Opinion ID: 1386957
Heading Depth: 4
Heading Rank: 2

Heading: Does the UMA Apply Only to Policies Issued Under the SRA?

Text: The language of the UMA further belies St. Paul's contention that the statute was only intended to apply to motor vehicle liability policies issued pursuant to the SRA. The UMA explicitly refers to automobile liability or motor vehicle liability policies. A.R.S. § 20-259.01 (emphasis added). Both common sense and the rules of statutory construction forbid equating the terms automobile liability and motor vehicle liability policies because [e]ach word, phrase, clause, and sentence must be given meaning so that no part will be void, inert, redundant, or trivial. City of Phoenix v. Yates, 69 Ariz. 68, 72, 208 P.2d 1147, 1149 (1949). Thus, even if we accepted St. Paul's invitation to construe the UMA in pari materia with the SRA, we would still have to give independent meaning to the term automobile liability policy. The term automobile liability policy must mean something different than motor vehicle liability policy when both terms are used in the disjunctive in the same sentence of the same statute. If motor vehicle liability policies, as St. Paul contends, refer to only those policies issued pursuant to and conforming with the requirements of the SRA, then automobile liability policies must refer to those issued under different circumstances. This conclusion comports with the subject matter, historical background, and spirit and purpose of the UMA. The purpose of the [UMA] statute is to afford protection to victims of financially irresponsible drivers. Calvert, 144 Ariz. at 294, 697 P.2d at 687. The statute is remedial and should be liberally construed in order to carry out the intent of the Legislature. Id. Thus, [the UMA] allows the driver to protect himself and his passengers  most often his own family and friends  from the loss by injury caused by uninsured drivers to the same extent that he protects others from the risk of his own negligence. Spain v. Valley Forge Ins. Co., 152 Ariz. 189, 192-93, 731 P.2d 84, 87-88 (1986). The offer of UIM coverage mandated by A.R.S. § 20-259.01(C) was intended to implement this protection. See Higgins v. Fireman's Fund Ins. Co., 160 Ariz. 20, 22-23, 770 P.2d 324, 326-27 (1989); see also State Farm Mut. Auto. Ins. Co. v. Wilson, 162 Ariz. 251, 253-54, 782 P.2d 727, 729-30 (1989) (discussing history and objectives of UIM legislation); Spain, 152 Ariz. at 191-94, 731 P.2d at 86-89 (discussing history and purpose of UM legislation). In the present case, AAID purchased automobile liability insurance to protect itself from the claims of those injured by the negligence of AAID's corporate employees operating automobiles within the scope of their duties. AAID extended this liability protection to its employees, as insureds, by special endorsement. It follows that the named insured was entitled to the statutorily required opportunity to purchase UIM coverage to protect itself and its covered employees from underinsured drivers to the same extent that its liability insurance protected others from the negligence of its employees. Spain, 152 Ariz. at 192-93, 731 P.2d at 87-88. We emphasize the importance the legislature has given to UM and UIM coverage in a state where many if not most drivers are under- or uninsured despite mandatory insurance laws. As we have noted, the UMA was passed in explicit recognition that automobile insurance, while mandatory, is nonetheless unavailable in all too many cases; and where it is available, as in this case, it is often inadequate to fully compensate the injuries incurred. Wilson, 162 Ariz. at 253-54, 782 P.2d at 729-30; 2 A. WIDISS, UNINSURED & UNDERINSURED MOTORIST INSURANCE § 35.2, at 47 (comment) (2d ed. 1990). Professor Couch also points out that the liberal purpose behind the UM statutes ... serve[s] as rationale for creating whatever fund is necessary to compensate the innocent injured party. 12A COUCH ON INSURANCE § 45.628, at 83 (2d ed. 1981). Arizona courts have expressly recognized and endorsed these principles for nearly thirty years. Sandoval, 102 Ariz. 241, 428 P.2d 98; Carpenter v. Superior Court, 101 Ariz. 565, 422 P.2d 129 (1966); Jenkins v. Mayflower Ins. Exch., 93 Ariz. 287, 380 P.2d 145 (1963); Geyer v. Reserve Ins. Co., 8 Ariz. App. 464, 467, 447 P.2d 556, 559 (1968). In that time, the legislature has never indicated that these principles should not inform our interpretations of the SRA or UMA. Given this background, we believe it would be inconsistent with the purposes of the UMA to restrict the words of the statute requiring offer of UIM coverage to only those motor vehicle liability policies mandated by the SRA. We therefore reject St. Paul's claim that UIM coverage must be offered only to those who are already required to purchase automobile liability insurance that must conform to the SRA. [9] We addressed the relationship between the SRA and the UMA in Calvert, where we stated: The legislature intended the [SRA] to protect the general public against the individual, financially irresponsible motorist. On the other hand, the [UMA] compels the carriers to provide economic protection for the insured individual against the financially irresponsible segment of the driving public. The former is for the public in general and the latter for the individuals who have the foresight to protect themselves against the public. Calvert, 144 Ariz. at 296, 697 P.2d at 689 (emphasis in original) (citation omitted). We believe the UMA's application to automobile liability policies means that those who purchase non-owned automobile liability insurance must be given the opportunity to exercise foresight by protecting themselves against underinsured motorists.