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Brown v. State Farm Mutual Automobile Insurance Co.12/14/1989
ill not enforce the pro rata other insurance provision when an insured seeks full indemnification for injuries. WIDISS § 13.12, at 420.
Professor Widiss' discussion of a situation identical to the present case is instructive:
n insured may be injured while occupying a vehicle owned by another person which is covered by underinsured motorist insurance . . . . The Other Insurance provisions uniformly specify that where there is underinsurance motorist coverage applicable to the vehicle occupied by the claimant at the time an accident occurs, that coverage is primary. If the insured claimant is also covered . . . by other insurance policies -- which provide protection, subject to certain exclusions, at all times -- these coverages are secondary and apply as excess coverage. In this situation, there should not be any issue -- at least as a consequence of the endorsement provisions -- about the right of an insured claimant to recover from more than one insurer providing underinsured motorist insurance.
WIDISS § 40.1, at 75 (emphasis added). Professor Widiss concludes that "a claimant should be entitled to seek indemnification when there is more than one applicable underinsured motorist coverage." Id. § 40.2, at 76.
We are aware, of course, that in Transportation Ins. Co. v. Wade, 106 Ariz. 269, 475 P.2d 253 (1970), we held that offset provisions in other insurance clauses in the UM coverage in two separate policies purchased could be invoked. Wade, however, was decided before UM coverage became mandatory, before the advent of UIM coverage, and before UIM offering became mandatory. It did not therefore consider the purchase of UIM excess coverage. Moreover, commentators dealing with UM coverage have criticized its result. See WIDISS § 13.6, at 397 n. 16 and § 13.6, at 403; APPLEMAN § 5102, at 462-63. Given the change in statutory law and case law since Wade was decided in 1970, we believe its reasoning is obsolete and disapprove its doctrine insofar as it applies to UIM clauses.
Conclusion
We hold State Farm's UIM excess/escape clause and pro rata limit reduction clause violate the public policy embodied in A.R.S. § 20-259.01 (UIM statute) if applied so as to obviate or reduce the UIM coverage available to Brown for her actual damages. Thus, to the extent her actual damages are not fully compensated, Brown is entitled to recover the limits of her State Farm UIM coverage over and above the amounts of available liability coverage from Farmers and primary UIM coverage from Universal.
We grant Brown's request for attorney's fees, pursuant to A.R.S. § 12-341.01. Brown may establish the amount of the award by complying with Rule 21(c), Ariz.R.Civ.App.P., 17B A.R.S.
The judgment is reversed, the opinion of the court of appeals is vacated, and the case is remanded to the trial court for proceedings consistent with this opinion.
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