The UIM statute, A.R.S. 20-259.01 was the topic of the last post, and now Division 1 has weighed in on whether an insurer can exclude an accident caused by an off-highway vehicle.  Plaintiff passenger was riding on an ATV on the dunes outside of Yuma when it rolled.  Passenger collected from the driver and then demanded UIM coverage from her insurer State Farm. State Farm’s policy states an “underinsured motor vehicle” does not include an offroad vehicle (nor is such coverage required under Arizona’s Financial Responsibility Act). State Farm argued the UIM statute does not compel coverage for vehicles that are not operated on the highways. Because there is case history agreeing with State Farm but involving uninsured motorist claims, the court distinguishes UM cases because the statute says UM coverage is “subject to the terms and conditions of the policy” and such language is not included when the legislature defined UIM coverage. The court gives us a side-by-side comparison of the UM/UIM statute while informing us the UIM coverage refers to an “accident” without reference to a motor vehicle at all. The court ascribes the difference in language as especially meaningful. The court backs up its analysis by quoting the overly broad statement in Cundiff that there are no exceptions to UIM coverage (except stacking as we discussed last week). The court rules for the insured but agrees with the dismissal of her bad faith claim which was tacked on the coverage claim and undeveloped in the trial court. This statute has been a favorite at the legislature, and we will see if the Fifty-sixth Legislature is inclined to correct such interpretations.

link to opinion