Off-Road ATV Exclusion Upheld: State Farm Automobile v. Orlando Establishes Definition of “Motor Vehicle” for UMA-Based UIM Coverage

1. Introduction

In State Farm Automobile Insurance Company v. Jacey Lee Orlando, the Arizona Supreme Court addressed whether the Uninsured/Underinsured Motorist Act (UMA) obligates insurers to provide underinsured motorist (UIM) coverage for injuries sustained in an accident involving an all-terrain vehicle (ATV) operated off public roads. The ruling resolves a split between the trial court and the Court of Appeals and clarifies the interplay between the UMA and Arizona’s Financial Responsibility Act (FRA).

Background facts. Jacey Lee Orlando, a State Farm insured, was severely injured when an ATV overturned in the Imperial Sand Dunes of California. After receiving insufficient liability proceeds from the ATV driver’s insurer, Orlando sought benefits under her State Farm UIM policy. State Farm denied the claim, citing a policy term that excluded vehicles “designed for use primarily off public roads except while on public roads.” Litigation followed, ultimately reaching the Supreme Court on the central question: Does Arizona law require UIM coverage for an off-road ATV accident?

2. Summary of the Judgment

The Court affirmed the Superior Court’s summary judgment for State Farm and vacated the contrary opinion of the Court of Appeals.
It held that the UMA does not mandate UIM coverage for vehicles that are:
- (1) primarily designed for off-road use, and
- (2) not operated on public highways at the time of the accident.
Accordingly, insurers may contractually exclude such accidents from UIM coverage without violating Arizona public policy.
The request for attorneys’ fees by State Farm was denied in the Court’s discretion.

3. Analysis

3.1 Precedents Cited and Their Influence

Chase v. State Farm (1982) – Recognized that UMA and FRA must be read together; upheld a UM exclusion for off-road accidents with a golf cart.
West American v. Pirro (1990) – Applied Chase logic to an uninsured dune-buggy accident; validated policy exclusion.
Lowing v. Allstate (1993) & Brown v. State Farm (1989) – Confirmed UMA’s purpose as a “gap-filler” for the FRA, aligning coverage obligations with FRA requirements.
McKeon (1988) & Gilmore (1991) – Previously declined to read UMA and FRA in pari materia for different issues; the Court distinguished these decisions.
Interpretive canons – The Court emphasized in pari materia and the general/specific canon, citing Stambaugh (2017) and scholarly commentary from Scalia & Garner and Justice (then-Judge) Kavanaugh.

3.2 Core Legal Reasoning

UMA Is a Gap-Filler to FRA.
UM and UIM provisions were enacted to protect motorists from financially irresponsible drivers, but only within the universe of accidents the FRA already contemplates—namely, accidents involving motor vehicles required to be insured. Extending UMA beyond that sphere would convert it into a general accident insurance mandate, an “absurd result.”
Defining “Motor Vehicle.”
The UMA lacks its own definition; therefore, the FRA’s definition applies when the statutes are read together. Under A.R.S. § 28-4001(3), a motor vehicle is a self-propelled vehicle registered or required to be registered for highway use. ATVs operated off-road are exempted from both registration and the mandatory liability insurance requirement. Hence, an ATV in the dunes is not a “motor vehicle” for UMA purposes.
Textual Differences Between UM and UIM Provisions Not Dispositive.
Orlando and the Court of Appeals relied on subtle textual variances (e.g., UM coverage is “subject to the terms and conditions” whereas UIM is not). The Supreme Court labeled these distinctions irrelevant to threshold applicability: if the incident does not involve a statutory “motor vehicle,” neither UM nor UIM coverage is triggered.
Canonical Interpretation.
The Court reinstated the primacy of in pari materia analysis, rejecting earlier decisions that had required statutory ambiguity as a prerequisite. It reasoned that the UMA and FRA share a common purpose and must therefore be harmonized.

3.3 Potential Impact on Arizona Law

Contract Drafting: Insurers may safely retain or insert exclusions for off-road vehicles in UM/UIM endorsements without violating public policy.
Coverage Litigation: Plaintiffs must now establish that the vehicle involved met FRA requirements (registration and operation on a public highway) before invoking UMA protections.
Tort Incentives: Operators and owners of off-road vehicles face heightened personal liability exposure. Consumers engaging in off-roading may purchase specialty accident or recreational vehicle policies to fill the protection gap.
Legislative Response: The legislature could, if policy considerations shift, expand FRA coverage to off-road vehicles, which would automatically broaden UMA scope. The Opinion leaves the door open for such legislative action.

4. Complex Concepts Simplified

UMA vs. FRA.
• FRA sets the floor: it requires all “motor vehicles” driven on Arizona highways to carry liability insurance.
• UMA fills the gaps: it makes insurers offer protection when the at-fault motorist lacks adequate insurance. Importantly, UMA’s reach is limited to the same “motor vehicles” covered by the FRA.
UM vs. UIM Coverage.
• UM: Applies when the at-fault driver has no liability insurance.
• UIM: Applies when the at-fault driver has some insurance but not enough to cover the victim’s full damages.
In Pari Materia.
Latin for “in the same matter.” Courts interpret statutes with related subject matter together so that they operate coherently.
General/Specific Canon.
When two statutes conflict, the more specific or more recent one usually governs. But in this case, no conflict existed; instead, the general FRA definition supplied a missing term in the UMA.
ATV Registration Exemptions.
Arizona law exempts ATVs not driven on public highways from: (1) title/registration, and (2) mandatory liability coverage. Consequently, they are outside the FRA’s—and therefore the UMA’s—protective ambit.

5. Conclusion

The Arizona Supreme Court’s decision in State Farm v. Orlando firmly aligns the UMA with the FRA, establishing that UMA coverage—whether uninsured or underinsured—only extends to accidents involving vehicles that the FRA compels to be insured. Off-road ATVs, when not operated on public highways, fall outside this statutory definition. Insurers may therefore exclude such accidents from UIM coverage without running afoul of public policy. The ruling brings clarity to coverage disputes involving recreational and specialty vehicles and underscores the importance for policyholders to understand, and if necessary supplement, their insurance portfolio when engaging in off-highway activities. Any expansion of coverage in this domain now lies squarely with the legislature rather than the courts.