Court Opinion

ID: 9410810
Source: CourtListenerOpinion
Date Created: 2023-07-24 17:04:47.847231+00
Date Added: 2024-06-11T17:21:00.502028
License: Public Domain

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.
    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 certified1 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 corresponding 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 policy’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.4th 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
        California Rules of Court, rule 8.548.
2
        All undesignated statutory references are to the Vehicle
Code.

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                    Opinion of the Court by Corrigan, J.

Transamerica, was not carried over when later legislation
replaced the Public Utilities Code permitting scheme and
amended the Vehicle Code to add the Act 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 Court, 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 carrier 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. (§ 34631.5, 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).)

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                 Opinion of the Court by Corrigan, J.

       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, subds. (a), (b).) When a motor carrier complies with
the Act by obtaining an insurance policy, a DMV regulation
requires 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 Act 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 Insurance.” This form
is referred to herein as a cancellation notice.

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unless the carrier provides evidence of valid insurance coverage”
pursuant to section 34630, subdivision (a). (§ 34630, subd. (c).)
This procedure ensures that only financially responsible
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, maintenance 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 failed 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 certificate of
insurance, identifying United as the insurer and Porras as the
insured and giving the policy number ending in 772. United
certified that a “fully executed endorsement, on a form
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 canceled 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] 34631.5

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. . . 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 motor 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
Endorsement also permitted United to seek “reimbursement
from [Porras] for any payment made by [United] solely on
account of the [Endorsement’s] provisions.”
       United provided coverage for Porras through the original
or renewed Policy 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 cancellation 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.”

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was subsequently renewed, United would send a new certificate
of insurance as evidence that Porras continued to have the
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 cancellation 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 renew 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 contains 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 Allied, which retained counsel to defend him and
settled the parents’ claim for its policy limits of $1 million.

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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 Here
       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 acknowledged one of its certificates of insurance
remained on file with the DMV because a cancellation notice had
been returned. However, it argued the certificate 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 certificate of insurance
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 federal court. The parties filed a
joint stipulation of facts and exhibits and then filed cross-
motions for summary judgment. The district court ruled for
Allied, finding that, because United “failed properly to submit a
Notice of Cancellation, its policy remained 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 both

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provided “insurance coverage on the same 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 of 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 shares 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 district court also addressed and rejected 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] where 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.

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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
respective 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 should 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 or 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 obtain 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’s

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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
damages 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
was “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 district court 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, supra, 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 Chemical 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). To

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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 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, italics omitted.) To promote the continuous
protection requirement and prohibition on cancellation without
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
thirty (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
full 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 highway

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carrier [would] continue ‘in full force and effect until canceled’ ”
by written notice to the PUC. (Id. at p. 394, italics added.)
      The dispute 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 policies 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
collision because its policy had previously expired.
(Transamerica, supra, 12 Cal.4th at p. 396.) Tab cross-
complained, asserting entitlement to coverage under the policy

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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 intent
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 endorsement 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 in 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 effect 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 policy of the PUC’s General Order No.

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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 was undisputed that there was “no compliance
with the notice requirements” in former section 3634 of the
Public Utilities Code and General Order No. 100. Therefore, 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 30 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 added.) So, the terms of
the HCA required that protection against liability, which was
provided by the policy, remain in effect until the motor carrier’s
permit was cancelled. To effectuate 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 not 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,
subdivision (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 HCA

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specifically prohibited cancellation of an insurance policy
without notice, the Act only 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).)
      The 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 at p. 400.) But under the new language of the Act
only the certificate of insurance remains active until cancelled.
Cancellation of a certificate triggers the DMV’s obligation to
suspend the motor carrier’s permit. The statute does not say
that the underlying 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 general 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 surety

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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, an 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 of 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.’ ” (Estate 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. Dudenhoeffer (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 should

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  ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY
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                 Opinion of the Court by Corrigan, J.

therefore “reject an interpretation of the statute which would
leave the prior judicial construction in effect.” (Ibid.)
       The Act prohibits cancellation of a certificate of insurance
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 insurance
that United filed during the period it covered Porras remained
uncancelled at the time of the accident. The question remains:
What impact does a certificate of insurance remaining on file
with the DMV have with respect to the coverage that an insurer
owes to its insured? Again, we return 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 insurer “to defend and indemnify the insured
against loss resulting from specified activities.” (2 Witkin,
Summary of Cal. Law (11th ed. 2017) Insurance, § 210, p. 329.)
The certificate of insurance required by the Act mentions
neither of these obligations. They are, instead, imposed by the
terms of the United policy and by the Endorsement, though the
obligations are described differently in each document.
      In its certificates of insurance, United affirmed that
Porras was covered by Policy 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 agreed

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  ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY
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                  Opinion of the Court by Corrigan, J.

the certificate was not cancellable without 30 days’ written
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 Endorsement also addressed United’s duties to defend
and indemnify Porras, but it altered some of the obligations
United and Porras owed to each other under the terms of the
underlying policy. In the Endorsement, United promised to
“pay, consistent with the minimum insurance coverage required
by [section 34631.5], and consistent with 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.” However, the
Endorsement’s “coverage” excluded any “costs of defense or
other expense that the policy provide[d].” And the Endorsement
specifically stated that it did “not prevent [United] from seeking
reimbursement from [Porras] for any payment made by [United]

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  ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY
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                 Opinion of the Court by Corrigan, J.

solely on account of the [Endorsement’s] provisions.” Thus, the
Endorsement 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 amendment to the United policy. 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
remains on file with the DMV does not cause the corresponding
insurance policy to remain in effect in perpetuity. But that is
not to say that an uncancelled certificate of insurance imposes
no obligation of any kind on the responsible insurer. The
statutory scheme suggests otherwise. For example, section
34631.5, subdivision (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 promptly 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.
      United has suggested in the federal litigation, and before
this court, that an uncancelled certificate of insurance could

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                  Opinion of the Court by Corrigan, J.

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 need 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
obligations 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 Counterarguments Fail
      In Allied’s view, the coverage provided by an insurance
policy subject 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 single 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 “even 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 certificate of
insurance, 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 active

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  ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY
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                 Opinion of the Court by Corrigan, J.

until the certificate is canceled. According to Allied, if a policy
can be canceled while the corresponding certificate remains
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 there is insurance
available.” To support its position that the policy and the
endorsement are inseparable, Allied relies on language in the
Endorsement providing that it is “attached to and made a part
of” the United policy. 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. Rather, 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
responsibility by virtue of its contractual 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 obligations between the parties. The endorsement,
meanwhile, serves to ensure that the policy complies with the

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  ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY
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                 Opinion of the Court by Corrigan, J.

Act’s financial responsibility requirements and amends the
policy to the extent of the endorsement’s terms.
       Allied’s argument, that an insurer might 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 without 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 before 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 Endorsement, its language clearly
indicates that the nature of coverage it describes is different
from that provided by the policy. The Endorsement 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 certain 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 Endorsement did not convert the policy
from one with an agreed-upon term 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 its

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    ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY
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                 Opinion of the Court by Corrigan, J.

legislative history singles 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 the 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
specifically 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
Legislature’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 § 3633). 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).)

                                 23
  ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY
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                 Opinion of the Court by Corrigan, J.

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 DMV,” then “the entire system of financial responsibility
for motor carriers [will] be eviscerated.” The argument, though
a bit hyperbolical, 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
the 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 providing
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
particular 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 carrier

                                 24
    ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY
                          COMPANY
                 Opinion of the Court by Corrigan, J.

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 affecting
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 properly 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 pp. 403−404.) The Act’s legislative history
indicates that it was also intended to “enhance 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 protect 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.

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  ALLIED PREMIER INSURANCE v. UNITED FINANCIAL CASUALTY
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                  Opinion of the Court by Corrigan, J.

of their settlement and that, at all relevant times, Porras
properly maintained an active operating permit.
                       III.   CONCLUSION
      Under the Act, a commercial automobile insurance policy
does not continue in full force and effect until the insurer cancels
a corresponding certificate of insurance 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.

                                  26
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 and 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