7.1 General Overview

• Jurisdiction: Arizona

Arizona's Uninsured Motorist Act^[1] was first enacted in 1965 in order to "protect drivers in the state against losses engendered by financially irresponsible owners or operators of motor vehicles."^[2] The Act initially required insurance companies to offer uninsured motorist (UM) coverage with all motor vehicle liability policies. Thus, as originally enacted in 1965, UM coverage was not mandatory because insureds had the right to reject such coverage.

Since 1965, there have been several significant amendments to A.R.S. Sec. 20-259.01. In 1970, the statute was amended to cover insureds injured by motorists whose vehicles were uninsured by reason of insolvency. In 1972, the statute was amended to make UM coverage mandatory, eliminating an insured's right to reject such coverage by requiring all motor vehicle liability policies issued in Arizona to contain UM coverage.

In 1981, the legislature enacted a requirement that insurance companies offer underinsured motorist (UIM) coverage. UM and UIM coverages were recognized by the legislature as being separate and distinct coverages: when there is both UM and UIM coverage, an injured person is not entitled to collect both benefits.^[3] When an accident involves insured drivers, only UIM coverage is available to satisfy any deficiency in liability coverage.^[4]

The purpose of Arizona's Uninsured Motorist Act is to close the gap in protection created by the Uniform Motor Vehicle Safety Responsibility Act (A.R.S. Sec. 28-4001 et seq.) by requiring insurance companies to offer UIM coverage with every motor vehicle liability policy to cover an insured's injuries caused by an uninsured motorist.^[5] This legislative purpose also applies to UIM coverage.^[6] The statute "establishes a public policy that every insured is entitled to recover damages he or she would have been able to recover if the uninsured motorist had maintained a policy of liability insurance in a solvent company."^[7]

Statutorily mandated UM coverage is remedial, and a liberal construction will be applied to effect its beneficent purposes.^[8] The supreme court has interpreted A.R.S. Sec. 20-259.01 in a restricted manner, finding that only those exclusions specifically enumerated in subsection (D) (excluding vehicles "used as public or livery conveyances or rented to others or which are used in the business primarily to transport property or equipment") are authorized and all other exclusions are void.^[9] However, not every construction of a policy that...