## Facts

- Fireman’s Fund insured independent truckers operating as highway carriers subject to California Public Utilities Commission (PUC) regulation under the Highway Carriers’ Act.
- State law and PUC rules required certified automobile liability coverage to remain effective until the PUC received written cancellation notice and 30 days elapsed after receipt.
- The truckers stopped Fireman’s Fund coverage and obtained replacement insurance with the same policy limits; Fireman’s Fund stopped collecting premiums.
- Fireman’s Fund did not provide the PUC the required written notice of cancellation and did not cancel its PUC insurance certificate in the required manner.
- A covered vehicle was involved in an accident causing bodily injury claims.
- Fireman’s Fund sued Allstate and Northbrook for declaratory relief, asserting its policy was not in effect (or was only excess) and that Allstate and Northbrook provided primary coverage, including by additional-insured status.
- After a bench trial, the court ruled: (1) Fireman’s Fund’s policy remained in force on the accident date due to failure to comply with PUC cancellation requirements; (2) Allstate’s and Northbrook’s policies did not cover the highway carrier as an additional insured; and (3) Allstate and Northbrook were entitled to prejudgment interest. Fireman’s Fund appealed.

## Issues

1. Whether Fireman’s Fund’s policy remained in effect at the time of the accident because it failed to provide the PUC 30 days’ written notice of cancellation, despite the insureds’ private termination and procurement of substitute insurance.
2. Whether the highway carrier qualified as an additional insured under Allstate’s or Northbrook’s policies.
3. Whether Allstate and Northbrook were entitled to prejudgment interest on sums owed by Fireman’s Fund.

## Decision

- The Court of Appeal affirmed the judgment for Allstate and Northbrook.
- Fireman’s Fund’s policy remained in full force and effect on the accident date because Fireman’s Fund did not comply with statutory and regulatory cancellation-notice requirements to the PUC.
- Allstate’s and Northbrook’s policies did not provide additional-insured coverage to the highway carrier on the facts and policy terms shown.
- Prejudgment interest in favor of Allstate and Northbrook was properly awarded.

## Legal Principles

- For PUC-regulated highway carriers, a certified liability policy remains effective until cancellation is accomplished through written notice to the PUC and the required notice period runs from the date the PUC actually receives notice.
- Private arrangements between insurer and insured (including substitution of replacement coverage and cessation of premium payments) do not terminate the insurer’s obligations where the financial-responsibility scheme requires regulatory notice as a condition of effective cancellation.
- Additional-insured coverage depends on satisfaction of the specific policy conditions; it is not created merely because the insured’s operations relate to or benefit another entity.
- Prejudgment interest may be awarded in inter-insurer reimbursement disputes when the amount owed becomes sufficiently certain or capable of being made certain by calculation once the obligation is fixed.

## Conclusion

The court held that Fireman’s Fund remained liable because it failed to cancel coverage through the PUC-required notice process, rejected attempts to shift liability via additional-insured provisions in other insurers’ policies, and affirmed prejudgment interest awards to the prevailing insurers.


Fireman's Fund Ins. Co. v. Allstate Ins. Co., 234 Cal. App. 3d 1154 (Ct. App. 1991)