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Cavanagh attorneys William Demlong and Parker Bunch represent CSAA General Insurance Company in proceedings before the Arizona Supreme Court. They are joined by co-counsel Kym Kochis at Eversheds Sutherland LLP. The outcome of the case will have a significant impact on underinsured motorist (UIM) coverage across Arizona.

The case, Franklin v. CSAA Gen. Ins. Co., is one of twelve putative class action lawsuits filed against insurers involving claims to stack UIM or Uninsured Motorist (UM) coverage pursuant to Arizona’s Uninsured/Underinsured Motorist Act, or UMA. In these lawsuits, plaintiffs’ assert that an auto policy that insures multiple vehicles inherently provides separate UIM coverages for each covered vehicle. Plaintiffs assert those separate coverages for each vehicle can be added together in the event of a claim, effectively doubling, tripling, or quadrupling the amount of UIM coverage stated on the Declarations page depending on the number of insured vehicles. Under Plaintiffs’ theory, there is no limit to the amount of UIM coverage a policy can provide so long as the insured keeps insuring additional vehicles.

On behalf of CSAA, Bill and Parker successfully moved U.S. District Court Judge John Tuchi to certify two questions regarding the claims asserted in the class actions to the Arizona Supreme Court. The Arizona Supreme Court accepted the certified questions in January 2023. The first question asks does A.R.S. § 20-259.01 of the UMA mandate that a single policy insuring multiple vehicles provide different UIM coverages for each vehicle, or a single UIM coverage that applies to multiple vehicles?  The second question asks whether A.R.S. § 20-259.01(B) bars an insured from receiving UIM coverage in an amount greater that the liability limits of the policy?  CSAA’s brief asserts there is one UIM coverage per policy, irrespective of the number of vehicles insured.  As to the second certified question, the plain language of the statute, as well as its legislative history and promulgations from the Arizona Director of the Department of Insurance, prohibits an insured from receiving UIM coverage in an amount that exceeds the policy’s limits of liability coverage. Accordingly, an auto policy in Arizona cannot provide more UIM coverage than liability coverage under any circumstance.

Franklin v. CSAA is the only one of the twelve putative class actions to be heard by the Arizona Supreme Court, although the other implicated parties—as well as trade organizations for insurers, insurance producers, and policyholders—have filed amicus briefs regarding the Certified Questions. Oral argument occurred April 18, 2023 and the matter taken under advisement.