AHK Law Office

Limitation provision in auto policy held unenforceable as it was not sufficiently conspicuous

On January 24, 2002, the Fourth Appellate District issued its opinion for publication in Haynes v. Farmers Insurance Exchange Case No. G028171, reaffirming the rule that insurance policy provisions that take away or limit coverage, must be "conspicuous, plain and clear".

In the Haynes case, the Court of Appeal held that a provision in an auto policy limiting coverage for permissive users to the limits of the Financial Responsibility Law was unenforceable as it was inconspicuous. The appellate court emphasized that the limitation in coverage was not placed on the declarations page "where one would expect an insured to look to determine the policy limits."

The court also emphasized that "to be conspicuous" the language must be placed and printed in a form, which would "attract a reader's attention." Here, nothing alerted the insured in the declarations page or in the liability section of the policy that limits of liability were different for permissive users. Only under the "other insurance" provision, three pages after the liability section, did Farmer's policy disclose that . there was a limitation in coverage for permissive users.