Blevins v. GEICO (CA1 3/24/11)

(LATER NOTE: This is opinion was amended by another issued on July 28, 2011. The only difference appears to be the deletion of a couple of sentences (from paragraphs 22 and 25) regarding the use and effect of DOI forms, about which one of the parties presumably raised some quibble. For purposes of our analysis the changes are inconsequential.)

A.R.S. 20-259.01(B) requires a written offer of UIM coverage. The issue here is whether it also requires a written denial. The answer is “no.”

When Blevins bought his car insurance from GEICO it gave him a written offer. He refused the coverage but didn’t sign the form saying so. After being in an accident he claimed UIM; GEICO denied it; he sued. The trial court gave him summary judgment; this opinion reverses.

An earlier case (State Farm v. Ash) had decided this issue for the insurer. But since then the statute has added two sentences.

Since 1992 the statute has said “The selection of limits or rejection of coverage by a named insured or applicant on a form approved by the director shall be valid for all insureds under the policy.” The trial court apparently focused on this, interpreting it as requiring a written denial on the written form. But the Court of Appeals points out that the sentence does not explicitly require a written denial nor even that a form be used. The Legislature could have done so had it wished, as it has with other insurance statutes, e.g., 20-259.01. The legislative history and a Supreme Court case indicate that use of the written form – including a written denial – is one method of demonstrating compliance, not the only way to comply with the UIM requirement. The sentence relates to an effect of using the form, namely, that the policyholder’s UIM choice applies to all insureds.

Since 2003 the next sentence of the statute has said “The completion of such form is not required where the insured purchases such coverage in an amount equal to the limits for bodily injury or death contained in the policy.”  This, Blevins argued, means that the form is required otherwise. But the court says that the 2003 sentence relates only to the 1992 sentence, under the last antecedent rule (“a qualifying phrase [is] applied to the word or phrase immediately preceding as long as there is no contrary intent indicated”). In other words, the sentence means that the purchase of maximum UIM coverage is valid for all insureds whether or nor a state-approved form is used.

The Department of Insurance has taken the position that it must approve the forms used to offer UM/UIM coverage. But an agency’s interpretations are advisory only; “to the extent it conflicts with our interpretation, we do not find [the Department’s] interpretation controlling.

(This will cause some consternation since there are efforts already underway to attack some companies’ UM/UIM selection forms based on the Department’s interpretation.)

The rule in Ash therefore still applies. The denial of UIM need not be in writing.

The Court remands with instructions to enter judgment for GEICO.

(link to opinion)