Petitioner insurer sought review of the judgment of the Court of Appeal of California, Third Appellate District, which overruled its demurrer to respondent insured’s cross-complaint in an action to recover damages under respondent’s uninsured motorist insurance coverage.

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Overview

Respondent insured was injured in a three-car collision. She settled against one driver and looked to the uninsured motorist provision of her insurance policy with petitioner insurer for the damages caused by the unidentified second driver, who left the scene. Petitioner denied coverage, stating that respondent voided her uninsured motorist coverage by settling with the first driver one and sought declaratory relief of any obligation under the policy. Respondent filed an answer and cross-complaint for breach of good faith and fair dealing. Petitioner demurred, contending that respondent’s claim could not be asserted until the issue of coverage was determined and that Cal. Evid. Code § 1155 provided that evidence of insurance was inadmissible to prove negligence. The court overruled the demurrer and held that the use of prejudicial evidence of insurance prevented by § 1155 was not a concern in an action by an insured against an insurer. Respondent’s action against her own insurance company created no potential discovery problems as no third party was involved. There was no prohibition to filing a cross-complaint in an action for declaratory relief.

Outcome

The judgment overruling petitioner insurer’s demurrer to respondent insured’s cross-complaint to recover damages was affirmed because the prejudicial use of evidence of insurance was not a concern in an action by an insured against an insurer.