Katelin Newman v. Cornerstone Nat’l Ins. Co. – 3/18/2015

March 25, 2015

Arizona Supreme Court holds that A.R.S. § 20-259.01(B)’s requirement that auto insurers offer underinsured motor insurance to policyholders does not require the insurer to specify the cost of the coverage.

Katelin Newman was injured by another driver in a car accident.  When the at-fault driver’s insurance was insufficient to cover her injuries, Newman sought underinsured motorist (“UIM”) coverage from her insurer.  The insurer denied the claim because Newman had previously waived UIM coverage when she purchased her policy.

Newman sued her insurer, seeking a declaration that the UIM waiver was void because the offer did not include a monthly premium quote.  The insurer countered that the Arizona Department of Insurance had approved the form on which Newman had declined UIM insurance, and in any event, Arizona law does not require an offer of UIM insurance to include a premium quote.

The trial court granted summary judgment to the insurer and the court of appeals affirmed. The Supreme Court granted review to decide an issue of statewide importance and affirmed the trial court’s judgment.  Relying on its previous interpretation of the statute, the Court held that an “offer,” as defined in § 20-259.01 only requires the insurer to “make available” UIM insurance; it does not require the insurer to convey all material terms of the contract.  Although the Court admitted that knowing the cost would help the insured determine whether to purchase the coverage, it declined to add such a requirement to the statute.        

Justice Brutinel authored the unanimous opinion