Code section 11580.2.
For a copy of the complete decision see: