The Supreme Court of Arizona has ruled that the state’s uninsured motorist (UM) and underinsured motorist (UIM) coverage selection or rejection form only needs to be filed in English — even when dealing with Spanish-speaking customers.
The Arizona legislature mandates the use of a UM/UIM coverage selection or rejection form to advise policyholders that they have the right to purchase UM/UIM coverage equal to the limits of the bodily injury coverage. If policyholders elect to purchase coverage in any amount less than the bodily injury liability limits, they must sign the form.
Luis Ballesteros, the plaintiff in Ballesteros v. American Standard Insurance Co., argued that the UM/UIM form could not be used as evidence of the policyholder’s election to include or exclude UM/UIM coverage because the form was in English, which he could not read. According to court documents, Ballesteros had signed the UM/UIM declining such coverage, but when his mother-in-law who was insured under the policy died in a collision with an uninsured driver, he sought coverage from his auto insurer. He sued the insurer for breach of contract when coverage was denied.
Ballesteros claimed that because the coverage form was not in his native language, UM coverage should have been included in his policy by “operation of law,” — despite the fact that a Spanish-speaking member of the insurance agent’s staff had helped Ballesteros complete the application. He reasoned that because he was unable to read the acceptance/rejection form he was not offered UM/UIM coverage, and therefore he should have been provided coverage even though he did not purchase it.
The lower courts decided in Ballesteros that complying with the mandatory UM/UIM offer requirement requires insurance producers to do “something more” that secure and insured’s signature to an Arizona Department of Insurance approved UM/UIM selection/rejection form. And the lower courts said that the use of a DOI-approved UM/UIM selection form should not be a “safe harbor” for insurers who say they are satisfying the law, but not sufficiently making their customers aware of the coverage.
However, the state Supreme Court said the legislature explicitly did not require a Spanish UM/UIM form. In fact, the Court said the law briefly required the forms in both Spanish and English, but the Spanish requirement was removed a year after it was enacted.
“The history confirms that the legislature did not intend to impose a Spanish-translation requirement in the current statute,” the high court wrote. “If the legislature desires to add such a requirement, it may do so … but it is not our place to rewrite the statute.”
Furthermore, the Supreme Court said “agents in the field, however, are not necessarily equipped to determine a client’s language proficiency or degree of understanding. Such a requirement may lead in future cases to questions about an offeree’s general understanding of the contract terms regardless of the language in which they are provided in a form. … We nonetheless conclude … that imposing a comprehension requirement is ‘both unwarranted by the statute and unwise.'”
The Independent Insurance Agents and Brokers of Arizona Inc. said the Supreme Court decision helped to avert an enormous financial impact on insurance agent errors and omissions policies.
“We are extremely pleased with the Arizona Supreme Court decision and consider it a victory,” stated Lanny Hair, IIABA executive vice president. “The industry can now have some confidence that the validity of a ‘form,’ as approved by the Department of Insurance, will not now be questioned just because an applicant asserts a lack of understanding regarding the offer of UM/UIM coverages.”
Had the Supreme Court decision been different, a signed form used to reject overage would not necessarily have been adequate to document the offer and the policyholder’s rejection, Hair explained. The case also had the potential of placing a burden on insurance companies and/or agents to effectively provide all of their communications in a multitude of languages, which would have placed an impossible burden on insurance agents and companies, he added.
“It should not be the job of the insurance agent to determine the applicant’s reading skills,” Hair said, also noting it would be impossible to provide a form in every language spoken by agents’ clients. “Remember, the ‘form’ must be approved by the Arizona Department of Insurance prior to its use, so this logic would require every insurance company selling auto insurance to file a ‘form’ in multiple languages. Frankly — an impossible task.”
IIABA had filed a friend of the court brief to the Ballesteros case.
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