Case Title: Shaffer v. Southern Union Gas Co., Inc.

Citation: 112 Ariz. 145, 539 P.2d 902

Docket Number: 

State: arizona

Court: Arizona Supreme Court

Date: 1975-09-03T00:00:00Z

Document:
112 Ariz. 145 (1975) 539 P.2d 902 Robert E. SHAFFER, Appellant, v. SOUTHERN UNION GAS CO., INC., a Delaware Corporation, United States Fidelity and Guaranty Co., a corporation, Appellees. No. 11711. Supreme Court of Arizona, In Banc. September 3, 1975. George M. Ireland, Prescott, for appellant. Favour & Quail by John M. Favour, Prescott, for appellees. CAMERON, Chief Justice. This case is an appeal by the plaintiff, Robert E. Shaffer, from the granting of defense motions for judgment on the pleadings pursuant to Rule 12(c) of the Rules of Civil Procedure, 16 A.R.S. We must consider on appeal whether an additional insured is bound by the actions of the named insured in rejecting uninsured motorist coverage in an automobile liability policy. The facts necessary for a determination of this case are as follows. Appellant was an employee of Southern Union Gas Company. In November of 1968, while Shaffer was engaged in company business driving a Southern Union Gas vehicle, he was involved in an automobile accident with an uninsured motorist. The co-appellee, United States Fidelity and Guaranty Company, insured Southern Union Gas Company for automobile liability. The uninsured motorist statute in force at the time of the accident in 1968 read as follows: Southern Union Gas, in contracting with United States Fidelity and Guaranty Company for insurance, rejected uninsured motorist coverage. Under the terms of the policy, Southern Union Gas was the "named insured" and there is no question that under the statute it could reject uninsured motorist coverage as it did in the instant case. Under the provisions of Arizona's "omnibus clause," A.R.S. § 28-1170(B)(2), which is a part of every insurance policy, Jenkins v. Mayflower, 93 Ariz. 287, 380 P.2d 145 (1963), Shaffer was an "insured" and was covered by the policy. Appellant contends that he was a named insured and therefore entitled to reject the uninsured coverage himself. We do not agree. Both by the definition in the policy and by our statute, as well as the custom and usage in the insurance business, there is a difference between the terms "named insured" and "insured": It is noted that in 1970 and again in 1972 the legislature amended the statute so that now uninsured motorist coverage is a part of every liability policy and may not be waived. At the time of the accident in this case, however, uninsured motorist coverage could be and was waived. Although there appears to be some respectable authority to the contrary, see State Farm v. Reaves (Ala.), 292 Ala. 218, 292 So. 2d 95 (1974), Southeast Title and Insurance Co. v. Thompson (Fla.App.), 224 So. 2d 718 (1969) and Kohly v. Royal Indemnity Co. (Fla.App.), 190 So. 2d 819 (1966), we do not believe that our legislature intended by the 1965 statute to give an additional insured the right to accept or reject uninsured motorist coverage when he did not pay the premium or contract for the coverage. Neither do we find it necessary, as appellant urges, that the named insured must notify each and every potential additional insured that the named insured has rejected uninsured motorist coverage before allowing an additional insured to drive or be a passenger in the named insured's automobile. Our Court of Appeals has stated: See also Allied Mutual Insurance Company v. Larriva, 19 Ariz. App. 385, 507 P.2d 997 (1973) in which the Court of Appeals considered the relationship of an injured employee with his own uninsured motorist coverage and workman's compensation coverage. Under the statute in existence at the time of the accident the one who was the named insured had the right to select or reject coverage on behalf of himself and his insured, and we believe that Southern Union Gas validly waived uninsured motorist coverage on its employee Shaffer. Judgment affirmed. STRUCKMEYER, V.C.J., and HAYS and HOLOHAN, JJ., concur. LOCKWOOD, J., did not participate in the determination of this matter.