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Monday, April 26, 2004
Jangula v. Arizona Property and Casualty Insurance: Division One Holds That the Amount an Insured May Recover From the Arizona Property and Casualty Insurance Guaranty Fund Must Be Reduced by the Amount the Insured Has Recovered From Other Coverage
A.R.S. § 20-661 et. seq. governs the administration of insolvent insurers and establishes a fund (the “Fund”) to help pay their claims. The maximum that can be recovered by an insured from the Fund is $99,900 or the limits of the insured’s policy. Section 20-673(C) sets forth how amounts received by an insured from other policies affect what may be recovered from the Fund. In 1988, the Arizona Supreme Court held that under A.R.S. § 20-673(C) amounts received by an insured from other coverage reduced the amount of the damages that could be claimed from the Fund. Arizona Property and Casualty Insurance Guaranty Fund v. Herder, 156 Ariz. 203, 751 P.2d 519 (1988). But if the total damages as reduced still exceeded the Fund’s maximum obligation, the amount paid by the Fund would not be reduced. Thus under Herder, if the insured received $15,000 on a $150,000 damages claim pursuant to a policy with limits of $100,000, the damage claim would be reduced to $135,000, and the Fund would be required to pay $99,900.
In 1998 the Legislature amended § 20-673(C) by adding that “[a]ny recovery pursuant to this article shall be reduced by the amount of the recovery under the claimant’s insurance policy.” Division One held this amendment changed the statute’s interpretation announced in Herder by requiring the recovery from the Fund to be reduced by any amounts the insured recovers from other coverage. Thus in the case before it the insured’s damages exceeded $115,000, but she had recovered UIM benefits of $15,000 from her own policy. The court held this UIM coverage reduced the amount she could recover from the Fund, limiting her total recovery from the Fund to $84,900 ($99,900 minus $15,000). The court held the statute’s plain language and the principal that a legislative amendment is intended to change existing law supported the court’s interpretation. The court rejected the plaintiff’s arguments to the contrary, including that the legislature did not intend to overrule Herder because it neither acted quickly nor expressly stated its intent to do so.
Judge Gemmill authored the opinion; Judges Thompson and Winthrop concurred.
A.R.S. § 20-661 et. seq. governs the administration of insolvent insurers and establishes a fund (the “Fund”) to help pay their claims. The maximum that can be recovered by an insured from the Fund is $99,900 or the limits of the insured’s policy. Section 20-673(C) sets forth how amounts received by an insured from other policies affect what may be recovered from the Fund. In 1988, the Arizona Supreme Court held that under A.R.S. § 20-673(C) amounts received by an insured from other coverage reduced the amount of the damages that could be claimed from the Fund. Arizona Property and Casualty Insurance Guaranty Fund v. Herder, 156 Ariz. 203, 751 P.2d 519 (1988). But if the total damages as reduced still exceeded the Fund’s maximum obligation, the amount paid by the Fund would not be reduced. Thus under Herder, if the insured received $15,000 on a $150,000 damages claim pursuant to a policy with limits of $100,000, the damage claim would be reduced to $135,000, and the Fund would be required to pay $99,900.
In 1998 the Legislature amended § 20-673(C) by adding that “[a]ny recovery pursuant to this article shall be reduced by the amount of the recovery under the claimant’s insurance policy.” Division One held this amendment changed the statute’s interpretation announced in Herder by requiring the recovery from the Fund to be reduced by any amounts the insured recovers from other coverage. Thus in the case before it the insured’s damages exceeded $115,000, but she had recovered UIM benefits of $15,000 from her own policy. The court held this UIM coverage reduced the amount she could recover from the Fund, limiting her total recovery from the Fund to $84,900 ($99,900 minus $15,000). The court held the statute’s plain language and the principal that a legislative amendment is intended to change existing law supported the court’s interpretation. The court rejected the plaintiff’s arguments to the contrary, including that the legislature did not intend to overrule Herder because it neither acted quickly nor expressly stated its intent to do so.
Judge Gemmill authored the opinion; Judges Thompson and Winthrop concurred.
Posted date: Mon, Apr 26, 2004
