State Farm Auto. Ins. Co. v. Orlando, No. CV-23-0228-PR (May 29, 2025) (J. Montgomery) https://opinions.azcourts.gov/Portals/0/OpinionFiles/Supreme/2025/CV230228PR.pdf

A.R.S. § 20-259.01(B) DOES NOT REQUIRE UIM COVERAGE APPLY TO OFF-ROAD ACCIDENT INVOLVING ATV

 Defendant suffered a serious leg injury while riding as a passenger off the public streets on an All-Terrain vehicle [ATV]. The driver of the ATV's insurer paid defendant its policy limits. She then made this claim against her underinsured motorist insurance [UIM] with plaintiff State Farm Automobile Insurance Company [State Farm]. State Farm denied the claim based upon the following policy language: “Underinsured Motor Vehicle does not include a land motor vehicle: . . . . 2. designed for use primarily off public roads except while on public roads[.]”

 This declaratory relief action/counter-claim for breach of contract and bad faith action followed. The trial court granted State Farm's motion for summary judgment finding the ATV operated off road here was not a covered vehicle under the policy. Defendant appealed and the Arizona Court of Appeals reversed finding A.R.S. § 20-259.01(B) requires UIM carriers cover off-road accidents since the UIM statute does not expressly allow for such an exclusion. The Arizona Supreme Court affirmed the trial court and vacated the court of appeals decision.

 The supreme court finds the Financial Responsibility Act, A.R.S. § 28-4135(A), which requires all auto insurers in Arizona provide minimal liability limits” to be in pari materia (of the same subject matter) as the UIM statute A.R.S. § 20-259.01(B). So while the UIM statute does not define “motor vehicle” the FRA does and its appropriate to apply that definition to UIM coverage.  The FRA defines motor vehicle, “‘[m]otor vehicle' means a self-propelled vehicle that is registered or required to be registered under the laws of this state.” A.R.S. § 28-4001(3). And under the FRA, “[a] motor vehicle that is operated on a highway in this state” must be sufficiently insured. § 28-4135(A). the insurance requirement “does not apply to the owner or operator of any: All-terrain vehicle or off-road recreational motor vehicle operating on a dirt road that is located in an unincorporated area of this state.” § 28-4132(9).””

 Applying the FRA definition of motor vehicle, we hold

that UIM coverage of an off-road ATV accident is neither required

nor prohibited under the UMA. UIM coverage in such a

circumstance is a matter of contract. Therefore, the Policy's

definition of “underinsured motor vehicle,” resulting in preclusion

of UIM coverage, is permissible under Arizona law.