If Other Vehicle is Insured there can be no Uninsured Motorist Claim
Barry Zalma, Esq., CFE
Insurance claims expert, consultant at Barry Zalma, Inc. and author/Publisher at ClaimSchool, Inc.
Posted on December 17, 2020 by Barry Zalma
Multiple Causes of Action for UM Property Damage Claims Fails for Lack of an Uninsured Motorist
Why would anyone claim coverage undr an uninsured motorist policy when he has convincing evidence the other party was insured and the insurer offered money to settle? When the insured thought he could get punitive damages from his own insurer.
Trent Jason purchased automobile insurance at his local American Automobile Association of Northern California, Nevada & Utah, Incorporated (AAA NCNU) office. Following an automobile accident with a third party, Jason submitted a report to defendant CSAA Insurance Exchange (CSAA). CSAA denied his claim for benefits. Jason subsequently sued CSAA and AAA NCNU, alleging AAA NCNU misrepresented that it was his insurer and the defendants improperly denied his claim.
In Trent Jason v. American Automobile Association Of Northern California, Nevada & Utah et al., A158369, Court Of Appeal Of The State Of California First Appellate District Division One (December 9, 2020) AAA NCNU and CSAA moved for summary judgment on the grounds Jason’s insurance policy did not cover the accident at issue. The trial court granted the motions and entered judgment against Jason.
BACKGROUND
The Insurance Policy
Jason purchased automobile insurance through an insurance agent, whose offices were in a “AAA”-labeled building. The cover page of the insurance policy states “AAA Members Car Policy,” with the subheading “Designed exclusively for Members.” The bottom of the page provides the name and address for “CSAA Insurance Exchange.” The “Automobile Policy Declarations,” which summarize Jason’s coverage, states, “No Coverage,” for collision. Jason did, however, have uninsured motorists coverage.
The Accident and Subsequent Claims Process
While backing out of a parking space at a mall, another vehicle rear-ended Jason’s vehicle. The operator of the other vehicle refused to provide any identification or insurance information and left the scene. Jason received a letter from a CSAA claims representative stating CSAA had opened a claim on his policy. As a service to its insured CSAA tried to locate the other party’s insurance information, establish a claim on your behalf and provide you with the claim information.
A claims service adjuster obtained the other driver’s contact information and insurance information. He informed Jason the other driver “has been identified and has a valid insurance policy” with USAA (United Services Automobile Association). As a result, the claims service adjuster noted “Uninsured Property Damage coverage will not apply for this loss” and CSAA had “submitted a claim on your behalf.”
USAA stated it was willing to accept 50 percent liability for the accident. After Jason objected to accepting any liability for the accident, the CSAA claims service adjuster informed Jason he “placed 100% Not at Fault for the accident” in his file. The claims service adjuster further explained, “Unfortunately, AAA will not be able to afford you any coverage for the loss, because you do not have any first party coverage (Collision).”
Jason subsequently filed a second amended complaint (SAC) and argued his policy entitled him to recover for damages caused by a hit-and-run driver, and thus defendants breached their insurance obligations by failing to provide coverage. . The court explained the SAC failed to allege facts showing CSAA engaged in unfair, dishonest, deceptive or fraudulent practices.
AAA NCNU and the CSAA defendants each filed motions for summary judgment. The CSAA defendants first argued Jason could not demonstrate CSAA failed to pay policy benefits that were owed because the accident was not covered under the terms of the policy. The trial court granted both CSAA’s and AAA NCNU’s motions for summary judgment.
As to CSAA’s motion, the trial court found the causes of action for breach of contract and implied covenant of good faith and fair dealing must fail because CSAA did not deny policy benefits owed to Jason. The court explained the evidence demonstrated no coverage was available for the accident because the other vehicle was insured by USAA. The court found the evidence “only [gave] rise to one reasonable inference,” namely, that CSAA’s conduct and its denial of coverage was reasonable.
The trial court entered judgment against Jason, and he timely appealed.
DISCUSSION
Breach of Contract Claim
Jason’s breach of contract claim is based on his allegation that CSAA improperly denied him coverage under his policy’s uninsured motorist provision. He does not identify any other coverage at issue. As to the uninsured motorist coverage, Jason asserts he is entitled to coverage for property damage to his vehicle caused by a collision up to $3,500, for which loss or damage to the insured is legally entitled to recover from the owner or operator of an uninsured vehicle.
Jason’s position is premised on the assumption he was hit by an uninsured motorist. He argued, with no effect, that even though the owner of the other vehicle was insured, the actual driver was a different individual who was not insured. The undisputed evidence demonstrated the other vehicle involved in the accident with Jason’s vehicle was insured by USAA, and USAA did not deny coverage. Thus, the other vehicle did not qualify as an “uninsured motor vehicle” under the terms of Jason’s policy, and the uninsured motorist coverage was not applicable to the accident.
It is a general rule that the receipt of a policy and its acceptance by the insured without an objection binds the insured as well as the insurer and he cannot thereafter complain that he did not read it or know its terms. It is a duty of the insured to read his policy. The policy language tracks the requirements imposed by Insurance Code section 11580.26, subdivision (a)(2) for uninsured motorist coverage.
Since the other vehicle does not qualify as an “uninsured motor vehicle” under the policy the claim does not fall within the terms of the policy’s coverage clauses, then no coverage exists. Jason thus was not entitled to coverage and, accordingly, CSAA did not breach the insurance contract. Absent an actual withholding of benefits due, there is no breach of contract.
Claims for Implied Covenant of Good Faith and Fair Dealing and Insurance Bad Faith
Because CSAA was justified in determining the uninsured motorist coverage under Jason’s policy did not apply to the accident, there was no viable basis on which CSAA could have been found to have acted in bad faith on the undisputed facts presented.
Negligent Infliction of Emotional Distress Claim
Since Jason’s automobile policy did not provide coverage for the accident at issue.the trial court properly dismissed his claim for negligent infliction of emotional distress.
Punitive Damages
In California, it is settled there is no separate cause of action for punitive damages.
Claims for Breach of Contract, Breach of Implied Covenant of Good Faith and Fair Dealing, and Insurance Bad Faith
Jason contends AAA NCNU is liable for the breach of contract, breach of the covenant of good faith and fair dealing, and insurance bad faith claims because he “believed” he was insured by AAA NCNU. He asserts AAA NCNU represented it was the insurer for its members and thus has liability under the policy.
Most notably, the policy defines the insurer as CSAA. The evidence also indicates Jason knew the identity of his insurer since the accident report Jason submitted to the DMV lists CSAA as his insurer. Likewise, in response to CSAA’s separate statement of undisputed facts, Jason did not dispute he reported the accident to CSAA.
Regardless, whether AAA NCNU represented to Jason it was his insurer is not a material fact for these causes of action. Even assuming AAA NCNU acted as Jason’s insurer, the claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and insurance bad faith must fail for the same reasons those claims against CSAA were subject to summary judgment.
Negligent Infliction of Emotional Distress Claim and Request for Punitive Damages
Finally, Jason asserts he is entitled to pursue his negligent infliction of emotional distress claim and request for punitive damages against AAA NCNU. However, for the same reason those claims fail as to CSAA, they also fail as to AAA NCNU.
ZALMA OPINION
I am amazed that this case was the subject of an appeal and that the Court of Appeal gave service to all of Jason’s claims concerning the identity of the insurer even though he paid premium to CSAA, that he was entitled to UM Property damage coverage even though the other car was insured and its insurer offered to settle with Jason. The clear language of the policy logically refused UM coverage when the other vehicle is insured. Regardless, Jason filed a incompetent suit and a second amended complaint, alleging nothing that could provide him coverage and trying to make a bad faith and punitive damages case out of a denial based on a clear and unambiguous exclusion. Courts should not give attention in any detail to such a suit.
? 2020 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at https://www.zalma.com and [email protected].
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.
https://zalma.com/zalmas-insurance-fraud-letter-2/ Read last two issues of ZIFL here.
Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921
Read posts from Barry Zalma at https://parler.com/profile/Zalma/posts
Listen to the Podcast: Zalma on Insurance https://anchor.fm/dashboard/episodes Zalma on Insurance
Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg/
Go to the Insurance Claims Library –https://zalma.com/blog/insurance-claims-library/