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Insurance—Underinsured Motorist Coverage Offer Valid W/O Premium Quote

Posted by Matt Schmidt | Mar 30, 2015 | 0 Comments

Newman v. Cornerstone National Insurance Co., 708 Ariz. Adv. Rep. 32 (March 18, 2015) (J. Brutinel)

STATUTE REQUIRING AUTO LIABILITY INSURERS TO MAKE WRITTEN OFFER OF UIM COVERAGE DOES NOT REQUIRE PRICE QUOTE

The plaintiff was involved in an automobile accident where the at fault driver had inadequate insurance. She made a claim against her own policy for underinsured motorist coverage [UIM]. Her claim was denied on the basis she had signed a written, Arizona Department of Transportation [ADOT] approved form expressly rejecting the coverage.  She countered that the written offer was not valid because it did not specify the cost of the insurance. The trial court granted the insurer's motion for summary judgment finding that the statute, Arizona Revised Statutes §20-259.01(B), does not require the written offer contain a price quote. The Arizona Court of Appeals and the Arizona Supreme Court affirmed.

Plaintiff argued that the statute requires insurers “offer” UIM coverage and by definition, under basic contract law principles, to constitute an offer there must be a stated price. The supreme court disagreed finding that the definition of “offer” in the context of the UIM statute does not require strict contract law compliance; it need not include all the terms of the contract.  The statute only requires a reasonable (objective standard) insured understand from the offer that UIM coverage is available for purchase and if she elects to purchase it the carrier will be bound to provide it. The court noted that while the price would be a useful thing to know in deciding whether or not to purchase the coverage, the statute does not state the price must be included and the court refuses to read that into the statute

About the Author

Matt Schmidt

Matt graduated from the James E Rogers College of Law at the University of Arizona in passing the Arizona bar exam in 2010. Matt's primary interest in law focuses on general personal injury and insurance bad faith.

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