Viking Insurance v. State Farm Mutual Automobile Insurance

In this insurance coverage dispute, State Farm Mutual Automobile Insurance Company (State Farm) appeals from a judgment in favor of Viking Insurance Company (Viking). The issue on appeal is whether under California law an underinsurance carrier, faced with claims from several insureds arising from one accident, can offset from the amount it owes to one of these insureds the amount that has been paid to the other insureds under the underinsured motorist’s per accident liability policy. We interpret the relevant statutes and conclude they contemplate such an offset. We also interpret the relevant insurance policy and conclude it is in accord with such an offset. Consequently, we affirm the judgment.

Background

The facts are undisputed. In August of 1990, Marie Peralsky, driving her own car, collided with a car driven by Robert Hill and owned by Michael Farley. Peralsky was insured by Farmers Insurance Group (Farmers) for bodily injury liability limits of $15,000 per person and $30,000 per accident. Farley, who was a passenger in his own car along with six others besides Hill, was insured by Viking for underinsured motorist limits of $25,000 per person and $50,000 per…