INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
Can ATV injury qualify for recovery?
Jacey Lee Orlando was a passenger in an ATV when it overturned in California’s Imperial Sand Dunes, seriously injuring her leg. The driver’s insurer paid Orlando the liability policy limit, which was insufficient to cover the extent of her injuries. Orlando then filed a claim with her insurer, State Farm, under her UIM policy (the “Policy”).
State Farm denied coverage, explaining that the ATV was not an “underinsured motor vehicle” under the Policy:
Underinsured Motor Vehicle does not include a land motor vehicle:
. . .
- designed for use primarily off public roads except while on public roads[.] . . . .
We will pay compensatory damages for bodily injury an insured is legally entitled to recover from the owner or driver of an underinsured motor vehicle. The bodily injury must be:
- sustained by an insured; and
- caused by an accident that involves the operation, maintenance, or use of an underinsured motor vehicle as a motor vehicle.
Notwithstanding the coverage determination, State Farm invited Orlando to provide information supporting an alternative conclusion. After receiving no response, State Farm filed suit to obtain a declaratory judgment that the Policy did not provide UIM coverage for the ATV accident.
Orlando counterclaimed for breach of contract, alleging that State Farm’s denial of coverage breached the policy. Orlando also counterclaimed for insurance bad faith. The superior court granted summary judgment in favor of State Farm on that claim, which the court of appeals affirmed.
State Farm also concluded that the policy was not statutorily required to provide UIM coverage for the accident.
The superior court in Maricopa Country granted summary judgement in favor of State Farm, concluding that the ATV was not an “underinsured motor vehicle” under the policy and that the policy’s exclusion was valid. Orlando appealed.
The Court of Appeals reversed the decision, holding that the UIM provision of the Uninsured/Underinsured Motorist Act (UMA) did not permit excluding coverage for the ATV accident.
The Supreme Court of the State of Arizona reviewed the case to determine whether the UMA requires insurers to provide UIM coverage for accidents involving vehicles designed primarily for off-road use and that do not occur on public roads.
The court held that the UMA does not require coverage for ATVs not operated on public roads and that an insurer may preclude such coverage in a UIM policy. The supreme court vacated the court of appeals’ decision and affirmed the superior court’s summary judgment in favor of State Farm.
In oral arguments, State Farm had acknowledged the good faith arguments made by Orlando and said that it would be an appropriate exercise of its discretion to decline to award attorney fees should it prevail.
The court agreed and therefore denied State Farm’s request for attorney fees.
State Farm Automobile Insurance Company v. Jacey Lee Orlando—Supreme Court of the State of Arizona—No. CV-23-0228-PR—May 29, 2025.
