CROSBY, J. I dissent. The majority reads the definition of “underinsured motor vehicle” literally and, contrary to a cardinal tenet of statutory construction, reaches a palpably absurd result. The Legislature could not have intended the meaning my colleagues ascribe to Insurance Code section 11580.2, subdivision (p)(2) any more than Thomas Jefferson meant to exclude women from the words “all men are created equal” in the Declaration of Independence.1
The majority’s result is also contrary to a cardinal tenet of insurance law: Insurance provisions are to be interpreted to give an insured the coverage he reasonably expects. (Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263, 270, fn. 7 [54 Cal.Rptr. 104, 419 P.2d 168].) Uninsured and underinsured motorist coverage is mandatory in this state unless an insured expressly waives it. (Ins. Code, § 11580.2, subds. (a)(1), (p)(7).) When Schwieterman purchased uninsured and underinsured motorist coverage with limits of $15,000/$30,000, he had a right to expect that if he sustained damages of $15,000 or more in an automobile accident and was not at fault, he would receive at least $15,000 in benefits, either from the tortfeasor’s carrier or his own or a combination of the two.2 Instead, he has been told that because he [1049]had only minimum coverage and the tortfeasor was insured, although not in an amount sufficient to satisfy the multiple claims involved, the legislatively mandated underinsured motorist coverage simply does not exist.
If permitted to stand, this result will perpetuate a statewide fraud of historical magnitude against low-end insureds.3 Bluntly stated, under the majority’s narrow definition of an underinsured motor vehicle, there can never be any recovery of underinsured motorist benefits for those individuals who buy policies with $15,000/$30,000 limits because no one who has insurance in California will be “insured for an amount that is less than [the injured insured’s] uninsured motorist limits.” (Ins. Code, § 11580.2, subd. (p)(2).) This means the statutorily required underinsured motorist coverage bought and paid for by the insured is entirely illusory.4 I have examined Schwieterman’s Mercury policy with care, and it contains no advisement to that effect.
Several facts bear emphasis here. First, Mercury does not dispute that Schwieterman has suffered more than $15,000 in damages. Second, Schwieterman only claims he is entitled to a total of $15,000: $10,000 from the tortfeasor’s policy, with the balance from his own insurance. Third, my colleague’s notation that Schwieterman is one of “several” individuals competing for benefits under the tortfeasor’s $15,000/$30,000 policy is extremely misleading; in truth, Schwieterman is one of eleven claimants.
And therein lies the dilemma. Schwieterman poses the issue thusly: “If there has been a de facto reduction in the per person policy limits of a third [1050]party, caused by a multiplicity of plaintiffs, can an injured party resort to his or her own underinsur[ed] motorist coverage?” The answer must be yes.
Somewhat curiously, Mercury espoused this very position in the trial court. There, the insurer conceded, “The purpose of underinsured motorist coverage is to provide the insured with the same type of coverage he would have if the insured was struck by an uninsured motorist.” (Italics added.) Thus, Mercury has essentially admitted that Schwieterman is entitled to the aggregate sum of $15,000 in benefits, the precise amount he seeks.
Coincidentally, Schwieterman and the tortfeasor were each insured by Mercury; and both policies confirm my interpretation. The policy definition of “underinsured motor vehicle” substantially tracks the statutory definition in Insurance Code section 11580.2, subdivision (p)(2), but it expressly provides that an underinsured motor vehicle is an uninsured motor vehicle. A persuasive argument can be made that under the principles developed for uninsured motorist benefits, Schwieterman would be entitled to a combined recovery of $15,000 for that reason alone. (Kirkley v. State Farm Mut. Ins. Co., supra, 17 Cal.App.3d at p. 1082.)
Also, the “conditions” section of the policy applicable to underinsured motor vehicles provides, “This coverage does not apply to any bodily injury until the limits of the 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 such is submitted to the company.” The policy then tracks the language of Insurance Code section 11580.2, subdivision (p)(4) (see fn. 2, ante), advising the insured that if the tortfeasor’s car is “insured, underinsured, or uninsured, [Mercury’s] maximum liability . . . shall not exceed the insured’s underinsured motorist coverage limits, less the amount paid to the insured by [the tortfeasor].”
This seems to be a clear acknowledgement by Mercury that its insured reasonably expected to receive $15,000 for his injuries. Nevertheless, the majority claims the statutory language in subdivision (p)(2) (“insured for an amount that is less than the uninsured motorist limits carried on the motor vehicle of the injured person”) refers solely to the face amount of a tortfeasor’s policy and does not include those situations where coverage has been effectively reduced in order to settle multiple, competing claims. This crabbed interpretation defeats the public policy behind mandatory uninsured and underinsured motorist coverage and is simply illogical.
Malone v. Nationwide Mutual Ins. Co. (1989) 215 Cal.App.3d 275 [263 Cal.Rptr. 499] is instructive. There, the plaintiff was covered by a policy providing $500,000 in underinsured motorist benefits. The tortfeasor’s [1051]insurance coverage was less than that sum, but the plaintiff claimed to be entitled to the limits of her underinsured motorist coverage plus whatever she collected from the tortfeasor’s carrier. We disagreed, concluding that where the tortfeasor’s liability coverage is less than the injured party’s underinsured motorist limits, those limits constituted the aggregated maximum the injured party could receive from both sources. Any other result would have been unfair to the carrier providing underinsured motorist benefits because “the underinsured motorist risk necessarily contemplates that the party responsible for the injury will have coverage of its own in some amount.” (Id. at p. 279.)
Self-evident in that case, but not articulated, was the following: Given Malone’s damages, the policy limits also constituted the minimum she could receive. Any other result would be unfair to the insured who bought underinsured motorist coverage contemplating that the combined contributions from a tortfeasor’s carrier and her own would provide benefits in the amount purchased.5
The situation faced by Schwieterman is no different. He bought underinsured motorist coverage with limits of $15,000 per person or $30,000 per accident. He is apparently the only insured on his policy who was involved in the accident precipitating this lawsuit; consequently, he reasonably expects that, upon proof of damages, he will be entitled to the full $15,000. If he had been the only claimant against the tortfeasor’s policy, the entire sum would have been paid from that source. If other claimants exhausted the tortfeasor’s limits before Schwieterman even made a claim, presumably he could have looked to his uninsured motorist coverage. Either way, Schwieterman would receive $15,000.
Because he was one of numerous claimants who timely filed a claim, however, Mercury argues it should reap a windfall savings of $5,000. That [1052]result could not have been intended by the Legislature or anticipated by Schwieterman when he bought the policy. It can only be the product of an overly literal reading of statutory language.
Elwood v. Aid Ins. Co. (9th Cir. 1989) 880 F.2d 204, cited by the majority, does conclude with the line, “In any event, the underinsured motorist coverage was never triggered because [the tortfeasor’s] vehicle did not meet the definition of an ‘underinsured motor vehicle.’ ” (Id. at p. 209.) But there the insureds received the tortfeasor’s $50,000 policy limits. Although that figure was also the limit of their underinsured motorist coverage, they sought to collect more because the $50,000 did not make them whole for their injuries. The Ninth Circuit rejected their claim, holding, as did this court in Malone, that uninsured coverage is not excess coverage. But the court also observed that its holding was consistent with the policy which “unambiguously” limited its liability to “the difference between their maximum coverage of $25,000/$50,000 and any payments made by a tortfeasor.” (Ibid.)
In my view, the policy here is similarly unambiguous. Mercury sold Schwieterman uninsured and underinsured motorist coverage in the amount of $15,000 per person. The policy did not conspicuously alert the insured to the impossibility of ever collecting underinsured motorist benefits. Nor would that be expected; it would be absurd to sell such a policy and then delete it in the same document. There is only one sensible interpretation that satisfies an insured’s reasonable expectation: The under-insured benefits fill any gap between the limits of the underinsured coverage and what the insured is able to collect from a tortfeasor, regardless of the latter’s policy limits. I would reverse.
I suppose a case could be made that our founding fathers thought so little of our founding mothers they did not intend to include them within the scope of the Great Declaration. Such a mean-spirited belief, however, like the lead opinion, is out of touch with the real world. It was obviously not the signers’ intent to free the men from the rule of George III while the women remained loyal subjects of the king.
Insurance Code section 11580.2, subdivision (p)(4) provides, “When bodily injury is caused by one or more motor vehicles, whether insured, underinsured, or uninsured, the maximum liability of the insurer providing the underinsured motorist coverage shall not [1049]exceed the insured’s underinsured motorist coverage limits, less the amount paid to the insured by or for any person or organization that may be held legally liable for the injury.”
The fraud is actually much broader, of course, and potentially reaches a policy of any limit. Assume plaintiff and defendant each have $300,000 in liability, uninsured, and underinsured motorist coverage. Eleven people are seriously injured in the accident, and all demand defendant’s policy. Plaintiff, according to the majority, may wind up with less than 10 percent of $300,000 despite his prudent acquisition of high limit underinsured motorist coverage. The Legislature could not have intended such a spurious result, nor could any insured ever expect it based on the language in the Mercury policies. People pay good money for this coverage. If it does not exist, the insurance industry owes many of us a healthy refund.
I am unimpressed by any argument that Schwieterman’s policy does not reflect a separate payment for underinsured motorist benefits. Per Insurance Code section 11580.2, subdivision (n), uninsured and underinsured coverages “shall be offered as a single coverage.” The declarations page indicates a healthy chunk of Schwieterman’s premium went for uninsured motorist coverage; by law, that meant he purchased underinsured motorist benefits as well.
Could underinsured motorist benefits apply in the case of an insured from a state or country that permits lower policy limits? Nope. The law is that defendants with coverage below this state’s minimum are uninsured motorists for purposes of the Insurance Code. (See Cal. Uninsured Motorist Practice (Cont.Ed.Bar 1973) § 1.25; (Supp. Feb. 1991) § 1.25.) Thus, a California plaintiff with minimum uninsured motorist coverage but damages of at least $15,000 is guaranteed a $15,000 recovery. True, he is required to reimburse his own insurer for any benefits received from the out-of-state insurer, but he collects the full value of his own policy. (Kirkley v. State Farm Mut. Ins. Co. (1971) 17 Cal.App.3d 1078 [95 Cal.Rptr. 427].)
The issue in Malone was whether an underinsured motorist carrier who paid the policy limits was entitled to reimbursement for all sums received by the insured from the tortfeasor. (See Ins. Code, § 11580.2, subd. (p)(2).) On that point we held, “underinsured motorist coverage is not the equivalent of full excess coverage. As the statutory scheme is designed, the underinsured motorist carrier gets a dollar-for-dollar credit for all payments by third party tortfeasors to the insureds, whether the insureds are made whole or not. In other words, 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.” (Malone v. Nationwide Mutual Ins. Co., supra, 215 Cal.App.3d at p. 277.) We added, “[t]he analysis is no different if there is more than one tortfeasor or more than one injured insured.” (Id. at p. 279, italics added.) The last sentence, while correct and innocuous when the issue is an insurer’s entitlement to reimbursement or credit, does create a potential for mischief in a case of this sort. In policies with single limits or the more traditional per person/per accident split, the number of injured individuals certainly does affect any one claimant’s ability to receive satisfactory compensation for serious injuries. That is why an insured’s expectation that he will receive a recovery equal to his uninsured or underinsured motorist limits must be honored. (See fn. 3, ante.)