Insurers Need Not Offer or Provide UM/UIM Coverage to Owners or Operators of Commercial Vehicles, Even in Conjunction with a Personal Auto Policy

Author: Lena Pond

Under Arizona’s UM/UIM statute, insurers writing automobile liability or motor vehicle liability policies must make available and offer uninsured and underinsured motorist coverage in limits not less than the liability limits for bodily injury or death contained within the policy. A.R.S. § 20-259.01(A-B). Use of the word “shall” in the statute makes availability and offering of such coverage mandatory.

The statute’s only limitation on its mandatory nature is contained in subsection C, which provides that insurers “writing automobile liability or motor vehicle liability policies may make available [UM and UIM coverage] to owners and operators of motor vehicles that are used as public or livery conveyances or rented to others or that are used in the business primarily to transport property or equipment.”

An Arizona Court of Appeals recently applied subsection C in a situation where an insured made a claim for UIM benefits under his personal policy after an accident which occurred in his work vehicle.

Gambrell v. IDS Property Casualty Insurance Company, 238 Ariz. 165, 357 P.3d 1221 (Ct. App. 2015)

In Gambrell, the insured was in a motor vehicle accident while driving a semi-tractor tanker, transporting milk for his employer. Mr. Gambrell was seriously injured and collected $15,000.00 from the at-fault driver’s insurance policy as well as $100,000.00 from his employer’s UIM coverage. He then made a claim for an additional $100,000.00 in UIM coverage from his personal automobile policy.

Mr. Gambrell had not purchased a specific operator’s policy for the milk truck. Generally, UM/UIM coverage is personal to the insured and therefore portable, offering coverage to the insured while injured “when in another automobile, when on foot, when on a bicycle, or when sitting on a porch.” Calvert v. Farmers Insurance Company of Arizona, 144 Ariz. 291, 296, 697 P.2d 684, 689 (1985); Higgins v. Fireman’s Fund Ins. Co., 160 Ariz. 20, 23, 770 P.2d 324, 327 (1989).

However, here the UIM clause in Mr. Gambrell’s personal auto policy limited coverage to injury sustained by an insured “while occupying a private passenger car or utility car, or as a pedestrian.” The policy defined “utility car” as one “not used in a business or occupation other than farming or ranching” “with a rated load capacity of 2000 pounds or less of the pick-up, van, or panel truck type.” Based on this language, Mr. Gambrell’s insurer, IDS, denied his UIM claim. Mr. Gambrell sued IDS and the claims adjuster, alleging breach of contract and insurance bad faith. The defendants filed a motion for summary judgment based on the language of the UIM clause. The trial court granted the defendants’ motion and Mr. Gambrell appealed.

Interpretation of Subsection C

Mr. Gambrell argued the only permissible limitation on UM/UIM coverage is for anti-stacking. In response, IDS argued that subsection C of the statute does not permit an “exclusion” or “limitation” on UM/UIM coverage, but instead permits insurers to write policies that simply do not include UIM coverage for commercial vehicles. The Court agreed with IDS.

The Court of Appeals previously addressed a similar situation, where a taxi driver sought to claim UM coverage from his personal automobile insurer for an accident that occurred while he was driving his taxi. Warfe v. Rocky Mountain Fire & Cas. Co., 121 Ariz. 262, 263, 589 P.2d 905, 906 (App. 1978). In Warfe, the Court of Appeals found to be valid an exclusion for “vehicles used as a public conveyance” contained in the driver’s personal automobile liability policy, based on the language of subsection C.  Id. at 264, 589 P.2d at 907.

Here, the Court of Appeals again found the language to be valid and enforceable. The Court reasoned that subsection C of the UIM statute treats coverage for commercial vehicles differently and does not make offering UIM coverage for commercial vehicles mandatory. Thus, Mr. Gambrell’s policy would not cover the milk truck unless Mr. Gambrell had specifically requested the coverage, which there was no evidence of him doing.

Application of Subsection C to Personal Policies

Mr. Gambrell also argued the application of subsection C is limited to situations where the insured seeks an owner’s or operator’s policy for a commercial vehicle. He argued Subsection C did not apply here, because his policy was a personal policy. The Court was not persuaded. Relying on the statutory language, the Court noted that nothing in the statute limits the application of subsection C to commercial auto policies. The Court stated the only specification in subsection C is the “owners and operators” language. The Court defined an operator as “a person in actual physical control” of the vehicle, which Mr. Gambrell was. In a footnote, the Court stated the holding is limited to the facts in this case being that Mr. Gambrell was the driver of the vehicle, potentially implying the outcome might have been different if Mr. Gambrell was a passenger instead.

Other Issues

Mr. Gambrell did not argue the UIM clause was unclear or ambiguous, so the Court did not analyze potential language ambiguity. Mr. Gambrell did, however, argue the UIM clause was invalid because it did not mirror the language of Subsection C. Again, the Court was not convinced. The Court held nothing in subsection C requires the policy language to mirror the statutory language, nor does it require the insurer to notify the insured about the lack of UIM coverage for commercial vehicles.


Though Arizona’s UM/UIM statute generally mandates the offering and availability of UM/UIM coverage on all automobile or motor vehicle liability policies, the legislature has carved out a narrow exception for owners and operators of vehicles used as public or livery conveyances, vehicles rented to others, and vehicles that are used in business primarily to transport property or equipment. The exception applies to owners and operators of such vehicles under both commercial and personal policies, does not require an insurer to mirror the statutory language, and does not require the insurer to notify the insured about the lack of coverage.

Lena Pond is a graduate of the Sandra Day O’Connor College of Law at Arizona State University. She specializes in insurance defense, insurance coverage disputes, insurance bad faith, professional liability, and general civil litigation. Contact her at 602.386.5654 or

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