Plaintiff insured challenged defendant insurer’s practice of providing two tiers of physical auto damage coverage, paying all reasonable costs incurred at a preferred repair facility (PRF), but only 80 percent of the reasonable costs incurred at an unapproved repair facility selected by an insured. The Superior Court of Los Angeles County, California, found no violation of Ins. Code, § 758.5, and struck class allegations. The insured appealed.

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Overview

The court of appeal held that insurance companies had the right to choose what typeface, format, headings, and positioning to use to satisfy the requirement under § 758.5, subd. (d)(1), that a policy conspicuously disclose a provision suggesting a particular automotive repair facility (PRF). The disclosure in the current case was sufficiently conspicuous because it stated “this is a restricted policy”; contained a separate section for the applicant to certify an understanding of the restricted policy; and was boxed off with separate signature lines. The court also held that the payment practice did not violate § 758.5, subd. (d)(2) (prohibiting the limitation or discount of reasonable repair costs when an insured elected to have a vehicle repaired at the shop of his or her choice) because that provision did not require 100 percent coverage. For purposes of class certification, common issues of fact were not stated with regard to allegations that the PRF used nonoriginal equipment or manufacturer (non-OEM) aftermarket crash parts and did not return the vehicle to its pre-loss condition. Each class member would have had to identify the non-OEM part used and prove it was inferior.

Outcome

The court affirmed the order striking the class allegations.