Who do you think is right in this one; the trial court or the Court of Appeal?
I can distill the basic facts fairly concisely. Insurance Company issues a policy to Insured that covers a RAM 3500 truck that weighs over 10,000 pounds. California's mandatory minimum insurance law says that if you have a truck (as here) that weighs over 10,000 pounds, the minimum level of insurance is $750,000. Insurer, which knows that the RAM truck is over 10,000 pounds, nonetheless issues a policy with only a $50,000 limit. Insured later drives the RAM truck and kills someone. Insurer pays $50,000, but the Victim (and Insured) say the coverage is the $750,000 minimum.
Does the insurance company have to pay only the $50,000 figure that the policy sets forth, or does it have to pay the $750,000 statutory minimum?
On the one hand, the policy expressly says what its limits are -- $50,000 -- and the insured could at least in theory have bought 15 different $50,000 policies and "stacked" them to satisfy the $750,000 minimum. On the other hand, when it issued the policy, the Insurer also gave the Insured a standard "proof of insurance" form required by law that stated (falsely) that the policy satisfied the statutory minimum, and the policy also contains a provision that says that if there's anything in the policy that conflicts with California law (e.g., the minimum insurance rules), then the policy is "hereby amended to conform to such statutes."
The trial court goes one way, but the Court of Appeal goes another and reverses. On which side of the argument do you fall?
Think about it.
Think about it.
Think about it before I tell you which side ends up winning.
The Court of Appeal agrees with the insurance company, and sets the limit at $50,000.
I think there are good arguments on both sides here, and that the right result is much, much closer than Justice Franson's opinion makes it out to be. Yes, I know, the policy says what it says, and it's primarily the insured who's required to have the requisite amount of insurance coverage, and it's possible at least in theory that the policy here could have been part of a $750,000 "package" of insurance that satisfied the statutory minimums.
But I nonetheless have a very keen sense of what went on here. The insurer knew that the RAM truck was over 10,000 pounds (they all are) and hence knew -- or definitely should have known -- that the statutory minimum was $750,000 in coverage. But it also knew that such a legally required policy was going to be hugely more expensive than a routine consumer $50,000 policy, which was all that the customer here (which didn't know about the 10,000 pound rule) wanted. The customer wanted a cheap policy and a "proof of insurance" form that it could show to cops and anyone else, so rather than lose the sale, the insurance company sold him the thing and issued the (false) proof of insurance.
If you let that happen -- as the Court of Appeal does -- then plenty of people will do precisely that. And, as here, the person who suffers will be a third party (the victim), who -- as here -- doesn't get paid even a smidgeon of her injuries and medical (or, as here, funeral) bills, because the insurance caps out at $25,000 per person and $50,000 total and the people who own and drove the car are (as here) judgment proof.
Plus, I've got a great little business model after today's opinion. I'm going to start writing auto insurance policies that provide $5 in coverage even though the statutory minimum is $15,000. They'll be super cheap, since they provide basically no coverage, but I'll nonetheless issue proof of insurance forms that you can show to the cops if they pull you over and ask for proof of insurance. So I'll get lots and lots of customers. True, if the Department of Insurance ever catches on to what I'm doing, I might be in trouble -- maybe they pull my license (shucks!) or slap me with other penalties.
But even then, I'll just say, as the Court of Appeal does here, "Oh, sure, I knew my policy only provided $5 in coverage and the statutory minimum is $15,000, but it's possible that my customers were self-insuring for the additional $14,995, or buying 3,000 $5 policies and 'stacking' them to satisfy the minimum. That's the insured's burden to meet the minimum, not mine. Take it up with the Legislature if you want a different rule, but what I'm doing is totally legal."
Right?
