BILL NUMBER: AB 778 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 6, 2005
AMENDED IN ASSEMBLY MAY 4, 2005
INTRODUCED BY Assembly Member Mullin
FEBRUARY 18, 2005
An act to amend Section 11580.1 of the Insurance Code, relating to
auto insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 778, as amended, Mullin. Auto insurance: in-home supportive
services.
Existing law generally regulates auto insurance. Existing law
prohibits an auto liability insurance policy from containing
specified provisions. Existing law, added by Proposition 103,
requires auto insurers to use specified rating factors in setting
rates, including the number of miles driven annually by the insured.
This bill would prohibit an auto liability policy from containing
any provision that expressly or impliedly excludes from coverage
under the policy the operation or use of an insured motor vehicle by
the named insured in the performance of any in-home supportive
services, as described. The bill would allow an insurer to
consider, for rating purposes, the number of miles driven in the
provision of in-home supportive services if that number exceeds 2,000
miles per year. The bill would prohibit an insurer
from rating or canceling an auto insurance policy, or refusing to
insure an applicant, for the reason that the insured or applicant is
using an insured vehicle for the provision of in-home supportive
services.
Because the bill would alter the rating factors applicable to auto
insurance, it would amend Proposition 103 and would therefore
require a 2/3 vote of the Legislature.
Vote: majority 2/3 . Appropriation:
no. Fiscal committee: no. State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 11580.1 of the Insurance Code is amended to
read:
11580.1.
(a) No policy of automobile liability insurance described in
Section 16054 of the Vehicle Code covering liability arising out of
the ownership, maintenance, or use of any motor vehicle shall be
issued or delivered in this state on or after the effective date of
this section unless it contains the provisions set forth in
subdivision (b). However, none of the requirements of subdivision (b)
shall apply to the insurance afforded under the policy (1) to the
extent that the insurance exceeds the limits specified in subdivision
(a) of Section 16056 of the Vehicle Code, or (2) if the policy
contains an underlying insurance requirement, or provides for a
retained limit of self-insurance, equal to or greater than the limits
specified in subdivision (a) of Section 16056 of the Vehicle Code.
(b) Every policy of automobile liability insurance to which
subdivision (a) applies shall contain all of the following
provisions:
(1) Coverage limits not less than the limits specified in
subdivision (a) of Section 16056 of the Vehicle Code.
(2) Designation by explicit description of, or appropriate
reference to, the motor vehicles or class of motor vehicles to which
coverage is specifically granted.
(3) Designation by explicit description of the purposes for which
coverage for those motor vehicles is specifically excluded.
(4) Provision affording insurance to the named insured with
respect to any owned or leased motor vehicle covered by the policy,
and to the same extent that insurance is afforded to the named
insured, to any other person using the motor vehicle, provided the
use is by the named insured or with his or her permission, express or
implied, and within the scope of that permission, except that: (i)
with regard to insurance afforded for the loading or unloading of the
motor vehicle, the insurance may be limited to apply only to the
named insured, a relative of the named insured who is a resident of
the named insured's household, a lessee or bailee of the motor
vehicle, or an employee of any of those persons; and (ii) the
insurance afforded to any person other than the named insured need
not apply to: (A) any employee with respect to bodily injury
sustained by a fellow employee injured in the scope and course of his
or her employment, or (B) any person, or to any agent or employee
thereof, employed or otherwise engaged in the business of selling,
repairing, servicing, delivering, testing, road-testing, parking, or
storing automobiles with respect to any accident arising out of the
maintenance or use of a motor vehicle in connection therewith. As
used in this chapter, "owned motor vehicle" includes all motor
vehicles described and rated in the policy.
(c) In addition to any exclusion provided in paragraph (3) of
subdivision (b), the insurance afforded by any policy of automobile
liability insurance to which subdivision (a) applies, including the
insurer's obligation to defend, may, by appropriate policy provision,
be made inapplicable to any or all of the following:
(1) Liability assumed by the insured under contract.
(2) Liability for bodily injury or property damage caused
intentionally by or at the direction of the insured.
(3) Liability imposed upon or assumed by the insured under any
workers' compensation law.
(4) Liability for bodily injury to any employee of the insured
arising out of and in the course of his or her employment.
(5) Liability for bodily injury to an insured or liability for
bodily injury to an insured whenever the ultimate benefits of that
indemnification accrue directly or indirectly to an insured.
(6) Liability for damage to property owned, rented to, transported
by, or in the charge of, an insured. A motor vehicle operated by an
insured shall be considered to be property in the charge of an
insured.
(7) Liability for any bodily injury or property damage with
respect to which insurance is or can be afforded under a nuclear
energy liability policy.
(8) Any motor vehicle or class of motor vehicles, as described or
designated in the policy, with respect to which coverage is
explicitly excluded, in whole or in part.
The term "the insured" as used in paragraphs (1), (2), (3), and
(4) shall mean only that insured under the policy against whom the
particular claim is made or suit brought. The term "an insured" as
used in paragraphs (5) and (6) shall mean any insured under the
policy including those persons who would have otherwise been included
within the policy's definition of an insured but, by agreement, are
subject to the limitations of paragraph (1) of subdivision (d).
(d) Notwithstanding the provisions of paragraph (4) of subdivision
(b), or the provisions of Article 2 (commencing with Section 16450)
of Chapter 3 of Division 7 of, or Article 2 (commencing with Section
17150) of Chapter 1 of Division 9 of, the Vehicle Code, the insurer
and any named insured may, by the terms of any policy of automobile
liability insurance to which subdivision (a) applies, or by a
separate writing relating thereto, agree as to either or both of the
following limitations, the agreement to be binding upon every insured
to whom the policy applies and upon every third-party claimant:
(1) That coverage and the insurer's obligation to defend under the
policy shall not apply nor accrue to the benefit of any insured or
any third-party claimant while any motor vehicle is being used or
operated by a natural person or persons designated by name. These
limitations shall apply to any use or operation of a motor vehicle,
including the negligent or alleged negligent entrustment of a motor
vehicle to that designated person or persons. This agreement applies
to all coverage provided by that policy and is sufficient to comply
with the requirements of paragraph (2) of subdivision (a) of Section
11580.2 to delete coverage when a motor vehicle is operated by a
natural person or persons designated by name. The insurer shall have
an obligation to defend the named insured when all of the following
apply to that designated natural person:
(A) He or she is a resident of the same household as the named
insured.
(B) As a result of operating the insured motor vehicle of the
named insured, he or she is jointly sued with the named insured.
(C) He or she is an insured under a separate automobile liability
insurance policy issued to him or her as a named insured, which
policy does not provide a defense to the named insured.
An agreement made by the insurer and any named insured more than
60 days following the inception of the policy excluding a designated
person by name shall be effective from the date of the agreement and
shall, with the signature of a named insured, be conclusive evidence
of the validity of the agreement.
That agreement shall remain in force as long as the policy
remains in force, and shall apply to any continuation, renewal, or
replacement of the policy by the named insured, or reinstatement of
the policy within 30 days of any lapse thereof.
(2) That with regard to a policy issued to a named insured engaged
in the business of leasing vehicles for those vehicles that are
leased for a term in excess of six months, or selling, repairing,
servicing, delivering, testing, road-testing, parking, or storing
automobiles, coverage shall not apply to any person other than the
named insured or his or her agent or employee, except to the extent
that the limits of liability of any other valid and collectible
insurance available to that person are not equal to the limits of
liability specified in subdivision (a) of Section 16056 of the
Vehicle Code. If the policy is issued to a named insured engaged in
the business of leasing vehicles, which business includes the lease
of vehicles for a term in excess of six months, and the lessor
includes in the lease automobile liability insurance, the terms and
limits of which are not otherwise specified in the lease, the named
insured shall incorporate a provision in each vehicle lease contract
advising the lessee of the provisions of this subdivision and the
fact that this limitation is applicable except as otherwise provided
for by statute or federal law.
(e) Nothing in this section or in Section 16054 or 16450 of the
Vehicle Code shall be construed to constitute a homeowner's policy,
personal and residence liability policy, personal and farm liability
policy, general liability policy, comprehensive personal liability
policy, manufacturers' and contractors' policy, premises liability
policy, special multiperil policy, or any policy or endorsement where
automobile liability coverage is offered as incidental to some other
basic coverage as an "automobile liability policy" within the
meaning of Section 16054 of the Vehicle Code, or as a "motor vehicle
liability policy" within the meaning of Section 16450 of the Vehicle
Code, nor shall any provision of this section apply to a policy that
provides insurance covering liability arising out of the ownership,
maintenance, or use of any motor vehicle in the Republic of Mexico
issued or delivered in this state by a nonadmitted Mexican insurer,
notwithstanding that the policy may provide automobile or motor
vehicle liability coverage on insured premises or the ways
immediately adjoining.
(f) On and after January 1, 1976, no policy of automobile
liability insurance described in subdivision (a) shall be issued,
amended, or renewed in this state if it contains any provision that
expressly or impliedly excludes from coverage under the policy the
operation or use of an insured motor vehicle by the named insured in
the performance of volunteer services for a nonprofit charitable
organization or governmental agency by providing social service
transportation. This subdivision shall not apply in any case in which
the named insured receives any remuneration of any kind other than
reimbursement for actual mileage driven in the performance of those
services at a rate not to exceed the following:
(1) For the 1980-81 fiscal year, the maximum rate authorized by
the State Board of Control, which shall also be known as the "base
rate."
(2) For each fiscal year thereafter, the greater of either (A) the
maximum rate authorized by the State Board of Control or (B) the
base rate as adjusted by the California Consumer Price Index.
No policy of insurance issued under this section may be canceled
by an insurer solely for the reason that the named insured is
performing volunteer services for a nonprofit charitable organization
or governmental agency consisting of providing social service
transportation.
For the purposes of this section, "social service transportation"
means transportation services provided by private nonprofit
organizations or individuals to either individuals who are senior
citizens or individuals or groups of individuals who have special
transportation needs because of physical or mental conditions and
supported in whole or in part by funding from private or public
agencies.
(g) Notwithstanding the provisions of paragraph (4) of subdivision
(b) of this section, or the provisions of Article 2 (commencing with
Section 16450) of Chapter 3 of Division 7 of, or Article 2
(commencing with Section 17150) of Chapter 1 of Division 9 of, the
Vehicle Code, a Mexican nonadmitted insurer and any named insured
may, by the terms of any policy of automobile insurance for use
solely in the Republic of Mexico to which subdivision (a) applies, or
by a separate writing relating thereto, agree to the limitation that
coverage under that policy shall not apply to any person riding in
or occupying a vehicle owned by the insured or driven by another
person with the permission of the insured. The agreement shall be
binding upon every insured to whom the policy applies and upon any
third-party claimant.
(h) No policy of automobile insurance that provides insurance
covering liability arising out of the ownership, maintenance or use
of any motor vehicle solely in the Republic of Mexico issued by a
nonadmitted Mexican insurance company, shall be subject to, or
provide coverage for, those coverages provided in Section 11580.2.
(i) On and after January 1, 2006, no policy of automobile
liability insurance described in subdivision (a) shall be issued,
amended, or renewed in this state if it contains any provision that
expressly or impliedly excludes from coverage under the policy the
operation or use of an insured motor vehicle by the named insured in
the performance of any in-home supportive services described in
Article 7 (commencing with Section 12300) of Chapter 3 of Part 3 of
Division 9 of the Welfare and Institutions Code. No policy of
insurance issued under this section may be rated or canceled by an
insurer solely nor shall an insurer refuse to
insure any applicant for insurance, for the reason that the
named insured or applicant is operating or using an
insured motor vehicle to provide transportation incident to the
provision of in-home supportive services. This subdivision
shall not prohibit an insurer from considering, for the purposes of
rating, the number of miles driven in the provision of in-home
supportive services if that number exceeds 2,000 miles per year.