Am. Family Mut. Ins. Co. v. Sharp

by
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.