Excess Insurance & Arizona Wrongful Death Recoveries

TL;DR

Yes, you can access excess or umbrella insurance policies to cover damages in an Arizona wrongful death claim when the at-fault party’s primary liability insurance is insufficient. This process involves first exhausting the primary policy’s limits through a settlement or judgment. Once that is complete, a claim can be made against the secondary excess policy to recover the remaining awarded damages, which under Arizona law can include lost income, final medical expenses, and the loss of love and companionship for surviving family members.

Key Highlights

Excess Insurance Access: These policies act as a second layer of coverage, available only after the primary insurance policy has been fully paid out.
Wrongful Death Damages: Arizona Revised Statutes § 12-613 allows for the recovery of a wide range of damages, including both economic losses and the personal loss to the family.
Exhausting Primary Limits: The excess insurance carrier is not obligated to pay until the primary insurer tenders its full policy limit.
Identifying Policies is Key: A critical step is uncovering all available insurance policies, including personal umbrella or commercial excess policies, which may not be voluntarily disclosed.
Legal Guidance is Essential: The complexity of these claims makes working with an experienced Arizona wrongful death attorney crucial for maximizing recovery and managing the process.

The loss of a family member is a deeply personal and painful experience. When that loss is caused by the negligence or wrongful act of another, Arizona law provides a path for specific surviving family members to seek financial justice through a wrongful death claim. These claims are governed by a specific set of statutes, beginning with Arizona Revised Statutes (A.R.S.) § 12-611. The financial impact of such a loss can be substantial, encompassing everything from final medical bills and funeral costs to the loss of a lifetime of income and support. In 2022, Arizona saw over 1,200 traffic-related fatalities alone, each representing a story of profound loss with significant economic consequences for the families left behind.

A major challenge in these cases arises from insurance policy limits. Arizona’s mandatory minimum auto insurance liability coverage is set at $25,000 per person and $50,000 per accident for bodily injury or death. For a claim involving the death of a primary wage earner, these minimums are tragically inadequate. Even individuals with higher-than-minimum coverage, such as a $100,000 or $300,000 policy, may not have enough insurance to cover the full value of the damages. This gap between the available primary insurance and the actual value of the claim is where the concept of additional coverage becomes critically important.

This is precisely the scenario where excess insurance policies play a vital role. These policies, often known as umbrella policies, are designed to provide an additional layer of financial protection for catastrophic events where the damages exceed the limits of a standard auto, home, or commercial liability policy. For families pursuing a wrongful death claim, understanding how to identify and access these secondary insurance policies is fundamental to achieving a fair recovery that truly reflects the full scope of their loss. The process involves a clear legal strategy, from proving the total value of the damages to compelling the primary insurer to pay its limits and then formally demanding payment from the excess carrier.

Understanding Wrongful Death Claims Under Arizona Law

Before exploring the mechanics of insurance, it is essential to have a firm grasp of the legal foundation for a wrongful death claim in Arizona. This type of civil action is not a criminal case; rather, it is a lawsuit brought by survivors to recover financial damages for the death of their loved one. The laws are specific about who can bring a claim and what kind of compensation they can seek.

Who Can File a Wrongful Death Lawsuit in Arizona?

Not just anyone can file a wrongful death claim. A.R.S. § 12-612 explicitly lists the parties who are eligible to bring such an action. These statutory beneficiaries include:

The surviving spouse of the deceased.
The surviving child or children of the deceased.
A surviving parent or guardian of the deceased.
The personal representative of the deceased person’s estate.

If the claim is brought by the personal representative (also known as an executor), they do so on behalf of all the statutory beneficiaries. For example, if a deceased person is survived by a spouse and two minor children, the personal representative would file one lawsuit, and any recovery would then be distributed among the spouse and children according to their respective damages.

What Damages Are Recoverable?

The purpose of a wrongful death claim is to compensate the survivors for the losses they have suffered due to their loved one’s death. A.R.S. § 12-613 states that the jury (or court) shall award “such damages as it deems fair and just with reference to the injury resulting from the death to the surviving parties who may be entitled to recover.” This broad language allows for the recovery of both economic and non-economic damages.

Economic Damages (Tangible Financial Losses):

Lost Income and Earnings: The value of the lost wages, benefits, and other earnings the deceased would have been reasonably expected to earn over their lifetime.
Loss of Services: The monetary value of the services the deceased provided, such as childcare, home maintenance, and financial management.
Medical Expenses: The cost of any medical care the deceased received for their final injury before their death.
Funeral and Burial Expenses: The reasonable costs associated with the funeral and burial or cremation.

Non-Economic Damages (Intangible Personal Losses):

Loss of Love, Affection, and Companionship: Compensation for the loss of the personal relationship with the deceased.
Pain, Grief, and Sorrow: Damages for the emotional and mental anguish experienced by the survivors.
Loss of Guidance and Training: This is particularly relevant for surviving children who have lost a parent’s guidance and upbringing.

The total value of these damages can easily run into hundreds of thousands or even millions of dollars, especially in cases involving the death of a young parent or high-income earner. This valuation is what makes accessing all layers of insurance so critical.

The Statute of Limitations for Arizona Wrongful Death Claims

There is a strict deadline for filing a wrongful death lawsuit in Arizona. Under A.R.S. § 12-542, the claim must generally be filed within two years from the date of the person’s death. If the claim is against a public entity or employee (like a state or city government), the timeline is even shorter, with a notice of claim requirement of just 180 days. Missing this deadline can permanently bar the family from seeking any recovery, regardless of the strength of their case.

The Role of Primary vs. Excess Insurance Policies

Understanding the structure of insurance coverage is fundamental to pursuing a high-value wrongful death claim. Liability insurance is structured in layers, and knowing how to move from one layer to the next is the key to a full financial recovery.

What is Primary Liability Insurance?

Primary proven liability insurance is the first line of defense for an at-fault party. It is the main policy that covers injuries or damages they cause to others. Common types of primary policies include:

Personal Auto Insurance: The policy every driver is required to carry. As mentioned, Arizona’s minimums are $25,000/$50,000, but many drivers carry higher limits like $100,000/$300,000 or $250,000/$500,000.
Homeowners Insurance: This policy can provide coverage if a death occurs on someone’s property due to a dangerous condition (e.g., an unsecured swimming pool).
Commercial General Liability (CGL): This is the primary policy for a business. If a death is caused by a company’s proved negligence (e.g., a commercial truck crash, a construction site incident), the CGL policy is the first to respond.

In a wrongful death claim, the first step is to make a claim against the at-fault party’s primary insurance policy. The insurer will investigate and, if their policyholder is liable, will offer to pay up to their policy limit.

Defining Excess and Umbrella Insurance

Excess and umbrella policies are forms of secondary insurance. They provide an additional layer of coverage that only activates after the limits of a primary policy have been completely used up.

Excess Insurance: This is a policy that “follows the form” of the underlying primary policy. It provides higher limits but generally covers the exact same types of risks as the primary policy. For example, a trucking company might have a $1 million primary CGL policy and a $5 million excess policy that mirrors the CGL’s terms.
Umbrella Insurance: This is a broader type of secondary insurance. It not only provides higher liability limits but can also sometimes cover claims that are not covered by the underlying primary policies. For individuals, a personal umbrella policy typically sits on top of both their auto and homeowners insurance, providing an extra $1 million or more in coverage for a catastrophic event.

Think of it like this: The primary policy is a bucket that can hold a certain amount of water (damages). Once that bucket is full, the umbrella policy acts as a much larger basin underneath to catch all the overflow.

Why High-Value Claims Often Require Excess Coverage

The connection to wrongful death claims is clear. Let’s consider a scenario: A 40-year-old software engineer in Phoenix, earning $150,000 per year, is killed by a distracted driver. He is survived by a spouse and two young children. An economist calculates the family’s economic loss (lost future earnings, benefits, etc.) to be $2.5 million. The non-economic loss (loss of companionship, guidance) is valued at another $2 million, for a total claim value of $4.5 million.

If the at-fault driver only has a standard auto policy with a $250,000 limit, that amount is nowhere near enough to compensate the family. The primary insurer will pay its $250,000, but there is still a $4.25 million shortfall. If the at-fault driver has a $5 million personal umbrella policy, that is the source from which the family can recover the remaining damages. Without it, the family would be left trying to collect from the driver’s personal assets, which is often an impossible task.

The Step-by-Step Process for Accessing Excess Insurance in a Wrongful Death Case

Securing compensation from an excess insurance policy is a methodical process. It requires a strategic approach that demonstrates to both the primary and excess insurers that the claim is valid and its value exceeds the primary policy limits.

Step 1: Establishing Liability and Damages

Before any insurance company will pay, you must prove two things: that their insured was legally responsible (liable) for the death, and the full monetary value of the damages.

Proving Liability: This involves a thorough investigation into the incident. For a car crash, it may include obtaining the police report, interviewing witnesses, hiring accident reconstruction experts, and securing vehicle data recorder information. For a premises liability case, it might involve inspecting the property and finding evidence of a known hazard.
Calculating Damages: This is a detailed and evidence-based process. It requires gathering financial documents (pay stubs, tax returns), and often involves hiring expert witnesses. An economist can project lost future earnings, and a vocational expert can testify about the deceased’s career trajectory. This detailed calculation is compiled into a “demand package” to be sent to the insurance companies.

Step 2: Exhausting the Primary Policy Limits

An excess insurer has no obligation to pay one dollar until the primary insurer has paid its full policy limit. This is a non-negotiable condition in virtually every excess policy. The process of exhausting the primary limits is known as “tendering the policy limits.”

Once the demand package is sent, the primary insurer will evaluate the claim. If the liability is clear and the punitive damages obviously exceed their policy limit, they will typically agree to pay their full limit in exchange for a release of their insured. However, this release must be carefully structured. It should release the at-fault individual only up to the amount of the primary policy, preserving the right to continue pursuing the claim against the excess insurance policy. This is a delicate legal maneuver that requires precise language.

Step 3: Notifying and Filing a Claim with the Excess Insurer

As soon as it becomes clear that the value of the claim will exceed the primary limits, the excess insurance carrier should be put on notice. This formal notification informs them of the potential claim and gives them an opportunity to monitor the situation.

Once the primary insurer has officially tendered its limits, a formal demand is made to the excess carrier. This demand will include all the evidence and expert reports used to settle with the primary insurer, along with a demand for payment of the remaining damages up to the limit of the excess policy. The excess carrier will then begin its own evaluation.

Step 4: Negotiation and Potential Litigation

The excess insurer is not guaranteed to simply write a check. They are sophisticated entities with their own legal teams and adjusters. They will conduct their own investigation and may challenge the valuation of the claim. They might argue that the non-economic damages are too high or that the economist’s projections are speculative.

This leads to a period of negotiation. An experienced attorney will advocate for the family, using the evidence to counter the insurer’s arguments and justify the full value of the claim. If the excess insurer refuses to make a fair settlement offer, the next step may be to file a lawsuit. If an insurer’s refusal is unreasonable and without proper justification, it could even lead to a separate “bad faith” claim against the insurance company itself.

Identifying All Available Insurance Coverage

One of the most significant challenges in a wrongful death case is simply finding out how much insurance coverage is available. At-fault parties and their insurers are often not forthcoming with this information, as it is not in their financial interest to reveal deep pockets.

The Challenge of Finding Hidden Policies

An individual might not even remember they have an umbrella policy that was sold to them as part of a package with their home and auto insurance. A business might have multiple layers of excess coverage through different carriers. Without a proactive effort to uncover these policies, a family could unknowingly settle a multi-million dollar claim for a fraction of its worth.

Methods for Uncovering Insurance Information

A skilled arizona wrongful death attorney has several tools to compel the disclosure of all applicable insurance policies.

Formal Demand Letter: The initial letter of representation sent to the at-fault party and their known insurer will include a formal request for a sworn affidavit disclosing all insurance policies.
Discovery in Litigation: If a lawsuit is filed, the plaintiff’s attorney can use formal legal tools to force disclosure. These include:
- Interrogatories: Written questions sent to the defendant that must be answered under oath, including specific questions about all insurance coverage.
- Requests for Production of Documents: A formal request for the defendant to provide copies of all insurance policies, including declarations pages that show the policy limits.
- Depositions: An oral examination where the defendant is questioned under oath by the attorney about their insurance coverage.

Commercial vs. Personal Umbrella Policies

The type of defendant often dictates the potential for significant excess coverage.

Personal Umbrella Policies: These are held by individuals and typically range from $1 million to $5 million. They are more common among high-net-worth individuals or professionals like doctors and lawyers.
Commercial Excess Policies: These are held by businesses and can be massive. A commercial trucking company, for example, is required by federal law to have a minimum of $750,000 in liability coverage, but most carry at least $1 million in primary coverage and often have excess policies providing an additional $5 million, $10 million, or even more.

Uninsured/Underinsured Motorist (UIM) Coverage

In some situations, the at-fault party may have no excess policy and insufficient primary coverage. In these cases, the family may be able to turn to their own insurance policy. Uninsured/Underinsured Motorist (UIM) coverage is an optional coverage in Arizona that protects you if you are injured by someone with no insurance (uninsured) or not enough insurance (underinsured). If the deceased had UIM coverage on their own auto policy, their family can make a claim against that policy to help cover the shortfall.

Common Hurdles and Insurance Company Tactics

Pursuing a claim against an excess insurer is not always straightforward. These companies handle high-stakes claims every day and employ tactics designed to minimize their payouts. Being prepared for these strategies is essential.

The “Drop-Down” Coverage Dispute

In some complex cases, an issue can arise where the primary insurance policy is voided or an exclusion applies. The claimant may then argue that the excess policy should “drop down” to become the primary coverage. The excess insurer will almost always fight this, arguing their policy is only triggered after a valid primary policy has been paid and exhausted. These disputes often hinge on the specific wording of the excess policy.

Contesting the Value of the Claim

This is the most common tactic. The excess insurer will agree that their insured is liable but will aggressively dispute the amount of damages. They will hire their own experts to create competing reports that project lower future earnings or place a lower value on non-economic losses. They may scrutinize the deceased’s health records to argue their life expectancy was shorter or question their career stability to reduce the lost income calculation.

Delay and Deny Strategies

Some insurance companies may engage in delay tactics, hoping that the financial pressure on the surviving family will force them to accept a low wrongful death settlement offer. They might make endless requests for more documentation, change adjusters multiple times, or simply fail to respond to communications in a timely manner. If these delays are found to be unreasonable and intentional, they can form the basis of an insurance bad faith lawsuit.

The Importance of a Detailed Demand Package

The best way to counter these tactics is with preparation. A comprehensive demand package that leaves no stone unturned can preempt many of the insurer’s arguments. This package should not just state a number; it should tell the story of the deceased and the family’s loss. It should include:

A detailed legal analysis of liability.
All supporting evidence (police reports, witness statements, photos).
In-depth reports from economic, vocational, and other relevant experts.
Personalized victim impact statements from family members.
A clear calculation showing how the damages far exceed the primary policy limits.

A strong demand package shows the excess insurer that the claimant is prepared to go to trial and has the evidence to win a large verdict. This significantly increases the likelihood of a fair settlement.

The Financial Implications and Distribution of Wrongful Death Recoveries

Securing a settlement or verdict is a major milestone, but it is not the final step. The funds must be properly managed and distributed according to Arizona law and any existing financial obligations.

How Settlement Funds Are Distributed Among Beneficiaries

When a wrongful death case is resolved, the funds are allocated among the statutory beneficiaries. If the case goes to trial, A.R.S. § 12-613 directs the jury to determine the specific amount each beneficiary should receive based on their individual damages. If the case settles out of court, the beneficiaries must come to an agreement on how to split the funds. This can sometimes be a difficult conversation, especially when a spouse and children from a previous marriage are all involved. A lawyer can help facilitate this process to ensure a fair and amicable distribution.

Liens and Subrogation Interests

The total recovery amount is often subject to liens, which are legal claims for repayment. Common liens in wrongful death cases include:

Medical Liens: From hospitals and doctors who provided final medical care to the deceased.
Health Insurance Subrogation: Health insurers, including Medicare and the Arizona Health Care Cost Containment System (AHCCCS), have a legal right to be reimbursed for the medical bills they paid related to the final injury.
Workers’ Compensation Liens: If the death occurred on the job, the workers’ compensation carrier that paid benefits will have a lien on the recovery from the third-party lawsuit.

An attorney’s job includes negotiating these liens to reduce the amount that must be paid back, thereby maximizing the net recovery for the family.

Attorney’s Fees and Costs

Most wrongful death attorneys work on a contingency fee basis. This means they are only paid if they successfully recover money for the family. The fee is a pre-agreed percentage of the total recovery. In addition, the costs of litigation (expert witness fees, court filing fees, deposition costs) are typically advanced by the law firm and then reimbursed from the settlement. This structure allows families to access high-quality legal representation without paying any upfront costs.

Structured Settlements vs. Lump Sum Payments

For large recoveries, especially those involving minor children, the funds can be paid out in a lump sum or through a structured settlement. A structured settlement is a financial arrangement where the settlement funds are used to purchase an annuity that provides a stream of guaranteed, tax-free payments over time. This can provide long-term financial security and ensure that funds intended for a child’s future education and care are protected until they reach adulthood.

The loss of a loved one due to another’s negligence creates a profound emotional and financial crisis. While no amount of money can replace a family member, a wrongful death claim provides a mechanism for justice and financial stability. In Arizona, where damages can be extensive, the at-fault party’s primary insurance is often just the starting point. The existence of an excess or umbrella policy can be the difference between a partial recovery and one that provides true, long-term security for the surviving family.

Successfully navigating these complex claims requires a deep understanding of both Arizona’s wrongful death statutes and the intricate world of insurance coverage. The process is a methodical one: proving fault, meticulously calculating the full scope of damages, leveraging that evidence to exhaust the primary policy, and then systematically pursuing the claim against the excess carrier. Each step is fraught with potential challenges, from uncovering hidden policies to countering the tactics of sophisticated insurance adjusters who are trained to minimize payouts. The evidence must be compelling, the legal arguments precise, and the negotiation strategy firm.

For any family facing this difficult situation, the most critical action is to seek guidance from a legal professional who concentrates on wrongful death cases. The two-year statute of limitations in Arizona leaves no time for delay. An experienced attorney can immediately begin the investigation, take the necessary steps to preserve evidence, and identify all potential sources of recovery. By understanding your rights and the pathways to compensation, you can ensure your family is protected and that you secure the full measure of justice available under the law. If your family is coping with such a loss, do not hesitate to reach out for a consultation to discuss the specifics of your case. Contact us for free consultation today.

Excess Insurance and Wrongful Death Recoveries in Arizona