§ 12.9.3 CASE LAW

• Jurisdiction: Arizona

§ 12.9.3 Case Law

An insurer may not refuse to provide its named insured with UIM coverage under her automobile policy because she was partially indemnified as a claimant under the liability coverage of a separate policy. Sharp, 229 Ariz. at 491-93, 277 P.3d at 196-98. In Sharp, the claimant, who was the sole named insured under an automobile policy for a passenger vehicle, was injured while a passenger on a motorcycle driven by her husband. Her husband was the sole named insured on a separate motorcycle policy issued by the same insurer. The claimant's insured passenger vehicle was not involved in the accident, and her total damages exceeded the amount of the tort recovery (the $100,000 liability limit) from her husband's motorcycle policy. The claimant demanded the $100,000 UIM limit from her own policy, which policy, via a UIM endorsement, had an "other insurance clause" that purported to exclude UIM coverage because the same insurer issued both the motorcycle and passenger vehicle policy. The claimant did not make a UIM claim under the motorcycle policy.

The Arizona Court of Appeals upheld a UIM exclusion in the permissive driver's policy when the claimant/passenger received full liability payment under that same policy as well as full liability and UIM payments under the claimant's own policies issued by the same carrier. Demko v. State Farm Mut. Auto. Ins. Co., 204 Ariz. 497, 499, 65 P.3d 446, 448-49 (App. 2003). Demko involved a single vehicle incident in which the claimant was a passenger in his own pickup truck, driven by a permissive driver. The permissive driver's policy excluded the truck from UIM coverage because she was covered under...