Arizona Court of Appeals Division One Holds That a Premium Price is Not Required for a Written Offer of Underinsured Motorist Coverage to be Valid Under A.R.S. § 20-259.01(B).

Katelin Newman was seriously injured in a car accident and the policy limits of her insurance and the other party’s insurance were insufficient to cover the loss.  Newman requested underinsured motorist (UIM) benefits from Cornerstone National Insurance.  Cornerstone rejected the claim, relying on a waiver Newman signed declining UIM coverage. Newman sued and sought partial summary judgment claiming that Cornerstone’s initial offer of UIM coverage was invalid under A.R.S. § 20-259.01(B) because it lacked a premium price. The trial court found in Cornerstone’s favor on its cross-motion and held that Newman waived coverage.

The Court of Appeals agreed with Cornerstone that no statute or case law requires the insurer to include the premium price in the offer.  The plain language of A.R.S. § 25-259.01 does not require a premium price, but, rather, only that Cornerstone “make available” by “written offer” UIM coverage in an amount not less than the liability limits for bodily injury or death.  A.R.S. § 20-259.01(B).  Moreover, the case law cited by Newman does not require a premium price.  The Arizona Supreme Court held that the plain meaning of “offer” in the statute is so unambiguous that there is no need to determine what the legislature intended by using that term, and the Court of Appeals noted that contracts are often executed without a price term.  The Court of Appeals also explained that it has addressed this issue in a prior case and held that a different insurer made a valid UIM offer without a premium quote, even when the insurer also pre-selected the coverage amount of the insureds.  Based on the plain statutory language and existing case law, the Court of Appeals found no need to expand the definition of “offer” to include a premium quote.

Judge Thompson authored the opinion; Presiding Judge Winthrop and Judge Downie concurred.