Articles Posted in Insurance Law

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When asked to decide the rate at which interest on a $7.8 million judgment Plaintiff obtained against the State accrued pending appeal, the Supreme Court held that the interest rate prescribed by Ariz. Rev. Stat. 41-622(F) applied to the judgment. Plaintiff filed this negligence action against the state, and the jury awarded her $7.8 million. The State’s appeal was unsuccessful. While the judgment was supposed to be paid from the State’s Risk Management Revolving Fund, the judgment was erroneously paid from the Construction Insurance Fund (CIF). When the mistake was discovered, the CIF was reimbursed from the Revolving Fund. In 2015, the parties filed cross-motions for summary judgment to resolve the calculation of post-judgment interest. At issue was whether, because the judgment had initially been paid from the CIF, it was subject to the rate of interest prescribed by Ariz. Rev. Stat. 44-1201(B) instead of the lower rate prescribed by section 44-622(F) for judgments paid from the Revolving Fund. The superior court concluded that the lower rate applied. The Supreme Court affirmed, holding that section 41-622(F) applied to the entire judgment, including any portion for which the State may be reimbursed by its excess insurance coverage. View "Glazer v. State" on Justia Law

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A policy exclusion for personal liability “under any contract or agreement” does not apply to relieve an insurer of its duty to defend its insured, an alleged builder-vendor, against a claim for negligent excavation brought by the home buyer because the negligence claim arose from the common law duty to construct the home as a reasonable builder would. After rockslides damaged his property, the home buyer sued the alleged builder-vendor, asserting breach of contract, negligence, and fraud-based claims and alleging that the rockslides were the result of improper excavation during construction. The builder-vendor’s insurer declined the tender of defense on grounds that there was no coverage under the relevant insurance policies. The builder-vendor sought damages and declaratory relief. The superior court granted summary judgment in favor of the insurer. The court of appeals reversed, concluding that the policy’s “contractual liability” exclusion did not apply. The Supreme Court affirmed, holding that the contractual liability exclusion did not relieve the insurer of its duty to defend the builder-vendor against the home buyer’s negligence claim. View "Teufel v. American Family Mutual Insurance Co." on Justia Law

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Arizona equitable indemnity law does not incorporate the Restatement (First) of Restitution section 78 because it conflicts with Arizona’s general equitable indemnity principles. Michael Bovre rented a vehicle from Payless Car Rental System Inc. Payless offered Bovre supplemental liability insurance (SLI) under a policy provided by KnightBrook Insurance Co. Bovre caused an accident while driving the rental vehicle that injured Lorraine and Robert McGill. The McGills sued Bovre. The parties settled. Bovre assigned to the McGills his claims against KnightBrook and Payless for their alleged failure to provide supplemental liability insurance (SLI) and agreed to an adverse judgment. Thereafter, the McGills sued Payless and KnightBrook seeking to recover the judgment. The McGills and KnightBrook entered into a settlement in which the McGills’ claims against Payless were assigned to KnightBrook, which paid the McGills the $970,000 SLI policy limit. KnightBrook then filed an action in federal court against Payless, asserting an equitable indemnification claim for the $970,000 it paid McGills. Relying on the First Restatement section 78, the district court ruled that KnightBrook was entitled to equitable indemnification from Payless for the $970,000 SLI policy limits. On appeal, the Ninth Circuit certified two questions to the Supreme Court. The court answered the first question as set forth above, which rendered moot the second question. View "KnightBrook Insurance Co. v. Payless Car Rental System Inc." on Justia 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