In Hanfelder v. Geico Indem. Co., WL 2018 WL 2315949 (May 22, 2018), the Arizona Court of Appeals reversed summary judgment granted to an Insurer because the Policy’s “imprecise” anti-stacking language did not apply to the “Affiliated Insurers”—GEICO Casualty Company and GEICO Indemnity Company.
If affiliated insurers issue multiple policies to the same insureds, then the affiliated insurers should consider incorporating the definition of “insurer” in ARS § 20-259.01(H) into their anti-stacking provisions and/or including “affiliated insurers” language in their anti-stacking provisions.
An Insured made UIM claims under two policies issued by affiliated Insurers. The “First Affiliated Insurer” paid policy limits. The “Second Affiliated Insurer” denied the claim based on the Policy’s anti-stacking provision: “If separate policies or coverages with us are in effect for you or any person in your household, they may not be combined to increase the limit of our liability for a loss; however you have the right to select which policy or coverage is applicable to the loss.” (underlining emphasis added). The Insured filed a declaratory judgment action against the Second Affiliated Insurer. The trial court granted summary judgment to the Second Affiliated Insurer because it determined the Anti-Stacking Provision applied to the Affiliated Insurers.
In holding the Anti-Stacking Provision did not apply to the Affiliated Insurers, the Arizona Court of Appeals reasoned as follows:
- ARS § 20-259.01(H) allows anti-stacking provisions and defines an insurer to include affiliated insurers: “For the purposes of this subsection, ‘insurer’ includes every insurer within a group of insurers under common management.”
- Arizona construes its UIM statutes “liberally and in favor of providing coverage” and “UIM policy exclusions strictly and narrowly.”
- Although ARS § 20-259.01(H) authorized the “Insurer”—the First Affiliated Insurer and the Second Affiliated Insurer—to limit coverage to one policy, the Policy’s anti-stacking provision did not do so because it applied to “separate policies or coverages with us”—but the Policy did not define “us.”
- The Policy used the term “we” to refer to solely to the Second Affiliated Insurer, so it would “defy common sense” to construe the term “us” as referring to the Second Affiliated Insurerand the First Affiliated Insurer.
- ARS § 20-259.01(H) is not self-executing—an insurer must include policy language to incorporate its limitations.
- The Policy did not incorporate ARS § 20-259.01(H)’s definition of an insurer to include “every insurer within a group of insurers under common management.”
- The Insured’s receipt of a multi-policy discount did not place the Insured on notice that his coverage would be limited.
- The Second Affiliated Insurer could have drafted the Policy to apply to separate policies or coverage purchased from any Insurer “affiliate” but did not so.
Read the entire Hanfelder opinion here.
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