Tallent v. National General Ins. Co.
| Citation | 183 Ariz. 304,903 P.2d 612 |
| Decision Date | 04 April 1995 |
| Docket Number | CA-CV,No. 1,1 |
| Parties | Maria A. TALLENT and David L. Tallent, wife and husband, Plaintiffs-Appellees, v. NATIONAL GENERAL INSURANCE COMPANY, a Missouri corporation, Defendant-Appellant. 93-0396. |
| Court | Court of Appeals of Arizona |
National General Insurance Company ("National") appeals from the trial court's grant of summary judgment in favor of Maria and David Tallent on their declaratory judgment claim. This appeal presents one issue: Did National make an offer of underinsured motorist ("UIM") coverage sufficient under Ariz.Rev.Stat.Ann. ("A.R.S.") section 20-259.01(C)?
We hold that National's offer was inadequate because it did not inform the insureds of the nature of UIM coverage so that they could knowledgeably decide whether to purchase the coverage. Accordingly, we affirm the trial court's judgment in favor of the insureds.
The Tallents made a claim against National for losses due to Maria Tallent's injury in a 1988 motor vehicle accident. She settled her injury claim against the negligent driver for his insurance policy liability limits of $60,000. Mrs. Tallent then submitted a claim to National for her UIM coverage. National's policy insured the Tallents with liability coverage of $100,000 but with UIM coverage of only $15,000.
The Tallents sought $100,000 in UIM coverage, contending that they were entitled to the higher amount because National had not offered them UIM coverage in limits not less than their liability limits as required by A.R.S. section 20-259.01(C). At the time the Tallents obtained their National policy, A.R.S. section 20-259.01(C) (1990) 1 provided in relevant part:
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.
(Emphasis added).
After National denied their claim and offered them the UIM coverage limit of $15,000, the Tallents filed a declaratory judgment action to determine the amount of UIM coverage. They subsequently moved for summary judgment, requesting a declaration that their policy afforded them $100,000 in UIM coverage because National's offer of UIM coverage did not comply with the statute.
National claimed to have offered UIM coverage to them by a form entitled "Arizona Notice," which stated: "This form is used for selecting (or changing) your Uninsured/Underinsured Motorists Coverage." 2 The form then showed available limits and corresponding premiums for uninsured and UIM coverages with boxes for the insured to check to indicate the levels of coverage desired. National's offer of UIM coverage did not describe the nature of UIM coverage.
Relying on Giley v. Liberty Mutual Fire Insurance Co., 168 Ariz. 306, 812 P.2d 1124 (App.1991), the Tallents argued that because National's notice did not describe the coverage, it did not meet the requirement that insurers offer UIM coverage to new policyholders "in a way reasonably calculated to bring to the insured's attention that which is being offered." The Tallents maintained that as a matter of law, National had failed to satisfy the written offer requirement of section 20-259.01(C) and, as a result, they were entitled to UIM coverage in the amount of their liability limits of $100,000.
In its response and cross-motion for summary judgment, National argued that it had complied with the statute. According to National, its form set forth in clear, unambiguous language that it was offering both uninsured and underinsured motorist coverage in amounts up to the insured's bodily injury liability limits. It further asserted that its form satisfied the Giley requirement by reasonably apprising the insured of its offer of UIM coverage.
The trial court granted the Tallents' motion, denied National's motion, and declared that the Tallents were entitled to UIM coverage in the amount of their liability coverage. The court explained:
[T]his Court believes it is bound by the reasoning of Giley which holds that in order to satisfy the requirement of A.R.S. § [20-259.01(C) ] an insurer must offer underinsured motorist coverage "in a way reasonably calculated to bring to the insured's attention that which is being offered." The mere listing of "Underinsured Motorists Coverage" as available in certain amounts does not, without further explanation, in the Court's view, enable the consumer to assess in a meaningful way what is being offered and why it should be considered. The insured needs to be given such information regarding the coverage as to make the election or rejection of such coverage meaningful. An example (to meet the requirement that the nature of underinsured motorist coverage be explained at least in the minimum terms required to make an intelligent decision) would be to merely state after the heading "underinsured motorist coverage" such language as: "Provides bodily injury protection for you if you are injured in an accident caused by another driver who does not have liability insurance coverage or has an inadequate amount of such insurance."
Accordingly, the court entered judgment for the Tallents, and National timely appealed.
We must decide whether National's offer of UIM coverage complies with section 20-259.01(C). Because this issue involves statutory interpretation and application, it is a question of law that we review de novo. See Libra Group, Inc. v. State, 167 Ariz. 176, 179, 805 P.2d 409, 412 (App.1991).
The primary goal in statutory interpretation is to ascertain and give effect to the statutory meaning and the legislature's intent. Lowing v. Allstate Ins. Co., 176 Ariz. 101, 103, 859 P.2d 724, 726 (1993). As we said about this very statute in Stuart v. Insurance Co. of North America, 152 Ariz. 78, 80-81, 730 P.2d 255, 257-58 (App.1986):
When construing legislation, a court must determine and give effect to legislative intent behind the statute.... Where the words of the statute fail to reveal that intent, as is the case with this statute, and the legislative history does not shed light on the issue, a court must read the statute as a whole, considering its subject matter, effects, consequences, purpose and spirit.... Further, the court should construe the statute so as to give it a fair and sensible meaning.
Id. (citations omitted).
National argues on appeal that this statute simply requires insurance companies to "offer" UIM coverage up to the liability limits in the insured's policy; the statute does not require insurance companies to explain UIM coverage or promote increased UIM limits. According to National, the legislature merely required that some offer be made without specifying how the offer must be made.
The Arizona legislature has not defined the term "offer" as used in section 20-259.01, and the term is susceptible to different interpretations. We must therefore find the statute's meaning from its context and purpose. The purpose of section 20-259.01 is to protect the victims of financially irresponsible drivers. Evenchik v. State Farm Ins. Co., 139 Ariz. 453, 458, 679 P.2d 99, 104 (App.1984). The statute's purpose is "to guarantee that responsible drivers will have an opportunity to protect themselves and their loved ones as they would others." Ormsbee v. Allstate Ins. Co., 176 Ariz. 109, 112, 859 P.2d 732, 735 (1993). Thus, this statute is remedial and should be liberally construed to carry out the legislature's intent. Evenchik, 139 Ariz. at 458, 679 P.2d at 104.
Although the Arizona courts have not specifically determined whether an offer of UIM coverage such as National's satisfies section 20-259.01(C), recent Arizona cases have examined the sufficiency of other offers of UIM coverage. Those cases are helpful in determining what the legislature intended. In Giley, supra, Division Two of this Court considered whether the insurer had complied with the statute. The insured claimed that although the agent had described uninsured motorist coverage, he did not describe UIM coverage, but asked the insured to sign a form which the agent retained. The insured did not realize the form contained a written offer of UIM coverage. Id. In reversing summary judgment in favor of the insurer, the Giley court stated:
[T]he phrase "make available" requires that the insurer offer such coverage in a way reasonably calculated to bring to the insured's attention that which is being offered. If [the insured's] testimony is credited, the agent did not do so.
In State Farm Mutual Automobile Ins. Co. v. Ash, 181 Ariz. 167, 888 P.2d 1354 (1994), this Court reviewed the legal sufficiency of the insurer's written offer of UIM coverage. In that case, the insurer sent a premium notice advising the insureds of the amount of premium necessary to increase uninsured and UIM coverages. The notice also referred the insureds to an accompanying brochure that explained the nature of UIM coverage.
The insureds in Ash contended that the insurer's offer failed the four-part test announced by the Minnesota Supreme Court in Hastings v. United Pacific Ins. Co., 318 N.W.2d 849, 851-53 (Minn.1982). Hastings adopted the following requirements:
(1) notification must be commercially reasonable if the offer is made in other than face-to-face negotiations;
(2) the insurer must specify the limits of the...
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