Farmers Insurance Exchange v. Hurley

Opinion

RICHILI, Acting P. J.

Insurance Code section 11580.2, subdivision (PX3),1 provides that underinsured motorist coverage does not apply until the limits of any policy covering the underinsured vehicle “have been exhausted by payment of judgments or settlements . . . .” The question presented in this case is whether a settlement for less than the policy limits satisfies the exhaustion requirement provided the insured agrees to credit the underinsurance carrier with the full policy limits as if they had been paid. We conclude that, under the plain terms of section 11580.2(p)(3), actual…