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S.B. 122

             1     

MOTOR VEHICLE INSURANCE AMENDMENTS

             2     
2001 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: Michael G. Waddoups

             5      This act modifies the Insurance Code by limiting underinsured motorist insurance coverage
             6      subrogation and clarifying the conditions for making an uninsured motorist claim.
             7      This act affects sections of Utah Code Annotated 1953 as follows:
             8      AMENDS:
             9          31A-22-305, as last amended by Chapter 188, Laws of Utah 2000
             10          31A-22-307, as last amended by Chapter 71, Laws of Utah 1994
             11          31A-22-309, as last amended by Chapter 222, Laws of Utah 2000
             12      Be it enacted by the Legislature of the state of Utah:
             13          Section 1. Section 31A-22-305 is amended to read:
             14           31A-22-305. Uninsured and underinsured motorist coverage.
             15          (1) As used in this section, "covered persons" includes:
             16          (a) the named insured;
             17          (b) persons related to the named insured by blood, marriage, adoption, or guardianship,
             18      who are residents of the named insured's household, including those who usually make their home
             19      in the same household but temporarily live elsewhere;
             20          (c) any person occupying or using a motor vehicle referred to in the policy or owned by
             21      a self-insurer; and
             22          (d) any person who is entitled to recover damages against the owner or operator of the
             23      uninsured or underinsured motor vehicle because of bodily injury to or death of persons under
             24      Subsection (1)(a), (b), or (c).
             25          (2) As used in this section, "uninsured motor vehicle" includes:
             26          (a) (i) a vehicle, the operation, maintenance, or use of which is not covered under a
             27      liability policy at the time of an injury-causing occurrence; or


             28          (ii) (A) a vehicle covered with lower liability limits than required by Section 31A-22-304 ;
             29          (B) the vehicle described in Subsection (2)(a)(ii)(A) is uninsured to the extent of the
             30      deficiency;
             31          (b) an unidentified vehicle that left the scene of an accident proximately caused by the
             32      vehicle operator;
             33          (c) a vehicle covered by a liability policy, but coverage for an accident is disputed by the
             34      liability insurer for more than 60 days or, beginning with the effective date of this act, continues
             35      to be disputed for more than 60 days; or
             36          (d) (i) an insured vehicle if, before or after the accident, the liability insurer of the vehicle
             37      is declared insolvent by a court of competent jurisdiction;
             38          (ii) the vehicle described in Subsection (2)(d)(i) is uninsured only to the extent that the
             39      claim against the insolvent insurer is not paid by a guaranty association or fund.
             40          (3) (a) Uninsured motorist coverage under Subsection 31A-22-302 (1)(b) provides
             41      coverage for covered persons who are legally entitled to recover damages from owners or operators
             42      of uninsured motor vehicles because of bodily injury, sickness, disease, or death.
             43          (b) For new policies written on or after January 1, 2001, the limits of uninsured motorist
             44      coverage shall be equal to the lesser of the limits of the insured's motor vehicle liability coverage
             45      or the maximum uninsured motorist coverage limits available by the insurer under the insured's
             46      motor vehicle policy, unless the insured purchases coverage in a lesser amount by signing an
             47      acknowledgment form provided by the insurer that:
             48          (i) waives the higher coverage;
             49          (ii) reasonably explains the purpose of uninsured motorist coverage; and
             50          (iii) discloses the additional premiums required to purchase uninsured motorist coverage
             51      with limits equal to the lesser of the limits of the insured's motor vehicle liability coverage or the
             52      maximum uninsured motorist coverage limits available by the insurer under the insured's motor
             53      vehicle policy.
             54          (c) Uninsured motorist coverage may not be sold with limits that are less than the
             55      minimum bodily injury limits for motor vehicle liability policies under Section 31A-22-304 .
             56          (d) The acknowledgment under Subsection (3)(b) continues for that issuer of the uninsured
             57      motorist coverage until the insured, in writing, requests different uninsured motorist coverage from
             58      the insurer.


             59          (e) (i) In conjunction with the first two renewal notices sent after January 1, 2001, for
             60      policies existing on that date, the insurer shall disclose in the same medium as the premium
             61      renewal notice, an explanation of the purpose of uninsured motorist coverage and the costs
             62      associated with increasing the coverage in amounts up to and including the maximum amount
             63      available by the insurer under the insured's motor vehicle policy.
             64          (ii) The disclosure shall be sent to all insureds that carry uninsured motorist coverage
             65      limits in an amount less than the insured's motor vehicle liability policy limits or the maximum
             66      uninsured motorist coverage limits available by the insurer under the insured's motor vehicle
             67      policy.
             68          (4) (a) (i) Except as provided in Subsection (4)(b), the named insured may reject uninsured
             69      motorist coverage by an express writing to the insurer that provides liability coverage under
             70      Subsection 31A-22-302 (1)(a).
             71          (ii) This rejection shall be on a form provided by the insurer that includes a reasonable
             72      explanation of the purpose of uninsured motorist coverage.
             73          (iii) This rejection continues for that issuer of the liability coverage until the insured in
             74      writing requests uninsured motorist coverage from that liability insurer.
             75          (b) (i) All persons, including governmental entities, that are engaged in the business of,
             76      or that accept payment for, transporting natural persons by motor vehicle, and all school districts
             77      that provide transportation services for their students, shall provide coverage for all vehicles used
             78      for that purpose, by purchase of a policy of insurance or by self-insurance, uninsured motorist
             79      coverage of at least $25,000 per person and $500,000 per accident.
             80          (ii) This coverage is secondary to any other insurance covering an injured covered person.
             81          (c) Uninsured motorist coverage:
             82          (i) is secondary to the benefits provided by Title 34A, Chapter 2, Workers' Compensation
             83      Act;
             84          (ii) may not be subrogated by the Workers' Compensation insurance carrier;
             85          (iii) may not be reduced by any benefits provided by Workers' Compensation insurance;
             86      and
             87          (iv) may be reduced by health insurance subrogation only after the covered person has
             88      been made whole.
             89          (d) As used in this Subsection (4):


             90          (i) "Governmental entity" has the same meaning as under Section 63-30-2 .
             91          (ii) "Motor vehicle" has the same meaning as under Section 41-1a-102 .
             92          (5) When a covered person alleges that an uninsured motor vehicle under Subsection (2)(b)
             93      proximately caused an accident without touching the covered person or the vehicle occupied by
             94      the covered person, the covered person must show the existence of the uninsured motor vehicle
             95      by clear and convincing evidence consisting of more than the covered person's testimony.
             96          (6) (a) The limit of liability for uninsured motorist coverage for two or more motor
             97      vehicles may not be added together, combined, or stacked to determine the limit of insurance
             98      coverage available to an injured person for any one accident.
             99          (b) (i) Subsection (6)(a) applies to all persons except a covered person as defined under
             100      Subsection (7)(b)(ii).
             101          (ii) A covered person as defined under Subsection (7)(b)(ii) is entitled to the highest limits
             102      of uninsured motorist coverage afforded for any one vehicle that the covered person is the named
             103      insured or an insured family member.
             104          (iii) This coverage shall be in addition to the coverage on the vehicle the covered person
             105      is occupying.
             106          (iv) Neither the primary nor the secondary coverage may be set off against the other.
             107          (c) Coverage on a motor vehicle occupied at the time of an accident shall be primary
             108      coverage, and the coverage elected by a person described under Subsections (1)(a) and (b) shall
             109      be secondary coverage.
             110          (7) (a) Uninsured motorist coverage under this section applies to bodily injury, sickness,
             111      disease, or death of covered persons while occupying or using a motor vehicle only if the motor
             112      vehicle is described in the policy under which a claim is made, or if the motor vehicle is a newly
             113      acquired or replacement vehicle covered under the terms of the policy. Except as provided in
             114      Subsection (6) or (7), a covered person injured in a vehicle described in a policy that includes
             115      uninsured motorist benefits may not elect to collect uninsured motorist coverage benefits from any
             116      other motor vehicle insurance policy under which he is a covered person.
             117          (b) Each of the following persons may also recover uninsured motorist benefits under any
             118      other policy in which they are described as a "covered person" as defined in Subsection (1):
             119          (i) a covered person injured as a pedestrian by an uninsured motor vehicle; and
             120          (ii) a covered person injured while occupying or using a motor vehicle that is not owned


             121      by, furnished, or available for the regular use of the covered person, the covered person's resident
             122      spouse, or the covered person's resident relative.
             123          (c) A covered person in Subsection (7)(b) is not barred against making subsequent
             124      elections if recovery is unavailable under previous elections.
             125          (8) (a) As used in this section, "underinsured motor vehicle" includes a vehicle, the
             126      operation, maintenance, or use of which is covered under a liability policy at the time of an
             127      injury-causing occurrence, but which has insufficient liability coverage to compensate fully the
             128      injured party for all special and general damages.
             129          (b) The term "underinsured motor vehicle" does not include:
             130          (i) a motor vehicle that is covered under the liability coverage of the same policy that also
             131      contains the underinsured motorist coverage; or
             132          (ii) an uninsured motor vehicle as defined in Subsection (2).
             133          (9) (a) Underinsured motorist coverage under Subsection 31A-22-302 (1)(c) provides
             134      coverage for covered persons who are legally entitled to recover damages from owners or operators
             135      of underinsured motor vehicles because of bodily injury, sickness, disease, or death.
             136          (b) For new policies written on or after January 1, 2001, the limits of underinsured
             137      motorist coverage shall be equal to the lesser of the limits of the insured's motor vehicle liability
             138      coverage or the maximum underinsured motorist coverage limits available by the insurer under the
             139      insured's motor vehicle policy, unless the insured purchases coverage in a lesser amount by signing
             140      an acknowledgment form provided by the insurer that:
             141          (i) waives the higher coverage;
             142          (ii) reasonably explains the purpose of underinsured motorist coverage; and
             143          (iii) discloses the additional premiums required to purchase underinsured motorist
             144      coverage with limits equal to the lesser of the limits of the insured's motor vehicle liability
             145      coverage or the maximum underinsured motorist coverage limits available by the insurer under the
             146      insured's motor vehicle policy.
             147          (c) Underinsured motorist coverage may not be sold with limits that are less than $10,000
             148      for one person in any one accident and at least $20,000 for two or more persons in any one
             149      accident.
             150          (d) The acknowledgment under Subsection (9)(b) continues for that issuer of the
             151      underinsured motorist coverage until the insured, in writing, requests different underinsured


             152      motorist coverage from the insurer.
             153          (e) The named insured's underinsured motorist coverage, as described in Subsection (9)(a),
             154      is secondary to the liability coverage of an owner or operator of an underinsured motor vehicle,
             155      as described in Subsection (8). Underinsured motorist coverage may not be set off against the
             156      liability coverage of the owner or operator of an underinsured motor vehicle, but shall be added
             157      to, combined with, or stacked upon the liability coverage of the owner or operator of the
             158      underinsured motor vehicle to determine the limit of coverage available to the injured person.
             159          (f) (i) A named insured may reject underinsured motorist coverage by an express writing
             160      to the insurer that provides liability coverage under Subsection 31A-22-302 (1)(a).
             161          (ii) This written rejection shall be on a form provided by the insurer that includes a
             162      reasonable explanation of the purpose of underinsured motorist coverage and when it would be
             163      applicable.
             164          (iii) This rejection continues for that issuer of the liability coverage until the insured in
             165      writing requests underinsured motorist coverage from that liability insurer.
             166          (g) (i) In conjunction with the first two renewal notices sent after January 1, 2001, for
             167      policies existing on that date, the insurer shall disclose in the same medium as the premium
             168      renewal notice, an explanation of the purpose of underinsured motorist coverage and the costs
             169      associated with increasing the coverage in amounts up to and including the maximum amount
             170      available by the insurer under the insured's motor vehicle policy.
             171          (ii) The disclosure shall be sent to all insureds that carry underinsured motorist coverage
             172      limits in an amount less than the insured's motor vehicle liability policy limits or the maximum
             173      underinsured motorist coverage limits available by the insurer under the insured's motor vehicle
             174      policy.
             175          (10) (a) Underinsured motorist coverage under this section applies to bodily injury,
             176      sickness, disease, or death of an insured while occupying or using a motor vehicle owned by,
             177      furnished, or available for the regular use of the insured, a resident spouse, or resident relative of
             178      the insured, only if the motor vehicle is described in the policy under which a claim is made, or
             179      if the motor vehicle is a newly acquired or replacement vehicle covered under the terms of the
             180      policy. Except as provided in this Subsection (10), a covered person injured in a vehicle described
             181      in a policy that includes underinsured motorist benefits may not elect to collect underinsured
             182      motorist coverage benefits from any other motor vehicle insurance policy under which he is a


             183      named insured.
             184          (b) (i) The limit of liability for underinsured motorist coverage for two or more motor
             185      vehicles may not be added together, combined, or stacked to determine the limit of insurance
             186      coverage available to an injured person for any one accident.
             187          (ii) Subsection (10)(b)(i) applies to all persons except a covered person as defined under
             188      Subsection (10)[(c)] (d)(i)(B).
             189          (iii) Coverage on a motor vehicle occupied at the time of an accident shall be primary
             190      coverage, and the coverage elected by a person described under Subsections (1)(a) and (b) shall
             191      be secondary coverage.
             192          (c) Underinsured motorist coverage:
             193          (i) is secondary to the benefits provided by Title 34A, Chapter 2, Workers' Compensation
             194      Act;
             195          (ii) may not be subrograted by the Workers' Compensation insurance carrier;
             196          (iii) may not be reduced by any benefits provided by Workers' Compensation insurance;
             197      and
             198          (iv) may be reduced by health insurance subrogation only after the covered person has
             199      been made whole.
             200          (d) (i) Each of the following persons may also recover underinsured motorist coverage
             201      benefits under any other policy in which they are described as a "covered person" as defined under
             202      Subsection (1):
             203          (A) a covered person injured as a pedestrian by an underinsured motor vehicle; or
             204          (B) a covered person injured while occupying or using a motor vehicle that is not owned
             205      by, furnished, or available for the regular use of the covered person, the covered person's resident
             206      spouse, or the covered person's resident relative.
             207          (ii) This coverage shall only be available as a secondary source of coverage.
             208          (iii) A covered person as defined under Subsection (10)[(b)](d)(i)(B) is entitled to the
             209      highest limits of underinsured motorist coverage afforded for any one vehicle that the covered
             210      person is the named insured or an insured family member.
             211          (iv) This coverage shall be in addition to the coverage on the vehicle the covered person
             212      is occupying.
             213          (v) Neither the primary nor the secondary coverage may be set off against the other.


             214          (e) A covered injured person is not barred against making subsequent elections if recovery
             215      is unavailable under previous elections.
             216          (11) A claim may not be brought by a covered person against a motor vehicle underinsured
             217      motorist policy more than three years after the date of the last liability policy payment.
             218      S [     (12) Underinsured motorist coverage may not include rights of subrogation by the
             219      underinsured motorist insurer against any person liable for the injuries caused in the accident .] (12)(a)
             219a      WITHIN h [TWO] FIVE h BUSINESS DAYS AFTER NOTIFICATION IN A MANNER SPECIFIED BY THE
             219b      DEPARTMEN T THAT h [ THE LIABILITY INSURER HAS TENDERED ITS ] ALL LIABILITY INSURERS
             219b1      HAVE TENDERED THEIR h LIABILITY POLICY LIMITS,
             219c      THE UNDERINSURED CARRIER SHALL EITHER:
             219d          (i) WAIVE ANY SUBROGATION CLAIM THE UNDERINSURED CARRIER MAY HAVE AGAINST
             219e      THE PERSON LIABLE FOR THE INJURIES CAUSED IN THE ACCIDENT; OR
             219f          (ii) PAY THE INSURED AN AMOUNT EQUAL TO THE POLICY LIMITS TENDERED BY THE
             219g      fLIABILITY CARRIER.
             219h          (b) IF NEITHER OPTION IS EXERCISED UNDER SUBSECTION (12)(a), THE SUBROGATION
             219i      CLAIM IS DEEMED TO BE WAIVED BY THE UNDERINSURED CARRIER. s
             220          Section 2. Section 31A-22-307 is amended to read:
             221           31A-22-307. Personal injury protection coverages and benefits.
             222          (1) Personal injury protection coverages and benefits include:
             223          (a) the reasonable value of all expenses for necessary medical, surgical, X-ray, dental,
             224      rehabilitation, including prosthetic devices, ambulance, hospital, and nursing services, not to
             225      exceed a total of $3,000 per person;
             226          (b) (i) the lesser of $250 per week or 85% of any loss of gross income and loss of earning
             227      capacity per person from inability to work, for a maximum of 52 consecutive weeks after the loss,
             228      except that this benefit need not be paid for the first three days of disability, unless the disability
             229      continues for longer than two consecutive weeks after the date of injury; and
             230          (ii) a special damage allowance not exceeding $20 per day for a maximum of 365 days,
             231      for services actually rendered or expenses reasonably incurred for services that, but for the injury,
             232      the injured person would have performed for his household, except that this benefit need not be
             233      paid for the first three days after the date of injury unless the person's inability to perform these
             234      services continues for more than two consecutive weeks;
             235          (c) funeral, burial, or cremation benefits not to exceed a total of $1,500 per person; and
             236          (d) compensation on account of death of a person, payable to his heirs, in the total of
             237      $3,000.
             238          (2) (a) To determine the reasonable value of the medical expenses provided for in
             239      Subsection (1) and under Subsection 31A-22-309 (1)[(e)](a)(v), the commissioner shall conduct


             240      a relative value study of services and accommodations for the diagnosis, care, recovery, or
             241      rehabilitation of an injured person in the most populous county in the state to assign a unit value
             242      and determine the 75th percentile charge for each type of service and accommodation. The study
             243      shall be updated every other year. In conducting the study, the department may consult or contract
             244      with appropriate public and private medical and health agencies or other technical experts. The


             245      costs and expenses incurred in conducting, maintaining, and administering the relative value study
             246      shall be funded by the tax created under Section 59-9-105 . Upon completion of the study, the
             247      department shall prepare and publish a relative value study which sets forth the unit value and the
             248      75th percentile charge assigned to each type of service and accommodation.
             249          (b) The reasonable value of any service or accommodation is determined by applying the
             250      unit value and the 75th percentile charge assigned to the service or accommodation under the
             251      relative value study. If a service or accommodation is not assigned a unit value or the 75th
             252      percentile charge under the relative value study, the value of the service or accommodation shall
             253      equal the reasonable cost of the same or similar service or accommodation in the most populous
             254      county of this state.
             255          (c) This Subsection (2) does not preclude the department from adopting a schedule already
             256      established or a schedule prepared by persons outside the department, if it meets the requirements
             257      of this subsection.
             258          (d) Every insurer shall report to the Commissioner of Insurance any patterns of
             259      overcharging, excessive treatment, or other improper actions by a health provider within 30 days
             260      after such insurer has knowledge of such pattern.
             261          (e) In disputed cases, a court on its own motion or on the motion of either party may
             262      designate an impartial medical panel of not more than three licensed physicians to examine the
             263      claimant and testify on the issue of the reasonable value of the claimant's medical services or
             264      expenses.
             265          (3) Medical expenses as provided for in Subsection (1)(a) and in Subsection 31A-22-309
             266      (1)[(e)](a)(v) include expenses for any nonmedical remedial care and treatment rendered in
             267      accordance with a recognized religious method of healing.
             268          (4) The insured may waive for the named insured and the named insured's spouse only the
             269      loss of gross income benefits of Subsection (1)(b)(i) if the insured states in writing that:
             270          (a) within 31 days of applying for coverage, neither the insured nor the insured's spouse
             271      received any earned income from regular employment; and
             272          (b) for at least 180 days from the date of the writing and during the period of insurance,
             273      neither the insured nor the insured's spouse will receive earned income from regular employment.
             274          (5) This section does not prohibit the issuance of policies of insurance providing coverages
             275      greater than the minimum coverage required under this chapter nor does it require the segregation
             276      of those minimum coverages from other coverages in the same policy.
             277          (6) Deductibles are not permitted with respect to the insurance coverages required under
             278      this section.
             279          Section 3. Section 31A-22-309 is amended to read:
             280           31A-22-309. Limitations, exclusions, and conditions to personal injury protection.
             281          (1) (a) A person who has or is required to have direct benefit coverage under a policy
             282      which includes personal injury protection may not maintain a cause of action for general damages
             283      arising out of personal injuries alleged to have been caused by an automobile accident, except
             284      where the person has sustained one or more of the following:
             285          [(a)] (i) death;
             286          [(b)] (ii) dismemberment;
             287          [(c)] (iii) permanent disability or permanent impairment based upon objective findings;
             288          [(d)] (iv) permanent disfigurement; or
             289          [(e)] (v) medical expenses to a person in excess of $3,000.
             290          (b) Subsection (1)(a) does not apply to a person making an uninsured motorist claim.
             291          (2) (a) Any insurer issuing personal injury protection coverage under this part may only
             292      exclude from this coverage benefits:
             293          (i) for any injury sustained by the insured while occupying another motor vehicle owned
             294      by or furnished for the regular use of the insured or a resident family member of the insured and
             295      not insured under the policy;
             296          (ii) for any injury sustained by any person while operating the insured motor vehicle
             297      without the express or implied consent of the insured or while not in lawful possession of the
             298      insured motor vehicle;
             299          (iii) to any injured person, if the person's conduct contributed to his injury:
             300          (A) by intentionally causing injury to himself; or
             301          (B) while committing a felony;
             302          (iv) for any injury sustained by any person arising out of the use of any motor vehicle
             303      while located for use as a residence or premises;
             304          (v) for any injury due to war, whether or not declared, civil war, insurrection, rebellion or
             305      revolution, or to any act or condition incident to any of the foregoing; or
             306          (vi) for any injury resulting from the radioactive, toxic, explosive, or other hazardous
             307      properties of nuclear materials.
             308          (b) The provisions of this subsection do not limit the exclusions which may be contained
             309      in other types of coverage.
             310          (3) The benefits payable to any injured person under Section 31A-22-307 are reduced by:
             311          (a) any benefits which that person receives or is entitled to receive as a result of an
             312      accident covered in this code under any workers' compensation or similar statutory plan; and
             313          (b) any amounts which that person receives or is entitled to receive from the United States
             314      or any of its agencies because that person is on active duty in the military service.
             315          (4) When a person injured is also an insured party under any other policy, including those
             316      policies complying with this part, primary coverage is given by the policy insuring the motor
             317      vehicle in use during the accident.
             318          (5) (a) Payment of the benefits provided for in Section 31A-22-307 shall be made on a
             319      monthly basis as expenses are incurred.
             320          (b) Benefits for any period are overdue if they are not paid within 30 days after the insurer
             321      receives reasonable proof of the fact and amount of expenses incurred during the period. If
             322      reasonable proof is not supplied as to the entire claim, the amount supported by reasonable proof
             323      is overdue if not paid within 30 days after that proof is received by the insurer. Any part or all of
             324      the remainder of the claim that is later supported by reasonable proof is also overdue if not paid
             325      within 30 days after the proof is received by the insurer.
             326          (c) If the insurer fails to pay the expenses when due, these expenses shall bear interest at
             327      the rate of 1-1/2% per month after the due date.
             328          (d) The person entitled to the benefits may bring an action in contract to recover the
             329      expenses plus the applicable interest. If the insurer is required by the action to pay any overdue
             330      benefits and interest, the insurer is also required to pay a reasonable attorney's fee to the claimant.
             331          (6) Every policy providing personal injury protection coverage is subject to the following:
             332          (a) that where the insured under the policy is or would be held legally liable for the
             333      personal injuries sustained by any person to whom benefits required under personal injury
             334      protection have been paid by another insurer, including the Workers' Compensation Fund created
             335      under Chapter 33, the insurer of the person who would be held legally liable shall reimburse the
             336      other insurer for the payment, but not in excess of the amount of damages recoverable; and
             337          (b) that the issue of liability for that reimbursement and its amount shall be decided by


             338      mandatory, binding arbitration between the insurers.




Legislative Review Note
    as of 1-16-01 3:56 PM


A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel


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