Evenchik v. State Farm Ins. Co., 2
| Decision Date | 13 March 1984 |
| Docket Number | CA-CIV,No. 2,2 |
| Citation | 679 P.2d 99,139 Ariz. 453 |
| Parties | Mark EVENCHIK and Sheryl Evenchik, individually and as the natural parents of Brittany Evenchik, a minor child, Plaintiffs/Appellants, v. STATE FARM INSURANCE COMPANY, an Arizona corporation, Defendant/Appellee. 4888. |
| Court | Arizona Court of Appeals |
This appeal involves a consideration of an amendment of the Arizona "Uninsured Motorist Statute", A.R.S. § 20-259.01, which required automobile liability insurance carriers to include underinsured motorist coverage in policies issued in this state.
The appellants were injured as a result of the negligence of an uninsured motorist. Neither the negligent driver or the vehicle he was driving were covered under any motor vehicle liability insurance policy. The appellants' vehicle was insured for liability, uninsured motorist coverage and underinsured coverage. Their total damages for their personal injuries were in excess of $100,000, the uninsured policy limit. Although the appellee paid this total amount to the appellants, they contend the underinsured coverage should pay the unrecovered damages above the $100,000, at least to the limit of the policy's underinsured coverage. The trial court rejected their contentions, finding for the insurance company. We affirm.
The statute as amended effective July 25, 1981, provided, in relevant part:
" § 20-259.01. Uninsured motorists; coverage; definitions; exceptions.
A. No automobile liability or motor vehicle liability policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in this state, with respect to any motor vehicle registered or principally garaged in this state, unless coverage is provided in the policy or supplemental to the policy, in limits for bodily injury or death prescribed in subsections B and C of this section, but not less than the limits prescribed in § 28-1102, under provisions filed with and approved by the insurance director, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured and underinsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom. For the purposes of the coverage provided for pursuant to this section, 'uninsured motor vehicles', subject to the terms and conditions of such coverage, includes any insured motor vehicle if the liability insurer of the vehicle is unable to make payment on the liability of its insured, within the limits of the coverage, because of insolvency.
B. Every insurer writing automobile liability or motor vehicle liability policies, as provided in subsection A of this section shall also make available to the named insured thereunder, and by written notice offer the insured and at the request of the insured shall include within the policy uninsured motorist coverage which extends to and covers all persons insured under the policy, in limits not less than the liability limits for bodily injury or death contained within the policy....
C. Every insurer writing automobile liability or motor vehicle liability policies, as provided in subsection A of this section shall also make available to the named insured thereunder and shall by written notice offer the insured and at the request of the insured shall include within the policy underinsurance motorist coverage which extends to and covers all persons insured under the policy, in limits not less than the liability limits for bodily injury or death contained within the policy....
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E. 'Underinsurance motorist coverage' includes 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 accidents 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, the underinsurance motorist coverage provided in subsection C of this section is applicable to the difference."
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The statute was amended in 1982 to add new subparagraph F:
This subsequent provision was not in effect at the time of the accident resulting in this litigation. Other uncontroverted facts underlying this action follow.
In 1976 Harvey Evenchik purchased a fleet automobile liability insurance policy from State Farm. Under the terms of the policy, the Evenchiks were covered by liability insurance with a single limit of $500,000. They also had uninsured motorist coverage in the amount of $50,000 per person with a total limit of $100,000.
On August 4, 1981, Mark Evenchik leased the new vehicle involved in the subsequent accident. He called Lloyd Bailey, the State Farm agent who had sold the motor vehicle liability policy to the Evenchiks. Mark asked that Mr. Bailey add the leased car as an insured vehicle under the policy. Mr. Bailey gave Mark a verbal binder and told Mark that Mark would have to sign an application and pay a premium in the near future. Underinsured motorist coverage was not discussed.
On August 18, 1981, an application form was completed adding the new vehicle to the policy. The application form provided limits of coverage on the new vehicle consistent with the other vehicles insured under the policy. Consequently, the new vehicle was covered by a single liability limit of $500,000 and uninsured motorist coverage limits of $50,000/$100,000. The application also provided for $50,000/$100,000 in underinsured motorist coverage. The application was signed. Mr. Bailey did not provide any written information concerning underinsured motorist coverage at that time. Rather, Mr. Bailey simply intended to conform to State Farm's routine business practice in providing written information to the insureds concerning the new coverage. Those routine practices required that the insured be informed about underinsured motorist coverage at the time that the policy was renewed, and that the insured be permitted to select the amount of coverage desired at the time of renewal. While the Evenchiks paid their insurance premium to State Farm on a monthly basis, their policy was not up for renewal until October 1981. State Farm did not include any written information concerning underinsured motorist coverage in the monthly billings sent to the Evenchiks.
The record reflects that very little information concerning underinsured motorist coverage was given to either Harvey Evenchik or to Mark Evenchik prior to the automobile accident of September 1981. In this respect, Mr. Bailey testified as follows:
"Q. Did you have any discussion with him [Mark Evenchik] at that time [August 18] about underinsured motorist coverage?
A. We probably--yeah, we did.
Q. Tell me what was discussed.
A. I told him it had just been legislated that that was to be there, that he was to have that additional coverage on this car, and so--I am not sure how this conversation progressed, but I would say it would be something like this: He would say: Okay. How much does it cost? And I said: Depends on the amount. You have some choices, and it certainly makes sense to have it consistent with your [uninsured motorist] coverage. And that's probably what he did.
Q. At the start of the answer to my question, you said, 'It probably went something like this.' Do you have a specific recollection of the conversation?
A. No."
With regard to Mr. Bailey's telephone conversation with Harvey Evenchik on August 18, Mr. Bailey testified as follows:
"Q. Did you talk about underinsured motorist coverage?
A. I'm sure we did, yes.
Q. What did you tell him?
A. Just the substance of what I told you, that it was new, additional, required, and needed to know how much.
Q. Would you have told him anything else?
A. He would have asked me: What do I get out of this coverage? And I would say: If somebody is liable and they hit you, hurt you, and their liability coverage is inadequate, then this will come up on top of that up to the amount of your claim and within your limits.
Q. Would you have told him anything else other than what we have discussed?
A. No, not about that."
In part the State Farm policy pertaining to uninsured motor vehicle coverage provided "We will pay damages for bodily injury an insured is legally entitled to collect from the owner or driver of an uninsured motor vehicle. The bodily injury must be caused by accident arising out of the operation, maintenance or use of an uninsured motor vehicle.
Uninsured Motor Vehicle --means:
1. a land motor vehicle, the ownership, maintenance or use of which is:
a. not insured or bonded for bodily injury liability at the time of the accident; or
b. insured or bonded for bodily injury liability at the time of the accident; but
(1) the limits of liability are less than required by the financial responsibility act of the state where your car is mainly garaged; or
(2) the insuring company denies...
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