Recovery from General Liability Carrier Held to Reduce Underinsured Motorist Coverage and to Eliminate Any Obligation on the Part of the Injured Party’s Automobile Carrier
Elliott v. Geico Indem. Co., 231 Cal. App. 4th 789 (2014)
In Elliott, the California Court of Appeal affirmed the trial court’s ruling that a carrier’s underinsured motorist coverage must be reduced not only by payments by the at-fault driver’s automobile carrier, but also by payments from a carrier that issued a general liability policy to the at-fault driver’s employer.
Elliott arose out of an accident in which a motorcyclist was killed when he collided with a drunk driver who was returning home from his work at a restaurant. The deceased’s widow recovered the $15,000 policy limit from the drunk driver’s automobile carrier, as well as the $250,000 policy limit from the restaurant’s general liability carrier. She then submitted a claim to her own automobile carrier in the amount of $85,000 – the $100,000 limit on her underinsured motorist coverage less the $15,000 payment by the tortfeasor’s automobile carrier. The widow’s carrier denied the claim and argued that the $250,000 payment from the restaurant’s general liability carrier also reduced the amount owed under its policy. Its position was based on the language in its policy allowing it to deduct from the policy’s underinsured motorist coverage “the amount paid to the insured by or for any person or organization that may be held legally liable for the injury.” 231 Cal. App. 4th at 791-92. The insured disputed this position and based her argument on language in a form provided to her with her policy which stated that “[t]he underinsured motorist portion of your … coverage pays the difference between your [underinsured motorist limits] and the at fault driver’s Bodily Injury limits….” Id. at 792. The insured ultimately sued her carrier, and the trial court granted the carrier’s motion for summary judgment based on a finding that the form was not a part of the policy, and that the policy language itself was unambiguous regarding the amounts that could be deducted from the policy’s underinsured motorist coverage. The insured appealed, and the Elliott court affirmed. In reaching its ruling, the Elliott court explained that the unambiguous terms of the policy applied, and also that they mirrored the terms of California Insurance Code Section 11580.2 – the code section requiring automobile carriers to provide underinsured motorist coverage.
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