American Standard Insurance Company of Wisconsin ("American Standard") issued an automobile policy to Luis Ballesteros. Ballesteros's primary language is Spanish. During the application process, a Spanish speaking member of the insurance agency helped Ballesteros complete the application. The agent gave Ballesteros an Arizona Department of Insurance ("DOI") approved uninsured motorist ("UM") and underinsured motorist ("UIM") selection form ("Selection Form") on which to select or reject UM and UIM coverage. The form was in English. Ballesteros signed the form memorializing that he declined UM/UIM coverage.
Ballesteros's mother-in-law, an insured under the policy, died in an accident with an uninsured driver. American Standard denied Ballesteros's claim for UM coverage. He sued American Standard for breach of contract claiming American Standard failed to comply with Arizona Revised Statutes (A.R.S.) section 20-259.01 (the "Statute") which requires insurers to offer UM and UIM coverage to their insureds by "written notice."
The trial court granted partial summary judgment to Ballesteros, concluding that American Standard violated the Statute by not giving him a Spanish Selection Form. The court reasoned the English Selection Form was not "reasonably calculated to bring to [Ballesteros's] attention that which was being offered" and that, to satisfy the Statute, the written offer of UM/UIM coverage to a Spanish-speaking insured must be in Spanish.
The court of appeals reversed, but held American Standard was not entitled to partial summary judgment because factual questions remained as to whether American Standard made Ballesteros sufficiently aware of the offer of UM/UIM coverage through other communications. The use of the Selection Form did not allow American Standard to sail into a "safe harbor" that automatically satisfied the Statute.
The Supreme Court granted review to determine whether an insurer must provide a Spanish-language form to a Spanish speaker to comply with the Statute. The Supreme Court reversed with instructions to enter partial summary judgment in American Standard's favor.
The Statute requires that every insurer make UM and UIM coverage available to the named insured and by "written notice offer both types of coverage." The Statute further provides the selection of UM and UIM coverage on a DOI approved form shall be valid. The Court applied general principles of contract law to interpret the terms "by written notice offer." Under contract principles whether an "offer has been made . . . [depends] on whether a reasonable person would understand that an offer has been made and that, upon acceptance, the offeror would be bound."
There is no dispute that American Standard offered Ballesteros UM and UIM coverage on a DOI approved selection form. There is a dispute as to whether he understood the form. However, under the contract interpretation principles the test is objective, not subjective. "Whether an offer was made turns only on whether a reasonable person would understand that a proposal of terms was made. . . ." Therefore, the "written notice" under the Statute does not have to be translated into the insured's language, "it requires only that the insurer make an offer that, if accepted, would bind the insurer to provide the offered coverage."
The Court supported its conclusion by the fact the Arizona Legislature has required Spanish translation in other contexts and an omission to do so here indicates it was intentional. The Statute had required forms in Spanish and English, but the requirement was later removed.
If an insurer provides and the insured signs the DOI approved form, the insurer has satisfied the statutory requirement to "make available" and "by written notice offer" UM/UIM coverage. Any other determination would result in multiple fact-intensive inquiries. The Supreme Court reasoned that insurance agents in the field are "not necessarily required to determine a client's language proficiency or degree of understanding."
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This opinion is not final. Though it has been certified for publication, it may be modified by the Arizona Supreme Court. Should this occur, the opinion would be unavailable for use as authority in other cases.
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