## IN THE SUPREME COURT OF CALIFORNIA

ALLIED PREMIER INSURANCE, Plaintiff and Respondent,

v. UNITED FINANCIAL CASUALTY COMPANY,

Defendant and Appellant.

S267746

Ninth Circuit
20

- 55099

Central District of California
No. 5:18

- cv

- 00088

- JGB

- KK

July 24, 2023

Justice Corrigan authored the opinion of the Court, in which Chief Justice Guerrero and Justices Liu, Kruger, Groban, Jenkins, and Evans concurred.1

ALLIED PREMIER INSURANCE v. UNITED FINANCIAL

CASUALTY COMPANY

S267746

Opinion of the Court by Corrigan, J.

The United States Court of Appeals for the Ninth Circuit
has certified 1 the following question for our review: Under California’s Motor Carriers of Property Permit Act (Veh. Code, § 34600 et seq. ; the Act), 2 does a commercial automobile insurance policy continue in full force and effect until the insurer cancels the correspo nding Certificate of Insurance on file with the Department of Motor Vehicles (DMV or Department ), regardless of the insurance policy’s stated expiration date? The answer is no. The terms of an insurance

contract generally determine the duration of the po licy ’s

coverage. Although an endorsement can amend the policy,
neither the Act nor the specific endorsement it requires extend coverage beyond the underlying policy’s expiration date.

In Transamerica Ins. Co. v. Tab Transportation, Inc. (1995) 12 Cal.4t h 389 ( Transamerica ), this court interpreted an earlier permitting system codified in the Public Utilities Code. We held that the policy endorsement required by that scheme
did extend insurance coverage until notice of cancellation was provided to the Public Utilities Commission. However, the language in the Public Utilities Code , on which we relied in

1 Cal ifornia Rules of Court, rule 8.548

. 2 All undesignated statutory references are to the Vehicle Code.ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

2 Transamerica
, was not carried over when later legislation replaced the Public Utilities Code permitting scheme and
amended the Vehicle Code to a dd the A ct at issue here. As a result, Transamerica ’s holding does not control the answer to the certified question.

I. BACKGROUND
The facts are taken from the parties’ joint stipulation of
facts and exhibits as well as the judgment of the United States
District C ourt, Central District of California

. A. The Act

Commercial trucker Jose Porras is a “ ‘ motor carrier of property ’ ” (motor carrier or carrier)

. (§ 34601, subd. (a).) Under
the Act

, a motor carrier cannot operate on public highways
without securing a DMV permit , which requires proof of the carrier’s financial responsibility. (§ § 34620, subd. (a)

, 34630, subd. (a).) A carrier can satisfy that requirement by obtaining a policy of insurance. 3 (§ 34631.) If a carr ier does so , the insurer

must submit a certificate of insurance to the Department as evidence that the “protection required under [section 34631.5, ] subdivision (a)” is provided. ( § 34631.5, subd. (b)(1).)

3 Section 34631.5, subdivision (a), establishes the required minimum amount of liability protection for bodily injury, death, and property damage. (§ 346 3 1.5, subd. (a)(1)

– (4).) The proof of financial responsibility required under section 34630 must “be evidenced by the deposit with the [DMV], covering each vehicle used or to be used under the motor carrier permit . . . , of one of the following”: (1) a certificate of insurance issued by an insurance company; (2) a surety bond issued by a company licensed to write surety bonds in the state; (3) evidence of qualification as a self

- insurer; or (4) evidence that coverage is provided by a charitable risk pool. ( § 34631, subds. (a)

– (d).)ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

3 The Department has published forms to facilitate the
administration of the Act’s financial responsibility requirement.
Two of those forms are a “Certificate of Insurance” and an “Insurance Policy Endorsement.” (See Cal. Code Regs., tit. 13, § 220.06, subd s

. (a), (b).) Whe n a motor carrier complies with the Act by obtaining an insurance policy

, a DMV regulation require s that the “ Insurance Policy Endorsement . . . , amending the insurance policy to comply with insurance requirements imposed by the [Act], . . . be attached to and made part of, the insurance policy insuring the motor carrier.” (Cal

. Code Regs., tit. 13, § 220.06, subd. (b).)

The Ac t requires that “ proof of financial responsibility

. . . be continued in effect during the active life ” of the permit
issued to the motor carrier. (§ 34630, subd. (b).) This requirement prohibits cancellation of a certificate of insurance
without notice to the DMV by the insurer

. 4 ( Ibid

. ) When an
insurer gives notice that a certificate will be cancelled because the policy will lapse or be terminated

, the DMV must “ suspend the carrier’s permit effective on the date of lapse or termination

4 To effectuate this requirement and prohibition, the Act requires that “ [ e ] very insurance certificate or equivalent protection to the public . . . contain a provision that the certificate or equivalent protection shall remain in full force and effect until canceled in the manner provided by [section 34631.5, subdivision (b)(3)].” ( § 34631.5, subd. (b)(4).) Section 34631.5, subdivision (b)(3) provides that a certificate of insurance “ shall not be cancelable on less than 30 days’ written notice to the [DMV].” California Code of Regulations, title 13, section 220.06, subdivision (c) provides that “[w]ritten notice of cancellation of [a] Certificate of Insurance, required under [section 34630, subdivision (b)], shall be submitted by the insurer to the department on a Notice of Cancellation of I nsurance.” This form is referred to herein as a cancellation notice.ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

4 unless the carrier provides evidence of valid insurance coverage” pursuant to section 34630, subdivision (a). (§ 34630, subd. (c).)
This procedure ensures that only financially re sponsible
carriers are permitted to operate on public highways.

B. The Facts
Effective May 2, 2013, United Financial Casualty Company (United) began insuring Porras under a commercial automobile insurance policy with an eight

- digit policy number ending in 772 (the United policy or Policy 772 ). The policy provided that, in return for Porras’s premium payment
, United
would , up to the policy limit, pay specified damages Porras
became responsible for as a result of an accident “ arising out of the ownership, maint enance or use of ” an insured vehicle . The policy also provided that United would , at its option

, settle or
defend any covered claim and that, if Porras faile d to pay the premium to renew, the policy would “automatically terminate at
the end of the current policy period.”
As required by the Act, United filed a c ertificate of
i nsurance , identifying United as the insurer and Porras as the
insured and giving the policy number ending in 772

. United
certifie d that a “fully executed endorsement, on a fo rm authorized by the [DMV], is attached to the referenced policy to conform to the requirements of the [Act]” and that “[t]his
Certificate . . . shall not be cancel ed on less than thirty (30) days
notice from the Insurer to the DMV and written on a Notice of Cancellation form authorized by the DMV.”

United attached the required Insurance Policy Endorsement to the United policy (the Endorsement)

. Under the Endorsement, United agreed: (1) to “pay, consistent with the minimum insurance coverage required by [section] 34631.5ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

5 . . . any legal liability of insured for bodily injury, death, or property damage arising out of the operation, maintenance, or use of any vehicle(s) for which a moto r carrier permit is required”; (2) that “[n]o provision, stipulation, or limitation contained in the attached policy or any endorsement shall relieve insurer from obligations arising out of this Endorsement or the Act, regardless of the insured’s financial solvency, indebtedness[,] or bankruptcy”; (3) that the “Certificate of Insurance shall not be canceled on less than thirty (30) days notice from the Insurer to the DMV”; and (4) that, “[e]xcept as specified in this endorsement, the terms, conditions, and limitations of this policy remain in full force and effect.” 5 One of the terms in the policy was the termination date

. The
E ndorsement also permitted United to seek “reimbursement from [Porras] for any payment made by [United] solely on
account of the [ E ndorsement’s] provisions.”
United provided coverage for Porras through the original
or renewed P olicy 772 from May 2, 2013 through April 12, 2015. During that period, it appears that United filed at least three
certificates of insurance and two cancel lation notices

, one of
which the Department returned to United as an “incomplete filing.” It appears that, as the end of a policy period approached, United would file a cancellation notice with the DMV, noting the policy number and giving the date the policy would lapse. The timing of the notice made the DMV aware that, if Policy 772 was not renewed, it would lapse on the date provided, triggering the DMV’s duty to suspend Porras’s operating permit. If the policy

5 Unlike the policy

, the “coverage provided by the endorsement exclude[d] any costs of defense or other expense that the policy provides.”ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

6 was subsequently r enewed, United would send a new c ertificate
of i nsurance as evidence that Porras continued to have th e required protection under Policy 772

. The new certificate would
indicate the date on which the new policy period began

. As noted, one of United’s cance llation notices was rejected by the Department as an incomplete filing. After that filing was returned, however, United filed a new certificate of insurance

, covering the ensuing period. As relevant here, United
submitted its final cancellation notice on February 6, 2015

, informing the Department that “ the [United] policy, including applicable endorsement and certifications ” is cancelled “effective thirty (30) days after the date” it was either received by the DMV, or on April 12, 2015, whichever was later. Every
certificate and cancellation notice in the record bears both the
772 policy number and the number of Porras’s permit.
By April 12, 2015, Porras had not paid the premium required to rene w the United policy. Effective April 13, 2015, Allied Premier Insurance (Allied) began to insure Porras under a policy that provided the required coverage

. Allied submitted

a certificate of insurance to the Department four days later

. The
record contain s no indication that , when it assumed coverage and filed its own certificate, Allied was aware that United’s
earlier certificate remained uncancelled because the DMV had rejected United’s cancellation notice.
On September 1, 2015, Porras was driving a truck covered by the Allied policy when he collided with a car driven by
Jennifer Jones. Jones died as a result of the accident , and her parents sued Porras for wrongful death. Porras tendered his
defense to All ied, which retained counsel to defend him and settled the parents’ claim for its policy limit s of $1 million.ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

7 United was not a party to the Jones suit, did not defend Porras
in that action, and did not contribute to the settlement.

C. The Action at Issue H ere After the settlement, Allied sued United for declaratory relief, equitable contribution, and equitable subrogation

, seeking reimbursement for half the amount it paid to resolve the Jones litigation

. It argued that, because one of United ’s
cancellation notices was rejected by the Department as incomplete, United continued to have an active certificate of
insurance on file with the DMV. That circumstance , according to Allied, meant United’s policy remained in effect on the date
of the collision between Porras and Jones.
United urged that it had no obligation to reimburse Allied because its policy had expired when Porras failed to renew.
United acknowle dged one of its certificates of insurance
remained on file with the DMV because a cancellation notice had
been returned

. However, it argued the c ertificate was not an insurance policy . At most , it created a surety

- like obligation, providing a “safety net ” for members of the public injured by
commercial motor carriers. Because the c ertificate of i nsurance did not function to make United a co

- insurer of Porras, United argued it was not required to contribute to the settlement.

The case was removed to fed eral court. The parties filed a joint stipulation of facts and exhibits and then filed cross

motions for summary judgment. The d istrict c ourt ruled for Allied, finding that, because United “failed properly to submit a Notice of Cancellation, its policy r emained in effect” on the date of the accident, “even though [the policy] may have lapsed under its own terms or been cancelled by the parties.” Based on that finding, the court concluded that Allied and United bothALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

8 provided “insurance coverage on the sam e risk,” and that Allied was “entitled to equitable contribution in the amount of $500,000.” 6
United appealed to the Ninth Circuit, which certified the question of law to this court. ( Allied Premier Ins. v. United
Financial Cas. Co. (9th Cir. 2021) 991 F.3d 1070, 1071.) In the Ninth Circuit’s view, the appeal turns on the following question of statutory interpretation: “If the [Act] requires a commercial auto insurance policy to remain in effect indefinitely until the
insurer cancels the certificate o f insurance on file with the DMV, then Allied must prevail. If not, United must prevail.” ( Id . at p. 1073.) We hold that the Act does not require the policy to remain in effect indefinitely.

II. DISCUSSION
Equitable contribution is the “right to recover, not from the party primarily liable for the loss [ here, Porras] , but from a

co

- obligor who shar es such liability with the party seeking
contribution [ here, United] .” ( Fireman’s Fund Ins. Co. v. Maryland Casualty Co. (1998) 65 Cal.App.4th 1279

, 1293 ( Fireman’s Fund ) .) “In the insurance context, the right to
contribution arises when several insurers are obligated to indemnify or defend the same loss or claim, and one insurer has paid more than its share of the loss or defended the action

6 The d istrict c ourt also addressed and r ejected United’s argument that a certificate of insurance that “ remains on record after a policy lapses functions as a surety, through which the insurer ‘promises to pay up to $750,000 towards a judgment against the trucker [for harm to a third party] wher e coverage for some reason is unavailable under an actual insurance policy.’ ” The Ninth Circuit has not asked us to assess the propriety of that ruling

, and we express no view on it

.ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

9 without any participation by the others. Where multiple
insurance carriers insure the same insured and cover the same risk, each insurer has independent standing to assert a cause of action against its coinsurers for equitable contribution when it
has undertaken the defense or indemnification of the common insured. Equitable contribution permits reimbursement to the insurer that paid on the loss for the excess it paid over its proportionate share of the obligation, on the theory that the debt it paid was equally and concurrently owed by the other insurers and should be shared by them pro rata in proportion to their

r espective coverage of the risk.” ( Ibid .)
The “reciprocal contribution rights of coinsurers who insure the same risk are based on the equitable principle that the burden of indemnifying or defending the insured with whom each has independently contracted s hould be borne by all the insurance carriers together, with the loss equitably distributed among those who share liability for it in direct ratio to the proportion each insurer ’ s coverage bears to the total coverage provided by all the insurance policies.” ( Fireman’s Fund

, supra , 65 Cal.App.4th at p. 1294.) The right to equitable contribution “is predicated on the commonsense principle that where multiple insurers or indemnitors share equal contractual liability for the primary indemnification of a loss o r the discharge of an obligation, the selection of which indemnitor is
to bear the loss should not be left to the . . . choice of the loss claimant, and no indemnitor should have any incentive to avoid paying a just claim in the hope the claimant will obta in full payment from another coindemnitor.” ( Id . at p. 1295.)

“ Equitable contribution thus assumes the existence of two or more valid contracts of insurance covering the particular risk of loss and the particular casualty in question .” ( Fireman’sALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

10 Fund

, supra , 65 Cal.App.4th at p. 1295, italics added.) This assumption lies at the heart of the Ninth Circuit’s question. Allied’s entitlement to equitable contribution depends on whether United was obligated to indemnify Porras for any damage s due to the Jones accident . Allied is entitled to equitable contribution only if it can show that United was a “ co

obligor who shares . . . liability” with Allied for the loss resulting
from that event . ( Id. at p. 1293.) Allied must show that United

wa s “obligated to indemnify or defend the same loss or claim” as Allied. ( Ibid .) Resolution of this question turns on an interpretation of the Act’s requirements.

A. The Act Does Not Extend the Policy Beyond the Term
Contained in the Contract
As mentioned, the d istrict c ourt concluded that the United policy ’s coverage remained in effect , not based on the policy’s
terms, but because United had not cancelled all certificates of
insurance on file with the DMV. The court relied on
Transamerica
, su

pra , 12 Cal.4th 389 in reaching that
conclusion

. Transamerica does not control here because it interpreted a different statutory scheme.

Transamerica addressed the application of the Act’s predecessor, the Highway Carriers’ Act of 1951 (Pub. Util. Code,
former § 3501 et seq. ; HCA). The Legislature repealed the HCA
in 1996 and replaced it with the Act, transferring primary regulatory authority over commercial truckers to the DMV. (See
Hill Brothers Chem ical Co. v. Superior Court (2004) 123 Cal.App.4th 1001, 1005; see also Stats. 1996, ch. 1042, § 53,

p. 6562 .) Like the Act that replaced it , the HCA prohibited commercial truckers from operating on public highways without a permit issued by the Public Utilities Commission (PUC). ToALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

11 obtain a permit, a commercial trucker had to show it carried

“ ‘adequate protection’ against liability.” ( Transamerica
, supra , 12 Cal.4th at p. 397 , fn. omitted. ) This could “be achieved by means of an insurance policy, a surety bond, or evidence . . . of the carrier’s qualification as a self

- insurer.” ( Ibid .) Proof of insurance coverage could be submitted to the PUC “in the form of ‘a certificate of insurance.’ ” ( Id . at p. 398.)

As to cancellation of a policy , the HCA provided that

“ ‘protection against liability shall be continued in effect during the active life of the [trucker’s] permit,’ and that ‘[t]he policy of insurance or surety bond shall not be cancelable on less than 30 days’ written notice to the [PUC], except in the event of cessatio n of operations as a highway carrier as approved by the [PUC].’ ” ( Transamerica
, supra , 12 Cal.4th at p. 398, quoting Pub. Util. Code, former § 3634, italics omitted.) To promote the continuous protection requirement and prohibition on cancellation witho ut notice, the PUC promulgated General Order No. 100, which required the following provisions to be included in any policy subject to the HCA: (1) “ ‘A policy of insurance, or surety bond, evidencing such protection, shall not be cancelable on less than

t hirty (30) days’ written notice to the Public Utilities Commission’ ”; and (2) “ ‘ Every insurance policy , surety bond or equivalent protection to the public shall contain a provision that such policy, surety bond or equivalent protection will remain in ful l force and effect until canceled in the manner provided ’ ” by the General Order. ( Transamerica , at p. 398 , italics added .) The regulatory scheme also required “a standard PUC form endorsement” be “attached to every policy of insurance purchased by a highway carrier.” ( Id . at pp. 394, 398.) The endorsement certified “that a liability policy issued to a highwayALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

12 carrier [would] continue ‘in full force and effect until canceled’ ” by written notice to the PUC. ( Id . at p. 394 , italics added .)
The disput e in Transamerica was between a commercial trucking company (Tab) and its liability insurer (Transamerica). In 1980, Tab purchased a one

- year term liability insurance policy from Transamerica to comply with the HCA

. ( Transamerica
, supra , 12 Cal.4th at p. 395.) Transamerica filed
a certificate of insurance with the PUC . The certificate provided that the “policy was ‘Effective 2

- 1

- 80 Until Canceled.’ ” ( Ibid .) Tab did not renew the Transamerica policy and, in the ensuing years, obtained insurance polici es from Federal Insurance Company (Federal) and Home Indemnity Company (Home). ( Ibid .) Both Federal and Home filed certificates of insurance representing their policies with the PUC. ( Ibid .) However, “neither Transamerica nor Tab ever notified the PUC of the cancelation of the Transamerica policy.” ( Ibid

. , fn. omitted. )
In 1989, a Tab truck collided with a train, causing multiple injuries and deaths

. ( Transamerica
, supra , 12 Cal.4th at p. 395.) The plaintiffs sued Tab for various claims and sought $6 million in damages. ( Id . at p. 396.) Tab demanded coverage from Transamerica, Federal, and Home under the three policies mentioned above. ( Ibid .) Federal and Home “each contributed [ their ] policy limits (a total of $1.6 million) to a global settlement in which Tab admitted liability.” ( Ibid .) Transamerica did not participate in the settlement. ( Ibid .)
Transamerica then sued Tab, seeking a declaratory judgment that it was not liable for damages from the 1989
collisio n because its policy had previously expired. ( Transamerica
, supra , 12 Cal.4th at p. 396.) Tab cross

complained, asserting entitlement to coverage under the policyALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

13 because the certificate of insurance Transamerica filed with the PUC “expressly stated its policy was ‘Effective 2

- 1

- 80 Until Canceled.’ ” ( Ibid .) Because Transamerica never notified the PUC that its policy was canceled, Tab argued the policy “continued in effect.” ( Ibid .) The trial court granted Tab’s motion for summary adjudication of the coverage issue. Transamerica appealed, and the Court of Appeal reversed, concluding that the Transamerica policy had “expired of its own terms [in] 1981, and that Transamerica therefore had no obligation to give 30 days’ written notice to the PUC of its i ntent to cancel the policy.” ( Id . at pp. 396

– 397.)
On review, this Court reversed the Court of Appeal’s judgment and concluded that Transamerica ’s policy was still “in effect at the time of the 1989 accident, thus providing coverage for Tab.” ( Transamerica
, supra , 12 Cal.4th at p. 400.) We reasoned that the “policy must be read in light of its original provisions as well as those added to the policy by the PUC’s standard form endorsement.” ( Id . at p. 399

. ) We then described the policy and end orsement as follows: “As initially written, the Transamerica policy was to remain in effect for one year only, from February 1, 1980

, until February 1, 1981. But . . . the policy was amended by the standard PUC endorsement, which provides for inclusion i n the policy of the PUC’s General Order
No. 100

. . . . [¶] Incorporation of General Order No. 100 . . . into the provisions of the Transamerica policy added to the provisions the requirement . . . that ‘such policy .

. . will remain
in full force and eff

ect until canceled . . . .’ This language, of course, is in direct conflict with the language of the policy as originally written stating that the policy was to expire in February 1981.” ( Id. at pp. 399

– 400.) We concluded that “incorporation into the po licy of the PUC’s General Order No.ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

14 100 language requiring the policy to remain in ‘full force and
effect until canceled’ converted the policy from a one

- year term policy to a policy that was to remain in effect ‘until canceled.’ ” ( Id. at p. 400.) It wa s undisputed that there was “no compliance with the notice requirements” in former section 3634 of the
Public Utilities Code and General Order No. 100 . T herefore , we held that the policy was “still in effect” at the time of the 1989 collision. ( Transamerica , at p. 400.)
Under its terms, the HCA provided that “ ‘ protection against liability shall be continued in effect during the active life of the permit,’ and that ‘ [t]he policy of insurance or surety bond
shall not be cancelable on less than 3 0 days’ written notice to the [PUC], except in the event of cessation of operations as a highway carrier as approved by the [PUC].’ ” ( Transamerica
, supra , 12 Cal.4th at p. 398, quoting Pub. Util. Code, former § 3634, original italics omitted , italics add ed.) So, the terms of
the HCA required that protection against liability, which was provided by the policy, re main in effect until the motor carrier’s permit was cancelled. To effect uate that requirement, the HCA
and the required endorsement prohibited the policy from being
cancelled without notice

. The Act is different. It provides that “ [p]roof of financial responsibility shall be continued in effect during the active life of the motor carrier permit,” and that the “ certificate of
insurance shall no t be cancellable on less than 30 days’ written notice from the insurer to the [DMV] except in the event of cessation of operations as a permitted motor carrier of property.” ( § 34630, subd. (b), italics added .) Likewise, section 34631.5,
subd ivision (b)( 3) provides that the certificate of insurance,

“ evidencing the protection, shall not be cancelable on less than 30 days’ written notice” to the DMV

. Thus, while the HCAALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

15 specifically prohibited cancellation of an insurance policy without notice, the Act on ly prohibits cancellation of a certificate of insurance without notice. This prohibition helps to ensure that “proof of financial responsibility” remains “in effect during the active life” of the permit. (§ 34630, subd. (b).)

Th e difference in statutory language is significant. Under
the HCA and the endorsement required by General Order No. 100, the underlying policy could not be cancelled without notice
to the PUC

. As a result, Transamerica remained obligated. Its policy with Tab had been amended by the endorsement, which “converted the policy from a one

- year term policy to a policy that was to remain in effect ‘until canceled.’ ” ( Transamerica
, supra , 12 Cal. 4th a t p. 400.) But under the new language of the Act only the certificate of insurance remains active until cancelled.
C ancellation of a certificate triggers the DMV’s obligation to suspend the motor carrier’s permit. The statute does not say
that the under lying policy remains active beyond the period called for in the contract between the parties. There is no language that “converts” the stated term of the policy

. Transamerica was decided against the backdrop of a general rule that an insurance company “incurs no liability for an accident that occurs after the policy period has ended.” ( Transamerica
, supra , 12 Cal.4th at p. 394.) This Court
concluded in Transamerica that the HCA created an exception to that gener al rule. The coverage provided by an insurance policy subject to the HCA could not be canceled, regardless of its stated expiration date, without written notice of the policy’s
cancellation to the PUC. ( Transamerica , at p. 401.) This exception was based on explicit statutory language in the HCA prohibiting cancellation of a “ ‘policy of insurance

, or suretyALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

16 bond’ ” without notice to the PUC. ( Transamerica , at p. 398, quoting Pub. Util. Code, former § 3634.)

That language was not carried over into the Act . The change does not appear inadvertent. Like the HCA, a n early
draft of the Act would have conditioned a motor carrier ’s

“ [ r ] egistration ” with the Department on the filing of either “a policy of insurance,” a surety bond, or other evidence of insurance. (Assem. Bill 1683 (1995

– 96 Reg. Sess.) § 55
, as amended Aug. 30, 1995.) The same draft would have required that “protection against liability . . . be continued in effect during
the active life o f the registration.” ( Ibid

. ) In later drafts, that language was removed from the relevant provisions and replaced with requirements that : (1) a “certificate of insurance”
be filed with the Department ; and (2) “proof of financial responsibility . . . be continued in effect during the active life of the permit.” (Assem. Bill 1683 (1995

- 96 Reg. Sess.) § 53
, as amended July 7, 1996.) These were the requirements the Legislature ultimately approved

. (§ 34630, subds. (a), (b).)
We generally infer a change in meaning from a change in statutory language. An “ ‘ essential change in the phraseology of a statutory provision would indicate an intention on the part of the legislature to change the meaning of such provision rather than interpret it. ’ ” ( Est ate of Todd (1941) 17 Cal.2d 270, 274

– 275.) This is especially true if a court has construed the old

statute as having a particular meaning. (See Benson v. Workers’ Comp. Appeals Bd. (2009) 170 Cal.App.4th 1535, 1557 ( Benson ) .) As O’Brien v. Dudenhoeffe r (1993) 16 Cal.App.4th
327 explained, an “ amendment materially changing a statute following a court decision interpreting the statute in its original form is to be regarded as an indication of legislative intent to change the meaning of the law .” ( Id . at p. 335.) We shouldALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

17 therefore “ reject an interpretation of the statute which would leave the prior judicial construction in effect.” ( Ibid .)
The Act prohibits cancellation of a c ertificate of i nsurance without notice to the DMV. (§ 34630, subd. (b); § 34631.5, subd. (b)(3).) Unlike the HCA, it does not speak to cancellation or termination of the underlying policy, which embodies the agreement between the parties. As a result , the Act does not prevent cancellation or termination of an insurance policy under
the terms of the contract.
It is undisputed that at least one certificate of insuranc e that United filed during the period it cover ed Porras remained
uncancelled at the time of the accident

. The question remains:
W hat impact does a c ertificate o f i nsurance remain ing on file
with the DMV have with respect to the coverage that an insurer

owe s to its insured ? Again , we re turn to the language of the United policy, the certificate of insurance, and the endorsement.

B. The Effect Upon Coverage of the Certificate of Insurance
and the Required Endorsement
Insurance coverage is generally understood to mean an obligation on the in surer “to defend and indemnify the insured against loss resulting from specified activities.” (2 Witkin, Summary of Cal. Law ( 11 th ed. 2017 ) Insurance, § 210, p. 329 .)
The c ertificate of i nsurance required by the Act mention s neither of these obligations

. They are , instead, imposed by the
terms of the United p olicy and by the Endorsement , though the obligations are described differently in each document.

In its c ertificate s of i nsurance, United affirmed that Porras was covered by P olicy 772 , that the policy covered all vehicles for which Porras’s permit was required, and that a fully executed endorsement was attached to the policy

. It also agreedALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

18 the certificate was not cancellable without 30 days’ writt en notice to the Department

. The United policy promised that, if Porras “ pa [ id ] the premium for liability coverage for the insured auto involved,” then United would pay damages up to the policy limits

. The policy also provided that United would “settle or defend, at [its] option, any [covered] claim or lawsuit for damages.” Thus, so long as Porras paid the required premium, the policy required
United to (1) defend or settle any covered claim against Porras and (2) indemnify Porras for any damages, up to the limits of liability. If Porras did not pay the required premium, however, the policy would “automatically terminate at the end of the current policy period.”

The E ndorsement also addressed United’s duties to defend and indemnify Porras , b ut it altered some of the obligations
United and Porras owed to each other under the terms of the underlying policy. In the E ndorsement, United promised to “pay, consistent with the minimum insurance coverage required by [section 34631.5], and consistent wit h the limits it provides herein, any legal liability of [Porras] for bodily injury, death, or property damage arising out of the operation, maintenance, or use of any vehicle(s) for which a motor carrier permit is required.” United also promised that “[n] o provision, stipulation, or limitation contained in the attached policy or any endorsement [would] relieve [United] from obligations arising out of this Endorsement or the Act, regardless of insured’s financial solvency, indebtedness or bankruptcy.” How ever, the
E ndorsement’s “coverage” excluded any “costs of defense or other expense that the policy provide[d].” And the E ndorsement specifically stated that it did “not prevent [United] from seeking reimbursement from [Porras] for any payment made by [Uni ted]ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

19 solely on account of the [ E ndorsement’s] provisions.” Thus, the
E ndorsement promised that United would pay Porras’s legal liability up to the statutorily required minimum amount notwithstanding any provision or limitation in the policy. But
it also allowed United to seek reimbursement from Porras for any payment United made solely on account of its provisions

, and it specifically excluded the costs of Porras’s defense from its

coverage. More importantly for our purposes, the Endorsement
was an amend ment to the United p olicy. Unlike the HCA and the endorsement applying General Order No. 100 in
Transamerica , nothing in the Act or the Endorsement provides
that the policy must remain effective until cancellation of the
certificate of insurance

. We emphasize that the question before us is a narrow one

. We hold that an uncancelled certificate of insurance that
remain s on file with the DMV does not cause the corresponding insurance policy to remain in effect in perpetuity. But that is not to say t hat an uncancelled certificate of insurance imposes no obligation of any kind on the responsible insurer. The statutory scheme suggests otherwise. For example, section
3463 1.5, subd ivision (d) provides that “[e] very insurance certificate or equivalent protection to the public shall contain a provision that the certificate or equivalent protection shall
remain in full force and effect until canceled .” Further, under the Act, an insurer remains obligated to prompt ly notify the DMV at least 30 days before a certificate of insurance is
cancelled. This obligation is an important part of the statutory scheme, alerting the DMV of the need to suspend a motor carrier’s permit until new insurance coverage is acquired.

U nited has suggested in the federal litigation, and before this court, that an uncancelled certificate of insurance couldALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

20 impose on the insurer something akin to a surety obligation to members of the public

. The Ninth Circuit has not asked us to

, and we ne ed not , resolve whether such an obligation is created and the scope of any such obligation

. We express no opinion on those questions

. The character, nature
, and extent of the obligation s owed by a company that does not properly cancel a certificate of insurance are matters that can be clarified by further litigation and/or legislative action.

C. Allied’s Countera rguments Fail
In Allied’s view, the coverage provided by an insurance policy s ubject to the Act cannot lapse or be canceled until the
insurer files a cancellation notice with the DMV . Indeed, Allied’s primary argument is that the insurance policy, the endorsement, and the certificate of insurance are all inseparable parts of a sing le whole, none of which can exist or be canceled
without an effect on the others.
In support of this position, Allied points to section 34630, subdivision (a), which refers to “the policy represented by the
certificate

, ” and section 34631.5, subdivision (b)(1), which refers to the certificate of insurance as “evidence[]” of the “protection required” by the Act. Allied contends that, because the
certificate is evidence of and “represents the policy,” it “cannot exist without an underlying policy.” Allied argues that “ e ven if the policy

. . . is set to expire on a certain date, the [certificate] and the policy it represents will remain in effect until 30 days after written notice is given to the DMV

. ”
Allied also relies on language in the c ertificate of
i nsurance, in which United certified under penalty of perjury that Porras “is covered” by the United policy. Allied urges the use of the verb “is” means that the policy must remain activeALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

21 until the certificate is canceled. According to Alli ed, if a policy

can be canceled while the corresponding certificate remain s active, then the insurer would be subject to penalties for perjury.
Allied argues the certificate would become “ a hollow document” that “would certify a falsehood

— i.e. that ther e is insurance available.” To support its position that the policy and th e endorsement are in separable, Allied relies on language in the
E ndorsement providing that it is “attached to and made a part
of” the United p olicy. Finally, Allied points to the cancellation
notice

, urging that it provides notice of cancellation of all three documents: policy; certificate; and endorsement. Allied argues there is “no separate mechanism for canceling only one or two of
the three

. . . . [E]ither all are active or all are canceled.”

There is , of course, a linkage between an insurance policy subject to the Act, the certificate of insurance required by the
Act , and the endorsement required by the DMV ’s regulations.
But the documents are not one and the same. Rath er, each serves its own function within the regulatory framework. As explained, an insurance policy is an agreement between an
insurer and its insured. If a motor carrier complies with the Act by obtaining insurance, the certificate is evidence tendered to the DMV that the insurer agrees to be bound by the terms of the
endorsement and therefore provides sufficient protection to satisfy the Act’s financial responsibility requirements. The certificate thus demonstrates the carrier’s financial responsibilit y by virtue of its contract ual arrangement with the
insurer . It is the document that supports issuance of the carrier’s permit, and its cancellation triggers the Department’s duty to suspend that permit

. The certificate, however, does not govern the obli gations between the parties. The endorsement, meanwhile, serves to ensure that the policy complies with theALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

22 Act’s financial responsibility requirements and amends the policy to the extent of the endorsement’s terms.
Allied’s argument

, that an insurer mi ght be subject to a perjury charge for failing to cancel a certificate of insurance when a policy expires

, raises an interesting potentiality, but it does not establish that the certificate, the policy, and the endorsement are inseparable or cannot exist w ithout one
another. Indeed, the premise that the three documents are
indivisible is flawed. On the contrary , a carrier can contract for coverage with an insurer, and that coverage can become legally binding on the parties without any endorsement and befo re any certificate is filed. The fact a certificate “ remains on file ” with
the DMV does not act to extend the policy’s coverage beyond its expiration date. As for the E ndorsement, its language clearly
indicates that the nature of coverage it describes is different from that provided by the policy. The E ndorsement amended the policy in several ways

. If applicable, it would impose no duty
to defend

, and it would allow United to seek reimbursement
from Porras under cer tain circumstances. But

, unlike the
endorsement in Transamerica
, supra , 12 Cal.4th 389, it did not change the duration of coverage, a subject to which it did not speak. Therefore, the E ndorsement did not convert the policy from one with an agreed

- upon te rm to one which remained in
effect until cancelled.
Next, Allied argues there is no indication that the Legislature intended “to modify the financial responsibility requirements for motor carriers” or to change the rule from
Transamerica
, supra , 12 Cal.4th 389. Rather, the Legislature’s purpose in passing the Act , according to Allied, was to conform state law to a newly enacted federal law that preempted parts
of the HCA. Allied points out that neither the Act nor itsALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

23 legislative history single s out Transamerica for “disapproval.” According to Allied, the change in statutory language was simply based on a change in the documentation required to be
filed with the Department

. 7

In construing a statute, we consider first the words of the

statute as th e most reliable indicator of legislative intent. ( California Building Industry Assn. v. State Water Resources
Control Bd. (2018) 4 Cal.5th 1032, 1041.) Here

, the HCA previously prohibited cancellation of an insurance policy
without notice to the PUC. In the Act, that prohibition has been
removed and replaced with a prohibition on the cancellation of

a certificate of insurance without notice to the DMV. If the Legislature intended to perpetuate Transamerica ’s holding, relating to the continuation of the underlying policy itself, it could have simply used the same language it used in the HCA. Allied cites no authority for the proposition that the rule from
Transamerica must survive because the Legislature failed to

spe cifically disapprove it in the new statute or to specifically note such an intention as part of its legislative history

. Well established authority supports the conclusion that a change in statutory language can, itself, be an indication of the Legislatur e’s intent. ( See O’Brien v. Dudenhoeffer

, supra , 16 Cal.App.4th 327

, 335 , and cases cited therein ; see also Benson
,

7 Under the HCA, an insurer was required to “ ‘ deposit ’ ” a

“ ‘ policy of insurance ’ ” with the PUC as proof of a trucker’s financial responsibility (Pub. Util. Code, former § 3632) , though with the PUC’s consent the insurer could file a certificate of insurance “in lieu of the policy” ( Transamerica
, supra , 12 Cal.4th at p. 408 (dis. opn. of Baxter, J., citing Pub. Util . Code, former § 363 3 )

. Under the Act, an insurer need only file a certificate of insurance to prove a motor carrier’s financial responsibility . (§ 34631.5, subd. (b)(1) .)ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

24 supra , 170 Cal.App.4th at p. 1557.) Finally, that the Legislature sought to avoid federal preemption does not mean it did not act
with other purposes in mind as well

. Allied’s final argument is that, if we adopt United’s “position that the expiration of a policy eliminates the insurance company’s obligation under the policy despite [ the ] lack of notice
to the DM V, ” then “ the entire system of financial responsibility for motor carriers [will] be eviscerated.” The argument, though
a bit hyperbolic al

, is related to a policy argument we raised in
Transamerica . There, we stated the “certificate of insurance
that an insurance company files with the PUC serves as proof of a highway carrier ’ s adequate protection against liability

. . . . [A] long

- term PUC employee testified at trial that the PUC looks to the certificate as proof of a highway carrier ’ s compliance with

t he financial responsibility obligations imposed by the statutory scheme: When a certificate for a policy of insurance is on file, the PUC assumes that the policy is still in effect, thus providing coverage for the highway carrier. [¶] In addition to pro viding an efficient means for the PUC to administer the [HCA’s] financial responsibility requirements . . . , the certificate of
insurance on file with the PUC serves as assurance that the public is protected in the event of an accident involving a particu lar highway carrier.” ( Transamerica
, supra , 12 Cal.4th at p. 403.) Allied contends that, if we hold that an insurance policy subject to the Act can be canceled without notice to the DMV, then the public will be left unprotected if a motor carrierALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

25 without insurance

, but with an active certificate of insurance representing an expired policy, is involved in an accident. 8

It is true that commercial trucking is a business affect ing the public interest and that one goal of the regulating legislation
is to ensure that truckers do not improperly seek to reduce costs by carrying inadequate insurance. ( Transamerica
, supra , 12 Cal.4th at p. 397.) Transamerica reasoned that, as between an insurer who failed to p roperly notify the PUC of a policy’s expiration and a member of the public injured by an inadequately insured trucker, the insurer should bear the risk of loss. ( Id

. at p p . 403

− 404.) The Act’s legislative history
indicates that it was also intended to “ e nhance public safety

. ” ( See, e.g., Sen. Com. on Energy, Utilities and Communications, analysis of Assem. Bill. No. 1683 (1995

– 1996 Reg. Sess.) as amended July 7, 1996, p. 2 .) However, the extension of insurance coverage beyond the underlying policy’s expiration date is not the only way to achieve these public protection goals.

As discussed above, further litigation or legislative action may clarify the particulars of how the overall statutory scheme will operate to pro tect the public. That important policy question need not be resolved here. The certified question arises only in the context of claims for equitable contribution and subrogation between two insurance companies. It bears repeating that the plaintiffs in the underlying lawsuit were compensated to the full limits of Allied’s policy under the terms

8 We conclude that a policy can be cancelled even if the corresponding certificate of insurance remains on file. Accordingly, we need not consider whether a subsequent, and properly filed , certificate of insurance supersedes the vitality of any previously filed certificate relating to the same policy.ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY CO MPANY Opini on of the Court by Corrigan, J.

26 of their settlement and that, at all relevant times, Porras properly maintained an active operating permit.

III. CONCLUSION
Under the Act, a commercial automobile in surance policy
does not continue in full force and effect until the insurer cancels

a corresponding c ertificate of i nsurance on file with the DMV.
The duration of the policy ’s coverage is regulated by its terms and those of any endorsement or amendment to the policy itself.

CORRIGAN, J.

We Concur:
GUERRERO , C. J. LIU, J. KRUGER, J. GROBAN, J. JENKINS, J. EVANS, J.See next page for addresses and telephone numbers for counsel who

argued in Supreme Court.

Name of Opinion Allied Premier Insurance v. United Financial Casualty Company

__________________________________________________________
Procedural Posture (see XX below) Original Appeal Original Proceeding XX on request by 9th Circuit (Cal. Rules of Court, rule 8.548) Review Granted (published) Review Granted (unpublished) Rehearing Granted

__________________________________________________________ Opinion No. S267746 Date Filed: July 24, 2023

________

__________________________________________________
Court: County: Judge:

__________________________________________________________
Counsel:

Patrick Howe Law, Patrick M. Howe; Horvitz & Levy, Lisa Perrochet and Peder K. Batalden for Defendant a nd Appellant.

Booth, Hillary Arrow Booth and Ian P. Culver for Plaintiff and Respondent.Counsel who argued in Supreme Court (not intended for

publication with opinion):

Peder K. Batalden Horvitz & Levy LLP 3601 West Olive Avenue, 8th Floor Burbank, CA 91505 (818) 995

- 0800

Hillary Arrow Booth Booth LLP 11835 West Olympic Boulevard, Suite 600E Los Angeles, CA 90064 (310) 641

- 1800