American Family Mutual Insurance v. Sharp
277 P.3d 192
Ariz.2012Background
- Arizona UMA requires UIM coverage and voids any exceptions not permitted by UMA.
- Sharp was injured as a passenger on her husband’s motorcycle; damages exceeded liability limits on that policy.
- Sharp held a separate Escape Policy with UIM coverage and a stacking/other insurance provision.
- Sharp settled her tort claim against her husband for the motorcycle policy limit; she pursued UIM under the Escape Policy for the difference.
- American Family denied UIM on the Escape Policy, relying on the Other Insurance clause and Subsection (H).
- The certified questions asked whether Subsection (G) requires UIM, whether Subsection (H) can deny it, and if an other-insurance clause complies with Subsection (H).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does § 20-259.01(G) require UIM coverage when damages exceed liability limits? | Sharp | American Family | Yes; UIM coverage required under G. |
| Can § 20-259.01(H) deny UIM when insured is partially indemnified under another policy? | Sharp | American Family | No; H does not authorize denial in this circumstance. |
| Does American Family's 'Other Insurance' clause comply with § 20-259.01(H) under the facts? | Sharp | American Family | Unnecessary to decide; H does not permit denial here, so clause not addressed. |
Key Cases Cited
- Taylor v. Travelers Indem. Co., 198 Ariz. 310 (2000) (broad application of UIM to fill gaps up to policy limits)
- Cundiff v. State Farm Mut. Auto. Ins. Co., 217 Ariz. 358 (2008) (voids exclusions that reduce UMA/UIM when not fully indemnified)
- Rashid v. State Farm Mut. Auto. Ins. Co., 163 Ariz. 270 (1990) (anti-stacking context for multiple coverages from same insurer)
- Lindsey v. State Farm Mut. Auto. Ins. Co., 182 Ariz. 329 (1995) (insurer must follow stacking/anti-stacking requirements when applicable)
- Ballesteros v. Am. Standard Ins. Co., 226 Ariz. 345 (2011) (remedial construction of UMA; liberal coverage interpretation)
- Duran v. Hartford Ins. Co. (Duran I), 160 Ariz. 223 (1989) (UIM not to expand tortfeasor's liability limits; distinction from primary liability)
- State Farm Mut. Auto. Ins. Co. v. Wilson, 162 Ariz. 251 (1989) (liability vs. first-party UIM distinctions; purpose of UM/UIM coverage)