Plaintiff Hamill sued a driver (“the Driver”) who struck him while he was walking in a parking lot. Although the Driver’s liability limit for bodily injury coverage was $100,000, her insurance company, State Farm, stated that it would pay any judgment or settlement. A jury awarded Hamill $165,000, and the Driver appealed. Hamill and the Driver then settled for $152,000, which State Farm paid. Hamill meanwhile submitted an underinsured motorist (“UIM”) claim to his own insurance provider, Defendant Mid-Century, seeking to recover the amount by which his judgment exceeded the $100,000 liability limit of Driver’s State Farm policy. Both parties agreed to arbitrate the claim and further agreed to offset any arbitration award by $134,259.59. The arbitrator ultimately found that Hamill was damaged in the amount of $126,000. Mid-Century refused to make any payment under the UIM policy because this award was less than the offset and the amount State Farm had paid. Hamill then sued Mid-Century for breach of contract, seeking the difference between the offset and the $165,000 jury award. Mid-Century moved for summary judgment, which the trial court granted.
The ArizonaAppeals Court affirmed, holding that the Driver was not underinsured. The Court explained that under A.R.S. § 20-259.01, which governs UIM insurance, Courts must look to the applicable insurance policy to determine whether a driver is underinsured. In this case, State Farm stated that it would pay any judgment or settlement, effectively eliminating the $100,000 liability limit in the Driver’s policy. Because the liability limit was not less than the damages, the Driver was not underinsured and Mid-Century was not obligated to make any payments under the UIM policy. See A.R.S. § 20-259.01(G).
The Court rejected Hamill’s assertion that his UIM policy required the Court to look to the stated policy limit rather than what State Farm actually did to determine whether the Driver was underinsured. The Court explained that the UIM policy, like A.R.S. § 20-259.01, focuses on the applicable insurance policy, which in this case effectively had no liability limit. The Court also rejected Hamill’s other arguments based on inapposite cases.
Chief Judge Howard authored the opinion; Presiding Judge Brammer and Judge Espinosa concurred.
Posted by: Sharad H. Desai