Articles Posted in Insurance Law

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The United States Court of Appeals for the Ninth Circuit certified certain questions to the Supreme Court regarding what impact, if any, a lender’s full-credit bid made at an Arizona trustee’s sale has on an insurer’s liability under standard form title insurance policies. The policy provisions at issue were (1) Section 2, which provides that coverage continues in force when an insured acquires the property in a foreclosure sale but the amount of coverage is reduced by all payments made; (2) Section 9, which provides that payments of principal or the voluntary satisfaction or release of the mortgage reduce available insurance coverage, except as provided under Section 2(a); and (3) Section 7, which explains how the insurer’s liability is calculated. The Supreme Court answered the certified questions as follows: (1) Section 2 applies when a lender purchases property by full-credit bid at a trustee’s sale; (2) the full-credit bid does not constitute a “payment” under Sections 2 or 9 of the policy; and (3) accordingly, the full-credit bid neither terminates nor reduces coverage under Section 2 or Section 7. View "Equity Income Partners, LP v. Chicago Title Insurance Co." on Justia Law

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Under Ariz. Rev. Stat. 20-259.01, insurers must offer uninsured motorist (UM) and underinsured motorist (UIM) coverage to their insureds and may prove compliance by having their insureds sign a Department of Insurance (DOI) approved form selecting or rejecting such coverage. Plaintiff obtained car insurance from State Farm through Defendant, an insurance agent. Plaintiff requested that her policy include both UM and UIM coverage, but Defendant procured insurance that did not include UIM coverage. Plaintiff signed the DOI-approved form, which had been filled out by Defendant to reject UIM coverage. Plaintiff and her husband later sued Defendant for malpractice for failing to procure the insurance coverage they had requested. The trial court concluded that Defendant’s compliance with section 20-259.01 demonstrated that it fulfilled its duties to Plaintiff regarding the offer of UM/UIM coverage, and therefore, Defendant breached no duty owed to Plaintiffs. The court of appeals reversed, holding that section 20-259.01(B) did not abolish the common law duty of reasonable care insurance agents owe their clients. The Supreme Court affirmed, holding that compliance with section 20-259.01 does not bar a negligence claim alleging that the insurance agent failed to procure the UIM coverage requested by the insured. View "Wilks v. Manobianco" on Justia Law

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Plaintiff was injured in a motor vehicle accident. The at-fault driver’s insurance was insufficient to cover Plaintiff’s damages, and therefore, Plaintiff sought underinsured motorist (UIM) coverage from her insurer (Insurer). When Plaintiff purchased her car insurance, Insurer had offered her UIM coverage on a form approved by the Arizona Department of Insurance, but Plaintiff declined the coverage. Insurer denied Plaintiff’s claim on the grounds that Plaintiff had waived UIM coverage. Plaintiff filed suit seeking a declaration that the UIM waiver was void because the written notice offering the UIM coverage did not include a premium quote. The trial court granted summary judgment for Insurer. The Supreme Court affirmed, holding that the statutorily required written offer need not include a premium quote. View "Newman v. Cornerstone Nat’l Ins. Co." on Justia Law

Posted in: Insurance Law

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An insurer refused to defend its insured against a third party’s tort claims. The third party, standing in the insureds’ shoes, brought a declaratory judgment action against the insurer for indemnification and failure to defend. Prior to the instant suit, an Arizona state court entered default judgment against the insureds that was entered pursuant to a Damron agreement that stipulated facts determinative of both liability and coverage. In the instant case, a federal district court granted summary judgment for the insurer. Applying Arizona law, the district court concluded that the default judgment did not preclude the insurer from litigating the question of whether coverage existed under the policy and that, as a matter of law, the insured did not own the vehicle involved in the accident at the time of the accident. The Supreme Court accepted certification and held (1) insurers are generally not precluded from litigating pure coverage issues in a default judgment action; (2) an insurer in a coverage action may not, in the guise of a coverage defense, litigate what are essentially and solely liability issues resolved by the default judgment; and (3) the insurer here was not precluded from litigating, for coverage purposes, who owned the vehicle at issue at the time of the accident. View "Quihuis v. State Farm Mut. Auto. Ins. Co." on Justia Law

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Arizona's Uninsured/Underinsured Motorist Act (UMA) requires all insurers writing motor vehicle liability policies to also offer underinsured motorist (UIM) coverage that covers all persons insured under the policy. Any exceptions to UIM coverage not permitted by the UMA are void. Insurer in this case sought a declaratory judgment that it had validly denied Insured's UIM claim. Insured was injured while a passenger on a motorcycle driven by her husband, the named insured on a separate motorcycle policy issued also by Insurer. The Supreme Court held (1) the UMA required Insurer to provide UIM coverage for Insured under the auto policy, where Insured's total damages exceeded the amount of her tort recovery from her husband under the husband's motorcycle policy; and (2) the UMA did not permit Insurer to refuse to provide Insured with UIM coverage under her auto policy because she was partially indemnified as a claimant under the liability coverage of the separate motorcycle policy issued by Insured to her husband, whose negligence contributed to her injuries. View "Am. Family Mut. Ins. Co. v. Sharp" on Justia Law

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In the underlying federal court action, an auto insurer (Insurer) sought a declaratory judgment that it had validly denied Insured's underinsured motorist (UIM) claim. Insured was injured while a passenger on a motorcycle driven by her husband, who had a motorcycle insurance policy with Insurer. Insured counterclaimed for breach of contract and bad faith. The U.S. district court certified several questions to the state Supreme Court. The Court held (1) Ariz. Rev. Stat. 20-259.01(G) required Insurer to provide UIM coverage for Insured under the auto policy, where Insured's total damages exceeded the amount of her tort recovery from her husband under the husband's motorcycle policy; and (2) Ariz. Rev. Stat. 20-259.01(H) did not permit Insurer to refuse to provide Insured with UIM coverage under her auto policy because she was partially indemnified as a claimant under the liability coverage of the separate motorcycle policy issued by Insurer to Insured's husband, whose negligence contributed to Insured's injuries. View "Am. Family Mut. Ins. Co. v. Sharp" on Justia Law