The ''Conspicuous, Plain and Clear'' Doctrine
The California Supreme Court reaffirmed the "conspicuous, plain and clear" standard--a doctrine of long standing--in Haynes v. Farmers Ins. Exchange (2004) 32 Cal.4th 1198.
Citing case law beginning in 1962, the court explained the doctrine as follows:
"In the insurance context, 'we begin with the fundamental principle that an insurer cannot escape its basic duty to insure by means of an exclusionary clause that is unclear. As we have declared time and again, "any exception to the performance of the basic underlying obligation must be so stated as clearly to apprise the insured of its effect."' Coverage may be limited by a valid endorsement and, if a conflict exists between the main body of the policy and an endorsement, the endorsement prevails. But to be enforceable, any provision that takes away or limits coverage reasonably expected by an insured must be 'conspicuous, plain and clear.' Thus, any such limitation must be placed and printed so that it will attract the reader's attention. Such a provision also must be stated precisely and understandably, in words that are part of the working vocabulary of the average layperson. The burden of making coverage exceptions and limitations conspicuous, plain and clear rests with the insurer. " (Haynes, supra, 32 Cal.4th at p. 1204.)
In Haynes, the court determined the reasonable expectations of the policyholder by examining the policy. First, it discussed the relevant statutes.
It observed that Insurance Code section 11580.1, subdivision (b)(4) requires automobile insurance policies to provide the same amount of coverage to permissive users that it provides to named insureds, while section 11580.1, subdivision (a) provides that this requirement does not apply if the policy limits exceed the minimum statutory requirements for bodily injury liability coverage of $ 15,000 per person and $ 30,000 per accident. The policy at issue had limits of $ 250,000 per person and $ 500,000 per accident, so the policy could legally limit permissive user coverage to $ 15,000/$30,000, as it purported to do. "But Farmers i.e., the insurer included 'any person using your insured car' within its definition of 'Insured person,' thus raising a reasonable expectation that permissive user coverage would be coextensive with that for other insureds." (Haynes, supra, 32 Cal.4th at p. 1213.)
This meant that "any limitation on permissive user coverage, to be enforceable, was required to be conspicuous, plain and clear." (Ibid.)