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Midland Risk Management Co. v. Watford6/30/1994
Midland relies on our decision in Keplinger v. Mid-Century Insurance Company, 115 Ariz. 387, 565 P.2d 893 (App. 1977), for the proposition that § 20-1109 is controlling due to the fraudulent conduct which occurred here. We have reexamined Keplinger and can find no support for Midland's Conclusion. In that case, the accident victim appealed the trial court's finding that an automobile liability policy issued by the insurer to her husband was vitiated by his alleged misrepresentations in the application and did not cover injuries she sustained as a passenger in the insured car. Although we cited § 20-1109 as authority for the general policy defense of fraud or misrepresentation, we concluded that the carrier had not sustained its burden of establishing grounds for avoiding liability primarily because it had not shown it would have refused coverage for the loss had it known of the intended use of the insured vehicle. Thus, it was not necessary to consider the applicability of § 28-1170(F)(1).
Alternatively, Midland contends that even if A.R.S. § 28-1170(F)(1) is applicable, it does not mandate coverage under all circumstances and would not here. Midland asserts that § 28-1170(F)(1) must be interpreted to exclude from its application those insurers who undertake a reasonable investigation of insurability but are unable to discover the fraudulently concealed information. This is so, Midland argues, because it had the right to specifically exclude Phillip Sanchez under § 28-1170(B)(3), and would have had it known of his existence. Thus, requiring coverage under the instant circumstances places form over substance and promotes the fraudulent procurement of automobile insurance coverage. Although there is merit to Midland's argument, we find it contrary to the plain language and intent of § 28-1170(F)(1).
The primary principle of statutory interpretation is to determine and give effect to the legislative intent behind the statute, considering among other things the context of the statute, the language used and the spirit and purpose of the law. See Martin v. Martin, 156 Ariz. 452, 752 P.2d 1038 (1988); State Farm Mutual Auto Ins. Co. v. Wilson, 162 Ariz. 251, 782 P.2d 727 (1989). The Financial Responsibility Act was enacted in response to social and economic problems arising from the increasing casualty rate on Arizona streets and highways. Sandoval, supra. Its primary purpose is the protection of the travelling public from financial hardship resulting from the operation of motor vehicles by financially irresponsible persons. Farmers Ins. Group v. Home Indemnity Co., 108 Ariz. 126, 493 P.2d 909 (1972); Schwab v. State Farm Fire & Casualty Co., 27 Ariz. App. 747, 558 P.2d 942 (1976). Midland suggests, however, that this purpose has since been undercut by the enactment of the Uninsured Motorist Act, A.R.S. § 20-259.01. We disagree. The protection afforded by that act is not applicable in all situations and may not neccessarily protect all third parties in accidents caused by uninsured drivers. Indeed, the record before us does not indicate that it is applicable in the instant case.
As noted above, § 28-1170(F)(1) provides that the liability of an insurance carrier becomes "absolute" whenever injury or damage occurs. Further, "no statement made by the insured or on his behalf and no violation of the po
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