Allied Premier Insurance v. United Financial Casualty Co.

• Jurisdiction: California,United States
• Law Firm: Lewis Brisbois Bisgaard & Smith LLP
• Subject Matter: Insurance, Insurance Laws and Products
• Author: Mr Michael Velladao and Aaron Knapp
• Published date: 02 October 2023

(Failure to Cancel Certificate of Insurance Filed For Purpose of Proof of Financial Responsibility By Commercial Trucker Does Not Prevent Expiration of Commercial Auto Policy)

(September 2023) - In Allied Premier Ins. v. United Financial Cas. Co., 15 Cal.5th 20 (July 24, 2023), the California Supreme Court responded to a certified question from the U.S. Court of Appeals for the Ninth Circuit, which stated as follows:

... Under California's Motor Carriers of Property Permit Act (Veh. Code, ' 34600 et seq.; the Act), does a commercial automobile insurance policy continue in full force and effect until the insurer cancels the corresponding certificate of insurance on file with the Department of Motor Vehicles (DMV or Department), regardless of the insurance policy's stated expiration date? The answer is no. The terms of an insurance contract generally determine the duration of the policy's coverage. Although an endorsement can amend the policy, neither the Act nor the specific endorsement it requires extend coverage beyond the underlying policy's expiration date.

The dispute which gave rise to the question certified to the California Supreme Court involved whether a commercial auto policy issued by United Financial Casualty Company ("United") remained in effect and provided coverage for wrongful death lawsuit, even though its policy had expired on April 12, 2015, and the accident giving rise to the underlying lawsuit took place on September 1, 2015.

The trucker's subsequent insurer, Allied Premier Insurance ("Allied"), on the risk at the time of the accident, settled the lawsuit for its $1,000,000 policy limits and filed a contribution action against United contending that it should have paid for half of the settlement of the underlying lawsuit. Allied contended that since the certificate of insurance on file with the California Department of Motor Vehicles ("DMV") had not been cancelled by United, under the Act, the United policy remained in place and covered the loss as well. In response United argued that its policy had expired and that the failure to cancel a "certificate of insurance" did not extend the United policy period under the Act.

In responding to the Court of Appeals' certified question, the California Supreme Court distinguished a prior decision of the Court entitled Transamerica Ins. Co. v. Tab Transportation, Inc., 12 Cal.4th 389. The Transamerica decision interpreted a predecessor code section, the Highway Carriers' Act f 1961 (Pub. Util...