Underinsured Motorist Statute Only Applies to Insureds
The Arkansas Court of Appeals affirmed summary judgment based on A.C.A. § 23-89-209(a) in Nash v. American Nat. Prop. & Cas. Co., No. 06-611 (4/4/07).
Nash was a passenger in a car insured by American National. He was injured in an accident, and American National paid Nash $50,000 under liability coverage. The policy contained a clause that allowed American National to reduce the amount of underinsured coverage by the amount of liability coverage payments.
The underinsured coverage clause only provided $50,000 of coverage. Applying the reduction clause, American National claimed it owed nothing else to Nash. Nash argued that A.C.A. § 23-89-209(a) prevented this type of reduction clause. The trial court disagreed and granted summary judgment to American National.
In affirming, the court noted that this statute is a procedure for insureds--defined in the statute as the person purchasing the insurance-- to accept or decline underinsured coverage. The statute does not apply to passengers; to do so would grant a benefit to the passenger, who was not a party to the insurance transaction.
