Michael Wilson (Wilson) petitions us to review a court of appeals’ opinion holding the underinsured motorist provisions (UIM) in his automobile policy did not cover a punitive damage award.
See State Farm Mut. Auto. Ins. Co. v. Wilson,
I. FACTS AND PROCEDURAL HISTORY
The facts are undisputed. On June 12, 1983, Wilson was injured in a collision with a drunk driver. He sued the driver and obtained a judgment for $5,000 compensatory and $20,000 punitive damages. The driver’s insurance company paid the compensatory damages award but refused to pay punitive damages, claiming the policy expressly excluded punitive damages from its liability coverage.
Wilson then demanded that State Farm Mutual Automobile Insurance Co. (State Farm), his insurer, pay the punitive damage award under the UIM coverage contained in his policy. State Farm sought *252 declaratory relief, requesting that the court find its policy did not provide such coverage.
The UIM endorsement provides:
We will pay damages for bodily injury an insured is legally entitled to collect from the owner or driver of an underin-sured vehicle. The bodily injury must be caused by accident arising out of the operation, maintenance, or use of an underinsured motor vehicle.
(Emphasis in original).
The policy states bodily injury “means bodily injury to a person and sickness, disease or death which results from it.” (Emphasis in original). The policy also contains the following provisions:
Deciding Fault and Amount
Two questions must be decided by agreement between the insured and us:
1. Is the insured legally entitled to collect damages from the owner or driver of an underinsured motor vehicle; and
2. If so, in what amount?
Payment of Any Amount Due
We will pay any amount due:
1. to the insured; ...
(Emphasis in original). A separate section of the policy specifically outlines when UIM coverage does not apply; there is no exclusion for payment of punitive damages.
Thus, the applicable insuring portion of the policy covers only damages “for bodily injury,” while the provision governing damage assessment provides for payment of all damages that may be due the insured. The words used do, indeed, present us with two apparently reasonable but conflicting interpretations. See Restatement (Second) of Contracts §§ 207 and 208. Wilson argued that the ambiguity in the policy language required judgment against State Farm and, furthermore, that Wise controlled. On cross-motions for summary judgment, the trial court ruled that State Farm, Wilson’s insurer, was liable to pay the punitive damages award assessed against the tort-feasor. State Farm appealed and the court of appeals reversed.
Having granted the petition for review, we must thus decide whether coverage for punitive damages assessed against the tort-feasor is within the protection afforded by Wilson’s UIM coverage.
II. DISCUSSION
A. Court of Appeals Decision
Viewing ambiguity as the dispositive question, the court of appeals found the UIM policy unambiguous and stated that it therefore must “be construed according to its ordinary meaning.”
The court acknowledged that when faced with an almost identical clause, division two of the court of appeais had come to a different conclusion in
Wise.
In
Wise,
division two held that arbitrators were correct to award punitive damages as part of a UM claim in the absence of an express exclusion.
On review, Wilson urges us to hold that coverage exists because the policy is ambiguous and because such a construction would fulfill the expectations of the consumer. Given the nature of the insurance
*253
industry, we are well aware many of its customers expect maximum return for the premium dollar. In that light, the coverage in question might be expected. To be enforceable, however, the specific expectation must be
reasonable. See Darner Motor Sales, Inc. v. Universal Underwriters Ins. Co.,
B. Interpretation of the Policy in Light of Statutory Law and Other Public Policy Considerations
Because both UM and UIM insurance are creatures of statute (see A.R.S. § 20-259.01), we turn first to consider whether the legislature has required the coverage in question or whether the legislative goals would be served by resolving any doubt in policy language in favor of coverage.
1. Statutory Genesis
State Farm offered UIM coverage to comply with the requirements of Arizona law.
See
Petition for Review, App. B (State Farm Mutual Car Policy, “New Law Adds Coverage W To Your Policy”). UM coverage was similarly offered in response to statutory enactments. Thus, we analyze the purpose of the coverages provided by the contract with the statutory mandate in mind.
Jenkins v. Mayflower Ins. Exch.,
a. The Legislative History of UIM
The legislature adopted the Financial Responsibility Act (currently, the Safety Responsibility Act) in 1951.
See
A.R.S. §§ 28-1101 to 28-1225, 1951 Ariz.Sess. Laws ch. 122. In requiring all owners or operators of motor vehicles in Arizona to obtain liability insurance coverage, the legislature sought to protect drivers in the state against losses engendered by financially irresponsible owners or operators of motor vehicles.
Id.; see also Cassel v. Schacht,
As enacted, the statute provided that insurers offer protection to persons “legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom.” See Laws 1965, ch. 34. The insured had the right to reject UM coverage until 1972 when the legislature made such coverage mandatory. See Laws 1972, ch. 157.
In 1981, the legislature perceived inadequacies in UM insurance. See A. Widiss, UNINSURED AND UNDERINSURED MOTORIST INSURANCE § 31.4 (2d ed. 1987) (UIM coverage developed in response to the public concern about the shortcom *254 ings of UM insurance, which only applied to accidents caused by uninsured motorists). Serious injuries are often caused by insured drivers with inadequate liability limits. Therefore, there was an obvious need for first party coverage to provide a source of recovery for such accidents. Id. A bill introduced in the Arizona house required auto liability insurance carriers to offer UIM coverage. HB 2129. As enacted, it stated that insurers must provide:
coverage for a person if the sum of the limits of liability under all bodily injury or death liability bonds' and liability insurance policies applicable at the time of the accident is less than the total damages for bodily injury or death resulting from the accident. To the extent that the total damages exceed the total applicable liability limits, underinsurance motorist coverage provided in ... this section is applicable to the difference.
Laws 1981, ch. 224, § 1.
After various changes, 3 the statute in effect at the time of the accident in this case directed that any motor vehicle policy issued in this state include UM coverage. A.R.S. § 20-259.01(A). The insurer was also required to make UIM coverage available to the same limits as the liability coverage; however, the insured had the option of refusing UIM coverage. A.R.S. § 20-259.01(0). The insurer had the right to subrogate against either an uninsured or underinsured motorist. A.R.S. § 20-259.01(G). 4
b. Legislative Objectives
Mandatory UM insurance is a reflection of public policy favoring indemnification of victims of negligent, financially irresponsible motorists.
Calvert v. Farmers Ins. Co.,
The legislature has amended A.R.S. § 20-259.01 repeatedly to expand its scope.
Calvert,
We believe the legislative objective in this case is narrower in scope than in the
*255
general liability context. Neither the UM nor the UIM statute purports to afford as broad protection as the Safety Responsibility Act. The UM and the UIM statutes require coverage only “for bodily injury or death,” whereas the Safety Responsibility Act also requires coverage for property damage.
Compare
A.R.S. § 20-259.01(B) and (C)
with
§ 28-1170(B)(2)(c). Furthermore, the Safety Responsibility Act serves the dual purpose of protecting the general public from the insured and protecting the insured from liability for his own acts, while the UM and UIM Act only compels protection for injuries the insured sustains from the acts of others.
Employers Mut. Cas. Co. v. McKeon,
Unlike liability coverages, therefore, UM and UIM coverages prescribed in this state do not even compensate the victim for the total loss (property as well as personal injury) suffered.
Compare
A.R.S. § 20-259.01
with
A.R.S. § 28-1170(B)(2)(c). Rather, they are “gap fillers” permitting insureds to provide themselves with a source of compensation for bodily injuries sustained as a result of the negligence of a financially irresponsible or inadequately insured driver.
Calvert,
Having determined as best we can the legislative objective — to provide a source of compensation for bodily injury sustained by the insured — we must consider whether punitive damage payments are within the legislature’s goals. To do so, we must examine the role such awards play in our judicial system.
2. Who Should Pay Punitive Damages?
Tort law has adopted the idea of punishment that underlies criminal law in its imposition of punitive damages for a defendant’s wrongdoing. PROSSER AND KEE-TON ON THE LAW OF TORTS § 2 (5th ed. 1984);
see also Hawkins v. Allstate Ins. Co.,
In appropriate cases, assessment of punitive damages to be paid by the tortfeasor fulfills the social policy of deterrence that underlies such awards. Liability insurance coverage
for that tortfeasor
is permissible because payment of such damages by the tortfeasor’s insurer may pass the ultimate costs of the punitive damage award to the tortfeasor or others in similar situations.
See Price,
3. Resolution of Legislative Issues
We have considered the goals and social policies that underlie the legislative requirement that UM coverage be provided and UIM coverage offered — to provide protection to the insured for his bodily injury. We have also considered the social policy underlying punitive damage awards — to punish the tortfeasor and deter others. These considerations provide no basis to conclude that the statutes or legislative policy underlying UM and UIM coverage require or should be read to require the victim’s UM or UIM insurer to pay punitive damage awards assessed to punish the tort-feasor rather than to compensate the victim for his injuries. When faced with conflicting, reasonable interpretations of a contract, the court should adopt the interpretation that furthers public policy.
*256
Helme,
C. Interpretation of the Contract in Light of the Nature of the Transaction as a Whole
We turn then to consider whether, regardless of legislative requirements and goals, State Farm has undertaken to include such coverage in its contract with Wilson. It is here, citing Darner and raising the flag of ambiguity, that Wilson makes his most forceful argument. Indeed, we have held that if an insurer chooses to provide coverage for punitive damage awards, the law will not prevent it from so doing. 7 Price.
1. Darner
This court has long stood for the proposition that, in buying insurance, consumers are entitled to get what they pay for.
Darner,
In the present case, however, the wording of the insuring clause is intended to provide a source of compensation for the victim/insured’s bodily injuries. The coverage is designed and offered for that purpose. The insurer’s undertaking at the beginning of the policy indicates no more than protection of the insured from bodily injury damages. No fine print exclusion is raised to take away that which the policy was intended to offer; the policy was never sold or intended to grant the coverage now claimed. Cf. Higgins, Calvert. Nothing in Darner or its progeny supports the proposition that an insured buying protection against bodily injury would have any reason to also expect coverage for non-compensatory damages assessed to punish the tortfeasor rather than compensate the victim.
The insured buying UIM coverage has a reasonable expectation that he will get what he pays for: coverage for bodily injuries caused by underinsured motorists. Nothing in the nature of the transaction engenders an expectation that absent an express undertaking by the insurer, he will also get coverage for punitive damages assessed against the tortfeasor. The
Darner
doctrine protects only the reasonable expectations engendered by the nature of the transaction, and in this case militates against a finding of coverage.
See
2. Ambiguity
We come then to the question of ambiguity. Indeed, because two divisions of our court of appeals have reached diametrically opposite conclusions based on essentially identical wording, prior authority requires us to conclude that the clause must be ambiguous.
See Federal Ins. Co. v. P.A.T. Homes, Inc.,
We thus come to the very essence of the ambiguity doctrine and its place in our interpretation of the contract. For some reason, before courts interpret contractual provisions they feel constrained to declare that the provisions are ambiguous.
See Transamerica Ins. Group v. Meere,
We marvel, as Corbin did nearly forty years ago, that judges insist upon applying such rules “innumerable times, sometimes to apply them though justice weeps at her own blindness, sometimes to avoid them by making fine and specious distinctions, sometimes merely to state them with respect while disregarding them, and sometimes to voice criticism and disapproval.” 3 A. Corbin, CONTRACTS § 536 (2d ed. 1960). We prefer to adopt a rule of common sense and have attempted to do so on numerous occasions. See generally Helme, Meere, Darner.
We once again decline “to hold that an unexpected, unknown ambiguity in a clause which the parties did not negotiate ... should permit them to show the true [meaning] of the agreement, but that the lack of such an ambiguity prevents them from so doing.”
Darner,
We emphasize that in so doing, we do not ignore the ambiguity question in evaluating the viability of Wilson’s claim that his policy covers punitive damages by providing for payment of “any amount due to the insured.”
See, e.g., Security Ins. Co. v. Andersen,
We agree with the court of appeals that
Price
is distinguishable. Moreover, it foretold, over fifteen years ago, the rule we adopt today. In
Price
we held that any public policy considerations militating against an insurer providing coverage for punitive damages were outweighed by the public policy “that an insurance company which admittedly took a premium for [indemnifying against]
all liability for damages,
should honor its obligation.” 108
*258
Ariz. at 487,
General liability insurance is separate and distinct from the first party coverage provided by either UM or UIM insurance. The insured in the UM or UIM context is not personally liable to pay punitive damages; therefore, the dominant purpose of the transaction would not be defeated if coverage were not conferred absent express statement in the policy. Our direction today is determined by the different considerations that come into play when the insured purchases UM and UIM coverage to protect himself and his family from
loss by reason of bodily injury
inflicted by uninsured or underinsured tortfeasors. That is what Wilson bought and State Farm sold. Wilson is entitled to get neither less nor more than that.
See McKeon,
We conclude, therefore, that although the language of the policy presents conflicting reasonable interpretations, we are not thereby automatically constrained to construe it against the insurer in this case. The determination that an ambiguity must be construed against the insurer comes in this case, as we believe it must in all cases, at the
end
of our inquiry, not at the beginning. Considerations of legislative goals, social policy, and examination of the transaction as a whole, including the reasonable expectations of the insured, may indicate, as here, that we should not automatically construe a clause susceptible to various interpretations in favor of the insured. To the extent that
Federal Insurance v. P.A.T. Homes,
D. Authority from Other Jurisdictions
We are cognizant that a conflict of authority exists in cases from other jurisdictions.
See
Annotation,
Punitive Damages as Within Coverage of Uninsured or Underinsured Motorist Insurance,
We do not find Lipscombe’s reasoning persuasive. Although theoretically State Farm had the right of recovery against the tortfeasor, we do not believe the subrogation right to be dispositive. The right of subrogation no longer exists against under-insured motorists because such efforts were seldom successful.
See
Minutes of Meeting of Committee on Banking and Insurance, March 5, 1986,
supra
note 3. No reason exists for us to believe that efforts against uninsured motorists would be more so.
See
Note,
Uninsured Motorist Insurance Now Covers Punitive
Damages—
Hutchinson v. J. Height,
19 Akron L.Rev. 325, 328 n. 27 (1985) (insurers’ efforts yield results no better than 1.5 percent collection rate);
State Farm Mut. Auto Ins. Co. v. Mendenhall,
We find the better reasoned cases agree that UM coverage does not apply to punitive damages.
See, e.g., Laird,
Many courts that have considered the issue have reached the same conclusion as Laird. 14 Widiss, in commenting on Laird, *260 noted that in the absence of a broad statutory mandate, an interpretation that punitive damages were not within the scope of coverage seemed proper. WIDISS, supra, § 12.6. We agree.
III. CONCLUSION
Insurers must comply with statutes governing automobile insurance in providing UM and UIM coverage. We conclude that the legislative objective in compelling such protection is to compensate victims for bodily injury caused by negligent, financially irresponsible or underinsured motorists. Because punitive damages are not compensatory and are intended to punish and deter tortfeasors from wrongful conduct, we hold UIM and UM insurers are not liable to pay such damages unless they have specifically provided to do so. State Farm did not so contract. No reasonable expectation of the insured — nothing in the dickered deal, the nature of the transaction, or clear intent manifested in the policy language— militates in favor of finding such an undertaking.
The trial court’s judgment that State Farm’s UIM provisions covered punitive damages is reversed. The opinion in State Farm Mutual Automobile Insurance Co. v. Wilson as modified by this opinion is approved. The opinion of the court of appeals in State Farm Fire & Casualty Co. v. Wise is disapproved.
The case is remanded with instructions that judgment be entered in accordance with this opinion.
Notes
. In
Price,
this court examined the scope of coverage provided by a general liability policy that provided it would pay “all sums [the insured] might become liable to pay as damages ‘arising out of the ownership, maintenance or use’ of [his] automobile."
. Forty-nine states have legislation that establishes various types of requirements regarding UM coverage. A. Widiss, UNINSURED AND UNDERINSURED MOTORIST INSURANCE, § 1.12 (2d ed. 1987).
. The 1981 legislation deemed that UIM coverage was mandatory. During the same session, the legislature permitted insurers who made payments for damages to insureds under the UM requirements of the act to subrogate and sue for reimbursement of the total payments made in the name of the insured against any uninsured motorist responsible for the damages to the insured. Laws 1981, ch. 224, § 1. The following year, the statute was amended so that the insured could elect to reject UIM coverage. Laws 1982, ch. 298, § 1. The act specified that UIM coverage was separate and distinct from UM coverage. Subrogation was permitted against underinsured motorists. In 1986, the statute was again amended to remove the insurer’s right to subrogation against an underin-sured motorist for reimbursement paid to an insured under the insured’s UIM coverage. Laws 1986, ch. 184, § 1. Supporters of the amendments stated that collections for underin-sured motorists were “very insignificant.” See Minutes of Meeting of Committee on Banking and Insurance, March 5, 1986.
. The only change effected after the accident was that the insurer no longer has a right of subrogation against an underinsured motorist. A.R.S. § 20-259.01(G).
. In Calvert, we held that an exclusion denying coverage to an insured injured by an uninsured motorist while the insured was occupying a vehicle he owned but that was not listed in his policy was invalid as contrary to the coverage mandated by the UM act.
. We similarly determined that legislative intent with respect to coverage for punitive damages pursuant to the Safety Responsibility Act was impossible to ascertain.
Cassel,
. The parties have not raised and we do not consider whether a contractual agreement by the victim’s insurer for payment of punitive damages imposed on the tortfeasor would be void as against public policy.
. Section 206 states:
In choosing among the reasonable meanings of a promise or agreement or a term thereof, that meaning is generally preferred which operates against the party who supplies the words or from whom a writing otherwise proceeds.
(Emphasis added.) Section 207 states:
In choosing among the reasonable meanings of a promise or agreement or a term thereof a meaning that serves the public interest is generally preferred.
. This case well illustrates the problems inherent in the so-called “plain meaning" rule. Two clauses of this policy are drawn into question. Each has a plain meaning, but their plain meanings are in conflict. To hold there is no ambiguity is to ignore that of the eight Arizona judges who have so far considered the question, four find one plain meaning and four another. A similar problem exists in other states. See part D, infra. The problem is that the ordinary meaning of the words used in two different sections of the policy permit two alternate, reasonable interpretations.
. In so holding, we quoted from Appleman's treatise on insurance as follows:
[I]t is clear that the average insured contemplates protection against claims of any character caused by his operation of an automobile, not intentionally inflicted. When so many states have guest statutes in which the test of liability is made to depend upon wilful and wanton conduct, or when courts, in an effort to get away from contributory negligence of the plaintiff, permit a jury to find a defendant guilty of wilful and wanton conduct where the acts would clearly not fall within the common law definitions of those terms, the insured expects, and rightfully so, that his liability under those circumstances will be protected by his automobile liability policy____ Of course, a policy would expressly exclude liability arising from wilful and wanton acts____ The author does not expect many decisions upon [such] clauses ... because as soon as the public became educated by competing agents to the limitations upon that policy, the public would refuse to accept it, and it would be unsaleable____
In any event a court should not aid [a liability] insurer which fails to exclude liability for punitive damages. Surely there is nothing in the insuring clause [typically indemnifying against "all damages”] that would forewarn an insured that such was to be the intent of the parties.
Price,
. We find the reasoning of other cases in which courts held the insurer liable for punitive damages inapplicable or unpersuasive as well.
See Stewart
v.
State Farm Mut. Auto. Ins. Co.,
. The provision stated:
INSURANCE AGREEMENT
1. Damages for Bodily Injury and Property Damage Caused by Uninsured Automobiles. To pay all sums which the Insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of: (a) bodily injury, sickness or disease including death, resulting therefrom hereinafter called "bodily injury” sustained by the Insured.
Laird,
. Subsequent legislation reversed the result reached in South Carolina, however, and provided that ”[t]he term ‘damages’ shall include both actual and punitive damages.” South Carolina Code § 56-9-810(4) (1976).
.
See California State Auto. Ass’n Inter-Insurance v. Carter,