BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Martha M. Escutia, Chair
2001-2002 Regular Session
SB 81 S
Senator Speier B
As Amended April 24, 2001
Hearing Date: May 1, 2001 8
Insurance Code 1
GMO:cjt
SUBJECT
Automobile Insurance: Uninsured Motorist Coverage
DESCRIPTION
This bill would permit an injured insured owner of a motor
vehicle to recover damages under the uninsured motorist
coverage of his or her policy, if he/she was struck by
his/her own insured car while it was being operated without
his/her permission in the course of criminal activity. The
criminal activity must be one to which the injured insured
was not a party, and must have been reported to the police.
BACKGROUND
Uninsured motorist (UM) coverage provided by an insured's
liability insurance policy does not apply as primary or
excess coverage to bodily injury sustained by the insured
when struck by a vehicle owned by an insured. [Bus. & Prof.
Code Sec. 11580.2(c)(7).] "The objective of the statute is
to provide protection to the insured from the injuries
caused by the unsafe operation of uninsured motor
vehicles." [ Denny v. St. Paul Guardian Ins. Co. (1987) 196
Cal. App. 3d 73.]
Thus, if the insured is injured by his or her own vehicle,
no claim may be made under the UM coverage of the insured's
car insurance policy, even if the injury was caused by a
driver who was committing a crime in which the insured was
not a participant.
(more)
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A recent unpublished opinion of the Second Appellate
District on a carjacking case concluded that 1) the
uninsured motorist insurance statute excludes coverage to a
motor vehicle owner who is struck by his own car, and 2)
the unfairness in this statutory scheme is for the
Legislature to correct. The concurring opinion of the
third justice pointed out that under the current statute,
the only person who would not be protected under the normal
automobile insurance policy with an uninsured motorist
coverage is the person who owns the vehicle and is injured
in the course of criminal activity involving the automobile
(such as carjacking, which was the subject case).
This bill is intended to correct this anomaly.
CHANGES TO EXISTING LAW
Existing law requires every automobile driven in the state
to carry an insurance policy in the minimum amount of
$15,000 for injury to one person, and $30,000 for injuries
to all persons. It also requires the policy to include
coverage for injury to the policyholder if the policyholder
is injured by an underinsured or uninsured motorist
(uninsured motorist coverage), or to exclude such coverage
only by explicit agreement.
Existing law specifically excludes uninsured motorist
coverage for bodily injury sustained by the insured owner
when struck by his or her own insured vehicle.
This bill would permit the injured owner of an insured
motor vehicle to recover damages for bodily injury when
struck by his or her own vehicle under the uninsured
motorist coverage of his or her insurance policy if:
the motor vehicle was being operated by someone without
the injured insured's consent;
in connection with criminal activity;
to which the injured insured was not a party; and
and the criminal activity was reported to the police.
COMMENT
1. Stated need for the bill
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The case that spurred introduction of this bill involved
a man who was nearly killed by someone attempting to
steal his car. His insurance policy covered liability
(for injury to others, mandated under current law) and
uninsured motorist coverage. He had no medical pay
coverage, and he incurred substantial medical bills as a
result of the carjacking.
The trial court denied Farmers Insurance Exchange (the
insurance carrier) summary judgment, stating that the
policy was ambiguous. On a writ of mandamus, the
appellate court reversed and denied coverage under the
policy.
The author believes that it is unfair to deny crime
victims coverage just because the vehicle that struck
them was their own. If the same vehicle caused injury to
someone else in the same manner, the injuries would be
covered. Or, if the owner was injured by a vehicle owned
by someone else, in the same manner, and that other
driver was not insured, the owner would be able to
recover for the injuries sustained. Thus, the injured
insured owner of a vehicle could be doubly victimized:
once by the criminal, and again by the laws of chance.
This bill is needed in order to correct this anomalous
situation, and provide those victimized by criminal
activity of others involving their own insured motor
vehicle with an avenue to recover for damages sustained
therefrom.
2. Who pays for uncovered injuries?
The author believes that this bill is necessary in order
to allow persons who are victimized by a crime involving
their car and are struck by that car in the course of the
criminal activity, to recover under the uninsured
motorist provision of their insurance policy.
At present, these victims rely on their own health
insurance, the Victims of Crime fund, or the taxpayers,
through Medi-Cal if they have no health insurance, or the
medical payment provision of their motor vehicle
insurance (if they have such coverage), to pay for
medical bills incurred in connection with the crime. The
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Office of Statewide Health Planning and Development
reports that Medi-Cal was typically charged in excess of
$200 million annually for automobile-related injuries
during the mid-1990's. The Victims of Crime fund has
been underfunded for years and is used typically for
counseling of children who are victims of sexual abuse.
In the case of the man who was injured while someone was
attempting to steal his car, if he had medical pay
coverage in his insurance policy, his injuries would have
been covered. However, since he did not, and he also had
no health insurance coverage, his only option was to make
a claim against the uninsured motorist coverage of his
insurance policy.
According to the author and proponents of this bill,
spreading the cost of this type over all motor vehicle
insurance policy holders makes much more sense than
burdening all taxpayers through Medi-Cal (if the injured
person qualifies) or leaving his crime-related injuries
untreated.
3. Coverage only if injured in the course of a crime
reported to the police
This bill would permit recovery under the uninsured
motorist coverage of a policy only if:
the insured was injured by someone who was
operating the vehicle without the insured's
permission;
in the course of criminal activity to which the
injured insured was not a party; and
and that criminal activity was reported to the
police.
Possible examples of injuries that the bill would cover
are:
injuries sustained from the carjacking case.
injuries sustained by a woman injured by an irate
husband who takes their car and intentionally strikes
her with the car (assault with a deadly weapon) and
the incident was reported to the police.
injuries sustained by a mother injured when her
underage son who has no driver's license takes her car
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without permission (joyriding) and hits her as she
tries to run in front of the car to stop him (only if
the joyriding is reported to the police).
On the other hand, injuries sustained by a woman
accidentally injured by her automobile as her husband
backs the car into the garage would not be covered under
the uninsured motorist provision of their policy.
Similarly, injuries sustained by a man struck by his car
driven by his wife in a staged accident, so that he and
she may collect on their insurance policy under the
uninsured motorist provision is not covered under current
law, and would not be covered under this bill.
According to the Department of Justice, in 1999 there
were approximately 1,024 carjackings, 1,611 kidnappings,
and 162 vehicular manslaughters in California. Assuming
that the kidnappings did not involve the victim's car,
the number of situations that this bill would cover would
be very small indeed. In light of this, the author
believes that such injuries should be covered by the
insurance system.
4. Opposition from insurance carriers: domestic violence
gets rewarded
The Association of California Insurance Companies (ACIC)
opposes this bill because, they contend, it would invite
claims in domestic violence cases, fraud, and such acts
as child molestation, arson, or intentional collision of
one insured vehicle into another insured vehicle. How
child molestation and arson could possibly fit under this
bill is questionable.
The ACIC argues that what will happen in domestic
violence cases is that "abusers will get paid for their
abuse. As the spouse of the person being beaten, the
abuser is considered by definition of the policy, an
"insured" person. When the insurance check comes in the
mail, the abuser can cash it just as easily (or maybe
even more easily) as the abusee?is the public policy
statement being made here one that says an insurance
policy will pay abusers for their abuse?"
However, the state's community property laws prevent a
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spouse who abuses the other spouse from claiming any
community property interest in any benefit that this bill
would provide to an abused spouse. In other words,
payment to the abused spouse is the abused spouse's
separate property. Should the abusing spouse take the
insurance payment when it comes in the mail, he or she
would be committing another crime.
Further, two of the conditions of coverage under this
bill would be that the person who was injured did not
participate in the criminal activity in which the car was
used and that the activity was reported to the police.
Perhaps, if an abused spouse had to report to the police
to get coverage, this bill would actually accomplish more
than it intended, as many spousal abuse cases are not now
reported.
Further, the author argues that collusion by spouses in
this case, where one strikes the other with a car and
must report the incident to the police to get coverage,
is such a highly visible situation that it would
certainly invite investigation by the police and would
probably result in the couple being charged with trying
to defraud the insurance company.
5. Suggested amendment
A police report is not currently required for coverage
under the uninsured motorist insurance statute, and in
practice is generally not made by the owner, unless the
owner is struck by a "hit-and-run" vehicle. Under this
bill, a report about the criminal activity during the
commission of which the owner was injured must be made to
the police in order for uninsured motorist coverage to be
effective.
Perhaps the language should be changed from the
requirement that the criminal activity has been reported
to the police to a requirement that the police has
investigated the reported criminal activity and prepared
a police report, regardless of whether any charges were
filed subsequently. This would ensure that the "criminal
activity" is not just reported by the injured owner, but
the facts were independently verified by the police.
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This may assuage the insurance carriers' fears that
spouses would simply hit each other with their vehicles
in order to collect on their insurance policies.
Support: Consumer Attorneys of California
Opposition: Association of California Insurance Companies;
Alliance of
American Insurers
HISTORY
Source: Author
Related Pending Legislation: None Known
Prior Legislation: None Known
Prior Vote: Sen. Ins. (Ayes 5, Noes 1)
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