Transamerica Ins. Co. v. McKee
| Decision Date | 23 June 1976 |
| Docket Number | No. 2,CA-CIV,2 |
| Citation | 27 Ariz.App. 158,551 P.2d 1324 |
| Parties | TRANSAMERICA INSURANCE COMPANY, Appellant, v. Judy McKEE, a minor, by and through her mother and next friend, Karen McKee, and Bobbie Stacy, a minor, by and through her mother and next friend, Susan Stacy, Appellees. 2092. |
| Court | Arizona Court of Appeals |
Browning & Wilson by William D. Browning, Tucson, for appellant.
Miller, Pitt & Feldman, P.C. by Stanley G. Feldman and Jeffrey H. Schwartz, Tucson, for appellees.
This appeal is from a partial summary judgment in a declaratory judgment action respecting an automobile insurance policy. The trial court ruled against the insurance company on the grounds that, (1) policy provisions excluding coverage in Mexico were contrary to statute, or public policy, and were therefore void; (2) the exclusion was ambiguous and therefore ineffective. The court, pursuant to 54(b), Arizona Rules of Civil Procedure, made the judgment final for appeal purposes.
On October 1973, the McKee, Stacy, Nelson and Franklin families went to Santo Tomas, Mexico, a town more than 50 miles from the Arizona border. The four families were social friends and the trip was intended as a short vacation trip to the beach. They drove to Mexico in several vehicles, and Nelson took his custom-made dune buggy.
On October 19, 1973, Franklin was given permission to use Nelson's dune buggy to take Franklin's daughter and plaintiffs Bobbie Stacy and Judy McKee for a ride. While driving with the three children as passengers, Franklin overturned the vehicle causing extensive injuries to Bobbie and Judy.
At the time of the accident, the dune buggy was not insured under any automobile liability policy issued to Nelson by United States insurance companies. He had procured Mexican insurance for the trip from Seguros America Banamex. The Banamex policy excludes coverage for damages arising from bodily injuries to passengers and the vehicle is thus uninsured as to plaintiffs. Franklin's liability insurance coverage with State Farm Insurance Company was inoperative because of a policy provision limiting coverage to occurrences within 50 miles of the United States border. There being no coverage on the driver or the vehicle for bodily injuries suffered by Bobbie and Judy, they would be covered under the uninsured motorist provision of their families' policies, absent a valid exclusion or limitation.
The McKee and Stacy families are covered by insurance policies issued by Transamerica. Both policies are identical in all respects except for a variation in an endorsement which we shall later discuss. The policies contain liability and uninsured motorist coverage. The policy territory is 'anywhere in the world' provided the claims are originally asserted in the United States. Attached to the policies is a printed form entitled 'Protection Against Uninsured Motorist' which limits the territory of the policy to the United States, its territories or possessions, or Canada. A Mexico coverage endorsement to the policies provides that 'Family Protection Coverage' if afforded by the policy shall not be applicable to accidents occurring in the Republic of Mexico. Nowhere in the policies themselves are the words 'Family Protection' used or defined. Instead, the words 'uninsured motorists' are found. Both policies have an attached amendment which states that the term 'uninsured automobile' includes an automobile with respect to which there is a bodily injury liability insurance policy applicable at the time of the accident but the company writing the same is or becomes insolvent. In the McKee policy this amendment is entitled 'Uninsured Motorists Coverage Amendment'. In the Stacy policy there are two amendments. One is entitled 'Uninsured Motorists (Family Protection) Coverage Amendment'. The other bears the same title as the McKee endorsement.
Can appellant issue a liability policy covering accidents in Mexico and exclude therefrom uninsured motorist coverage? Would such an exclusion violate the public policy of the State of Arizona? To answer these questions we first turn to our financial responsibility laws and in particular, A.R.S. Sec. 28--1170(B)(2) which provides that an owner's policy must insure against loss from the liability imposed by law within the United States or Canada. The purpose of the Financial Responsibility Act is to protect the public on the highways against the operation of motor vehicles by financially irresponsible persons. Schecter v. Killingsworth, 93 Ariz. 273, 380 P.2d 136 (1963); Sampson v. Transport Indemnity Company, 1 Ariz.App. 529, 405 P.2d 467 (1965). It soon became evident that more was needed in the way of protection since many automobiles were being driven on the highway by persons who neither purchased insurance nor possessed sufficient personal financial resources to enable them to respond to damage claims. To fill this gap, the legislature passed A.R.S. Sec. 20--259.01(A). Transportation Insurance Company v. Wade, 106 Ariz. 269, 475 P.2d 253 (1970). It provides:
'. . . (N)o 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 therein or supplemental thereto, in limits for bodily injury or death set forth in § 28--1142, 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 motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom.'
The foregoing statute contains no territorial limitation. It does not mandate that uninsured motorist coverage be extended to accidents in Mexico. It does not state that such coverage is required outside the State of Arizona. However, when consideration is given to the purpose of the statute (to close the gap), it is clear that the territorial extent of coverage is the same as is required of liability coverage, to wit, the United States and Canada. The public policy of Arizona does not mandate that a liability policy which complies with our statutes by extending coverage to Canada and the United States also extend uninsured motorist coverage to all parts of the world.
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