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State Farm Mutual Automobile Insuarnce v. Lindsey
Citations: 897 P.2d 631; 182 Ariz. 329; 193 Ariz. Adv. Rep. 77; 1995 Ariz. LEXIS 59Docket: CV-94-0347-PR
Court: Arizona Supreme Court; June 29, 1995; Arizona; State Supreme Court
State Farm Mutual Automobile Insurance Company issued liability policies for three vehicles owned by Janice and Walter Lindsey, with specific named insureds for each vehicle. Each policy provided underinsured motor vehicle (UIM) benefits of $100,000 per person and $300,000 per accident, with no discounts for multiple policies. An "other vehicle" clause in the policies excluded UIM coverage for injuries sustained while occupying a vehicle owned by the insured but not covered by the policy. Following a collision on July 3, 1989, which resulted in Walter Lindsey's death and Janice Lindsey's injuries, State Farm paid the maximum UIM benefits under one policy but contested whether it was liable for the limits under the other two policies. The trial court ruled against State Farm, but the court of appeals reversed this decision. Under A.R.S. 20-259.01(F), insurers can limit coverage to one policy for a claim involving multiple vehicles, but the court found that State Farm did not adequately incorporate this limitation into its policies. The "other vehicle" clause was deemed insufficient to enforce this statutory restriction. State Farm's insurance policies have included "other vehicle" provisions for many years, predating the 1982 enactment of A.R.S. 20-259.01(F). However, the existence of these clauses prior to the statute does not imply they were designed to exploit the statute's limitations. The court's decision hinges on the specific language of the policy, which fails to align with the statute's requirements. A.R.S. 20-259.01(F) allows for anti-stacking clauses if clearly articulated, but State Farm's policies do not inform insureds of their right to choose which policy applies in the event of a claim. The court found this omission significant, particularly since circumstances vary when policy limits are not identical. The appellate court's conclusion that this oversight was insignificant is contested, as it could affect coverage decisions. The policy's language explicitly denies UIM coverage in scenarios where the insured occupies an owned but uninsured vehicle, effectively removing the insured's ability to select another policy, contradicting the statute’s provisions. While insurers can limit stacking, State Farm did not fulfill the necessary requirements to enforce such limitations. The court of appeals' application of community property principles regarding the "one insured" requirement is deemed unnecessary to address. Ultimately, the other vehicle clauses do not adequately invoke the terms of A.R.S. 20-259.01(F) to prohibit stacking, leading to a summary judgment in favor of the Lindseys and affirmation of the trial court's judgment.