California Appeals Court Upholds Rule that Insurance Agent Owed No Duty to Advise Plaintiffs to Purchase Excess Uninsured/Underinsured Motorist Insurance to Help Recover Costs from Son’s Accident

In a recent unpublished opinion, the California Court of Appeals analyzed whether an auto insurance company had breached its duty of care to a husband and wife who believed they had purchased liability insurance for “everything,” including excess uninsured/underinsured motorist (UM) coverage.  The issue was whether such a duty exists, under California law, and whether the insurance agency had negligently failed to disclose that the plaintiff’s policy did not have UM coverage.

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The plaintiffs, the parents of a teenage boy struck and injured by an underinsured motorist, had purchased a personal umbrella policy through an insurance agency (the defendant). When the plaintiffs learned that they had personal liability coverage but no excess uninsured/underinsured motorist (UM) coverage, they filed a lawsuit against the defendant, alleging they negligently failed to disclose that their umbrella policy did not have UM coverage.

The plaintiffs’ allegation was that by failing to obtain a UM umbrella policy, the defendants deprived them of an additional million dollars of insurance benefits for their son’s accident. The trial court granted the defendant’s motion for summary judgment, finding no triable issue of material fact regarding whether the defendant breached its duty of care.  The plaintiffs appealed.

The Court stated that insurance agents do not have a duty to advise their insured to buy UM insurance in an amount beyond what is required by state law.  The Court held that here, the plaintiffs had not requested UM umbrella coverage from the defendant, and the defendant did not have a duty to supply such coverage.

In short, if the plaintiffs had known that the umbrella policy they purchased protected them from third-party claims but did not provide coverage for UM incidents, they alleged that they would have elected a different policy.

According to the umbrella policy the plaintiffs had purchased, excess liability coverage would activate if the plaintiffs were liable for negligence beyond their primary auto and homeowner policies. However, UM coverage was not provided as compensation to the plaintiffs for injuries caused by uninsured/underinsured motorists.

After the plaintiffs’ son suffered major injuries after being struck by a car while skateboarding across a street, two insurance carriers paid their full policy limits. The insurer for the driver who hit the teenager paid $100,000, and the defendant paid $400,000, according to the UM clause in the primary auto policy.

While the plaintiffs thought they had full protection on their auto insurance, and their intent was to cover “everything and everyone,” this was not the case.  The defendant insisted that their company did not maintain excess UM coverage.  The plaintiff testified that she believed UM coverage existed because she had asked for the umbrella policy to cover “everything.”  An expert for the plaintiff offered his opinion that the defendant had not clearly explained that they did not offer “coverage for everything.”

In reviewing the summary judgment, the court stated that they examined the record independently, looking for triable issues of material fact.  Since the defendant had moved for summary judgment, all doubts and ambiguities would be resolved in favor of the plaintiffs.

California law states the duties owed by insurance agencies.  The issue before the appellate court was whether the defendant owed a duty to advise the plaintiffs to purchase excess UM insurance from a different insurer, after the plaintiffs specifically requested a one-million dollar umbrella policy from the defendant, which had provided only excess liability coverage.

The law requires that automobile insurance policies include a minimum level of UM coverage. Insurance agents must ensure clients maintain a policy that meets the minimum levels of UM coverage, set by law.  In this case, the appellate court stated that simply because an insured states they want to cover “everything” does not mean that the insurance agent must procure UM coverage or advise about the existence of such coverage.

Here, the court stated the plaintiffs never requested UM excess coverage, and there was no triable issue of material fact.

State law requires UM coverage when consumers buy an auto liability policy.  Excess insurance and excess UM insurance is different, and the defendant did not offer excess UM umbrella coverage. The court affirmed the judgment in favor of the defendant.

This case demonstrates the nuances of car insurance policies and the issues that can arise following a devastating car accident. At Sharifi Firm, our car accident attorneys help accident victims and their families throughout Southern California assert their right to damages following an accident. We seek to hold negligent parties accountable when their careless or reckless actions cause harm. Contact our office today for a no-obligation consultation at 866-422-7222 or through our online form.

More Blog Posts:

California Appellate Court Upholds Reasonable Value of Medical Services for Uninsured Victim of Car Accident, Southern California Injury Lawyer Blog, October 24, 2016

California Court of Appeal Upholds Cancellation of Car Insurance Policy Before Car Accident; Plaintiffs’ Claims for Breach of Contract and Breach of Implied Covenant of Good Faith and Fair Dealing Fail, Southern California Injury Lawyer Blog, September 27, 2016

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