ISOFEA v. FARMERS INSURANCE EXCHANGE COMPANY Part II
Arbitration conducted pursuant to Insurance Code Sec. 11580.2 to determine coverage for damages caused by an uninsured motorist is an arbitration within meaning of and subject to Code of Civil Procedure Sec. 998. The Code provides that party who rejected a settlement offer that is later exceeded by ultimate judgment must bear costs other party incurred in making offer. Insurance Code Sec. 11580.2(p)(4), which states insurer's maximum liability to insured "shall not exceed the insured's underinsured motorist coverage limits...", does not preclude the insured from recovering costs under Code of Civil Procedure Sec. 998. Costs, when added to arbitration award, would exceed policy's coverage limits. Under Civil Code Sec. 3291, which allows plaintiff in personal injury action to recover prejudgment interest where amount of ultimate judgment is less than plaintiff's rejected settlement offer. The prejudgment interest is not available to an insured who sues an insurance company to recover policy benefits even if purpose of recovery is to compensate for personal injury incurred in accident. Where ultimate judgment arising from uninsured motorist arbitration exceeds amount of plaintiff's rejected settlement offer, award of costs to plaintiff pursuant to Code of Civil Procedure Sec. 998 may include deposition and exhibit preparation expenses in addition to expert witness fees.
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