Earlier this year, the Arizona Court of Appeals issued a decision that highlights two key issues for
anyone purchasing automobile insurance: (1) the importance of uninsured and underinsured motorist coverage and (2) the complications associated with insurance coverage for adult family members living in the same home.
Beaver v. American Family
The facts of the case are simple. While riding her own motorcycle, Sally Ann Beaver was injured by another driver's negligence. The other driver's liability insurance was insufficient to compensate Beaver for her injuries. At the time of the accident, Beaver lived with her father. Because Beaver's auto insurance did not include underinsured motorist coverage, she sought coverage pursuant to the underinsured motorist provision of her father's family car policy. The father's insurer, American Family, denied coverage because the policy's definition of "relative" excluded family members who owned their own vehicle. The Court of Appeals upheld the policy provision and agreed with the trial court that Arizona public policy and statutory law did not require American Family to provide coverage to Beaver.
Uninsured and Underinsured Motorist Coverage
The first lesson highlighted by this case is the importance of uninsured and underinsured motorist insurance. Uninsured motorist insurance (UM) provides compensation when another driver who does not have any insurance injures you in an accident. Similarly, underinsured motorist insurance (UIM) will compensate you if the other driver has insufficient insurance to cover all of your damages.