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Insurance—Obligation of General Commercial Liability Insurer to Offer UM Coverage When Separate Auto Policy Offered UM

Jackson v. Nationwide Mut. Ins. Co., 618 Ariz. Adv. Rep. 25 (App. Div. II, September 30, 2011) (J. Kelly)

WHERE INSURED HAD AUTO POLICY PROVIDING UM COVERAGE THE INSURED'S GENERAL COMMERCIAL POLICY WITH A GARAGE LIABILITY ENDORSEMENT WAS NOT REQUIRED TO OFFER UM COVERAGE

Plaintiff was a passenger in his own car when it was being driven by a service station employee and was struck and injured by an uninsured motorist. The service station had two insurance policies—a business auto policy [BAP] issued by AMCO and a business owner's policy [BOP] issued by Nationwide. The BAP expressly provided UM coverage while the BOP did not. The BOP, however, did have a garage liability endorsement that provided liability coverage when the insured was operating a customer's car. Plaintiff recovered damages under the BAP UM coverage then brought a declaratory relief action seeking a ruling that there was UM coverage imputed under the BOP policy. The trial court granted summary judgment to Nationwide, the issuer of the BOP. The Arizona Court of Appeals affirmed.

The court of appeals noted that while ARS sec. 20-259.01(A) requires every auto insurer to offer UM coverage in the amount of the liability coverage and imputes such coverage when the insurer fails to make that offer, the statute also excepts “any general commercial liability policy, excess policy, umbrella policy or other policy that does not proved primary motor vehicle coverage” ARS sec. 20-259.01(L). Plaintiff argued that the BOP was not a “general commercial liability policy” under the statute because of the garage liability endorsement and as such the garage liability endorsement was intended to be the primary coverage when the insured was operating a customer's vehicle. The court rejected this argument noting that both the BOP and BAP were issued at the same time with the same policy period and that because UM coverage was offered and provided under the BAP the statute was satisfied and the BOP was not primary. Therefore the BOP was not subject to the statutory requirement that UM coverage be offered and no such coverage shall be imputed to that policy.

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