The Arizona Court of Appeals has recently issued an opinion as to when Arizona’s uninsured/underinsured motorist act prohibits an insurer from denying underinsured motorist coverage to a family member who lives with the named insured and who otherwise would be entitled to such coverage but for her ownership of a motor vehicle.

In Beaver v American Family Mutual Insurance, Sally Anne Beaver was injured in a motor vehicle accident caused by another driver while riding her motorcycle. The negligent drivers’ insurance company offered Sally Anne the policy limits under its insured’s policy but the amount was not sufficient to compensate Beaver for her injuries. Because Sally Anne lived with her father at the time of the accident, she made a claim for underinsured motorist coverage under his American Family Mutual Insurance auto policy even though the policy did not specifically cover Sally Anne’s motorcycle.

However, the policy did state that it covered the named insured- Sally Anne’s father- or a relative. The policy definde “relative” as, “a person living in your household related to you by blood, marriage or adoption.” Unfortunately, the policy specifically excluded, “any person who …owns a motor vehicle other than an off road motor vehicle”. American Family Insurance denied Sally Anne’s claim and she sued American Family in Arizona state court. Sally Anne argued that American Family’s policy was void in that it ran counter to Arizona’s Uninsured/Underinsured Motorist Act (“UMA”) The trial judge agreed with Sally Anne and found that she was covered by her father’s UM/UIM policy. American Family appealed.

On Appeal, the Court of Appeals of Arizona reversed, finding that Sally Anne was not covered by her father’s policy. However, the Court of Appeals did remand the case for further consideration by the Superior Court of Sally Anne’s argument that her father had a reasonable expectation that his daughter, who resided with him, would be covered by his UIM/UM policy coverage. For this argument to be successful however, the Court stated, Sally Anne would have to show that her father had a “reasonable expectation” that she would have portable UIM coverage under the policy he purchased from American Family Mutual Insurance.


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