Legal Memorandum: Underinsurer's Right of Subrogation

Issue: When payment of underinsured motorist benefits is not made until after repeal of the Arizona statute permitting subrogation with respect to underinsured motorist benefits, is the date of the accident or the date of payment controlling as to whether or not the underinsurer has a right of subrogation against the underinsured motorist?

           The Subrogation Statute.  At the time of the accident an insurer was entitled by statute*FN1 to seek reimbursement from the tortfeasor for uninsured and underinsured payments made to its insured:

Insurers who make payments for damages to insureds under the uninsured and underinsured requirements of this section may subrogate and sue for reimbursement of the total amount of said payments in the name of the insured against any uninsured or underinsured motorist responsible for the damages to the insured.

Ariz. Rev. Stat. § 20-259.01 (G).  This subsection was amended by 1986 Ariz. Sess. Laws, ch. 184, § 1, titled “[a]n act relating to insurance: removing subrogation provision relating to underinsured motorist coverage, and amending section 20-259.01, Arizona Revised Statutes.”  Nothing in the act itself — which merely deleted the phrases “and underinsured” and “or underinsured” from subsection (G) — indicates whether it is to apply to pending claims or actions or to accidents occurring prior to its effective date.

Only two reported Arizona decisions were found which discuss the temporal application of […]