Interinsurance Exchange of the Automobile Club v. Garrett

Opinion

DUNN, J. Plaintiff filed an action against defendant for declaratoiy relief, after defendant had made a demand for arbitration of an uninsured motorist accident. Following a nonjury trial, judgment was entered for plaintiff and defendant appeals.

It appears that defendant filed an application with Latin American Insurance Agency for insurance under California’s assigned risk plan. He paid the premium demanded by this producer; an employee of the producer told him that he was covered, beginning September 13, 1972. Plaintiff contended that its policy did not become effective until September 23, 1972, i.e., after defendant’s accident of September 16, 1972.

The facts are not in dispute, consisting of documents received in evidence by stipulation together with a stipulation that, if an employee of plaintiff took the witness stand, he would testify that no insurance is solicited by plaintiff, other than assigned risk insurance, except through employed sales agents; plaintiff pays a “commission” to the producer of an “assigned risk” policy; and a stipulation that, if defendant took the witness stand, he would testify that on September 13, 1972, he talked with a Mr. Lopez of Latin American Insurance Agency,1 paid him $242 by way of premium, and was told by Mr. Lopez that “he was covered by insurance from that point onward effective that date.”

The court found, among other things, that plaintiff issued to defendant its policy No. H 1634357 which became effective September 23, 1972; that the “producer of record” was not acting as plaintiff’s agent in [371]making any “binder” agreement on September 13, 1972; and that plaintiff’s policy did not cover the accident of September 16, 1972. Judgment was entered holding that no coverage existed for the accident in question.

Defendant first contends on appeal that certain California Administrative Code provisions, adopted by the Insurance Commissioner pursuant to Insurance Code section 11620 et seq., are void. Insurance Code section 11620 provides, in part, that the Insurance Commissioner shall approve of or issue a reasonable plan by which applicants for automobile liability insurance, “who are in good faith entitled to but are unable to procure such insurance through ordinary methods,” may procure an assigned risk policy. Insurance Code section 11623 provides, in pertinent part, “To carry out the purpose of this article, the subscribing insurers may form their own organization which shall, subject to review by the Insurance Commissioner, administer and operate the plan,” and Insurance Code section 11624 provides, in pertinent part: “Such plan shall contain: . . . (b) Procedures for making application for insurance, for apportionment of eligible applicants among the subscribing insurers and for appeal to the commissioner . . . (d) Rules and regulations governing the administration and operation of the plan . . . (f) Such other provisions as may be necessary to carry out the purpose of this article.”