Geico explained this provision is taken, nearly word for word, from Insurance Code section 11580.2, subdivision (p)(4) , which has been held to require underinsured motorist benefits be reduced, not only by the amount recovered from the negligent driver's insurer, but also by the amount recovered from a third party tortfeasor. (See Mercury Ins. Co. v. Vanwanseele–Walker (1996) 41 Cal.App.4th 1093, 1101–1102 (Vanwanseele–Walker ).) Geico also argued Elliott had no reasonable expectation of coverage under the policy since the policy itself is unambiguous and any potential ambiguity created by the example provided in the UM/UND form must be resolved by the terms of the policy.
Allied maintains it is entitled to subrogation under Insurance Code section 11580.2, subdivision (g) which states: “The insurer paying a claim under an uninsured motorist endorsement or coverage shall be entitled to be subrogated to the rights of the insured to whom the claim was paid against any person legally liable for the injury or death to the extent that payment was made.” Our review of the trial court’s judgment is de novo. (Angelucci v. Century Supper Club, supra, 41 Cal.4th at p. 166; Mercury Ins. Co. v. Vanwanseele-Walker (1996) 41 Cal.App.4th 1093, 1100.) All further statutory references are to the Insurance Code unless otherwise indicated.
Thus, "`. . . a carrier providing underinsured motorist benefits never pays the full amount, only the difference between the policy limits and all contributions by all tortfeasors to all insureds.'" ( Hartford Fire Ins. Co. v. Macri (1992) 4 Cal.4th 318, 328 [ 14 Cal.Rptr.2d 813, 842 P.2d 112]; accord, Mercury Ins. Co. v. Vanwanseele-Walker (1996) 41 Cal.App.4th 1093, 1102 [ 49 Cal.Rptr.2d 28].) The provision at issue in this case, section 11580.2(p)(3), provides that underinsurance coverage "does not apply to any bodily injury until the limits of bodily injury liability policies applicable to all insured motor vehicles causing the injury have been exhausted by payment of judgments or settlements, and proof of the payment is submitted to the insurer providing the underinsured motorist coverage."
" Id. (citing Malone 215 Cal.App.3d at 277, 263 Cal.Rptr. 499 ; italics in original.) SeeMercury Ins. Co. v. Vanwanseele–Walker , 41 Cal.App.4th 1093, 49 Cal.Rptr.2d 28 (4th Dist. 1996) ("[t]he [ § 11580.2 (p) (4) ] statutory language is clear: an insured's recovery under an insurance policy must be offset by amounts received from other ‘persons or organizations legally liable for the injury’ ") (internal citations omitted).
Once the insured has complied with the statute, the insurer is liable for underinsured motorist coverage only to the extent the insured's coverage exceeds the amount paid to the insured by or on behalf of the underinsured motorist. ( Mercury Ins. Co. v. Vanwanseele-Walker (1996) 41 Cal.App.4th 1093, 1101 [ 49 Cal.Rptr.2d 28].) The trial court determined that plaintiff was required to sue Groscost and exhaust the policy limits of the Coast and Hartford policies before seeking coverage under the underinsured motorist provisions of his policy with defendant.
2(p)(4) (5) (defining insurer's liability as "less the amount paid to the insured by or for any person or organization that may be held legally liable for the injury") with Utah Code § 31A-22-305.3(2)(f)(ii) ("Underinsured motorist coverage may not be set off against the liability coverage of the owner or operator of an underinsured motor vehicle."); see also Mercury Ins. Co. v. Vanswanseele-Walker, 41 Cal. App. 4th 1093, 1107 (1996) ("the Legislature has made a clear determination that the goal of [California]'s underinsurance system is not to make a victim `whole,' but instead to ensure that underinsurance benefits are available when an insured has not recovered equivalent amounts from all tortfeasors liable for the injury."). At the time of the accident, the pertinent language was located at Utah Code section 31A-22-305(8)(b).
Because Kaufer's uninsured/underinsured coverage limits were the same as the motorist's liability limits, she could not recover her policy's uninsured/underinsured benefits. (See Mercury Ins. Co. v. Vanwanseele-Walker (1996) 41 Cal.App.4th 1093, 1101 ["Underinsurance policy benefits are potentially available only when ' "the tortfeasor's liability policy is in an amount less than the underinsured motorist policy of the injured driver" ' "]; Ins. Code, § 11580.2, subd. (p).) All further statutory references are to the Insurance Code unless otherwise specified.
In addition, if any other party is deemed liable for the injuries, the underinsured motorist insurance coverage may be reduced. (See, e.g., Ins. Code, § 11580.2, subd. (p)(4) ; Mercury Ins. Co. v. Vanwanseele-Walker (1996) 41 Cal.App.4th 1093, 1103, 49 Cal.Rptr.2d 28 [car manufacturer that settled product liability claims relating to a car accident was an organization legally liable for the injury, and therefore recovery under the underinsured motorist policy should have been reduced].)Here, the parties seem to agree that Jonathan's damages exceeded $1.5 million. However, liability for the damages was contested, and as plaintiffs point out, "if [the insurer] had been able to convince the arbitrator that Jonathan bore the brunt of the fault for causing the accident, the arbitration award could have been for $1.5 million or less."
Considerations of policy do not permit us to ignore the plain language of the statute. (Mercury Ins. Co. v. Vanwanseele–Walker (1996) 41 Cal.App.4th 1093, 1103, 49 Cal.Rptr.2d 28.) “ ‘[N]o legislation pursues its purposes at all costs. Deciding what competing values will or will not be sacrificed to the achievement of a particular objective is the very essence of legislative choice—and it frustrates rather than effectuates legislative intent simplistically to assume that whatever furthers the statute's primary objective must be the law.
In any event, even if Ronay had presented a forceful policy argument for extending FINRA Rule 12202 to associated persons and others—and it has not—a “policy argument does not permit us to ignore the plain language of the [rule].” ( Mercury Ins. Co. v. Vanwanseele–Walker (1996) 41 Cal.App.4th 1093, 1103, 49 Cal.Rptr.2d 28; see also Esberg v. Union Oil Co. (2002) 28 Cal.4th 262, 270, 121 Cal.Rptr.2d 203, 47 P.3d 1069 [when determining applicability of statute, court need not consider public policy underlying statute when its language is clear]; National Union Fire Ins. Co. v. Miller (1987) 192 Cal.App.3d 866, 872–873, 237 Cal.Rptr. 632 [public policy argument cannot prevail when it contradicts clear language of contract].) Finally, we are not persuaded by Ronay's argument that we should follow the decision of the New Mexico Court of Appeals that “an associated person may not compel arbitration with a customer after the lapse of the member's NASD membership.”