S.B. 60

1

MOTOR VEHICLE INSURANCE - LIABILITY
2 ON RENTAL OR LOANED VEHICLE
3 1998 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: George Mantes
6 AN ACT RELATING TO INSURANCE; AMENDING CERTAIN MOTOR VEHICLE
7 INSURANCE PROVISIONS; AND AMENDING CERTAIN DEFINITIONS.
8 This act affects sections of Utah Code Annotated 1953 as follows:
9 AMENDS:
10 31A-22-301, as last amended by Chapter 91, Laws of Utah 1987
11 31A-22-303, as last amended by Chapter 375, Laws of Utah 1997
12 31A-22-314, as enacted by Chapter 316, Laws of Utah 1994
13 Be it enacted by the Legislature of the state of Utah:
14 Section 1. Section 31A-22-301 is amended to read:
15 31A-22-301. Definitions.
16 As used in this part:
17 (1) "Motor vehicle" has the same meaning as under Subsection 41-12a-103(4).
18 (2) "Motor vehicle business" means a motor vehicle sales agency, repair shop, service
19 station, storage garage, motor vehicle rental company, or public parking place.
20 (3) "Motor vehicle liability policy" means a policy which satisfies the requirements of
21 Sections 31A-22-303 and 31A-22-304.
22 (4) "Occupying" means being in or on a motor vehicle as a passenger or operator, or being
23 engaged in the immediate acts of entering, boarding, or alighting from a motor vehicle.
24 (5) "Operator" has the same meaning as under Subsection 41-12a-103(7).
25 (6) "Owner" has the same meaning as under Subsection 41-12a-103(8).
26 (7) "Pedestrian" means any natural person not occupying a motor vehicle.
27 Section 2. Section 31A-22-303 is amended to read:

1 31A-22-303. Motor vehicle liability coverage.
2 (1) In addition to complying with the requirements of Chapter 21 and Part II of Chapter
3 22, a policy of motor vehicle liability coverage under Subsection 31A-22-302(1)(a) shall:
4 (a) name the motor vehicle owner or operator in whose name the policy was purchased,
5 state that named insured's address, the coverage afforded, the premium charged, the policy period,
6 and the limits of liability;
7 (b) (i) if it is an owner's policy, designate by appropriate reference all the motor vehicles
8 on which coverage is granted, insure the person named in the policy, insure any other person using
9 any named motor vehicle with the express or implied permission of the named insured, and, except
10 as provided in Subsection (7), insure any person included in Subsection (1)(c) against loss from
11 the liability imposed by law for damages arising out of the ownership, maintenance, or use of these
12 motor vehicles within the United States and Canada, subject to limits exclusive of interest and
13 costs, for each motor vehicle, in amounts not less than the minimum limits specified under Section
14 31A-22-304; or
15 (ii) if it is an operator's policy, insure the person named as insured against loss from the
16 liability imposed upon him by law for damages arising out of the insured's use of any motor
17 vehicle not owned by him, within the same territorial limits and with the same limits of liability
18 as in an owner's policy under Subsection (1)(b)(i); and
19 (c) except as provided in Subsection (7), insure persons related to the named insured by
20 blood, marriage, adoption, or guardianship who are residents of the named insured's household,
21 including those who usually make their home in the same household but temporarily live
22 elsewhere, to the same extent as the named insured.
23 (2) (a) A policy containing motor vehicle liability coverage under Subsection
24 31A-22-302(1)(a) may:
25 [(a)] (i) provide for the prorating of the insurance under that policy with other valid and
26 collectible insurance;
27 [(b)] (ii) grant any lawful coverage in addition to the required motor vehicle liability
28 coverage;
29 [(c)] (iii) if the policy is issued to a person other than a motor vehicle business, limit the
30 coverage afforded to a motor vehicle business or its officers, agents, or employees to the minimum
31 limits under Section 31A-22-304, and to those instances when there is no other valid and

- 2 -

1 collectible insurance with at least those limits, whether the other insurance is primary, excess, or
2 contingent; and
3 [(d)] (iv) if issued to a motor vehicle business, restrict coverage afforded to anyone other
4 than the motor vehicle business or its officers, agents, or employees to the minimum limits under
5 Section 31A-22-304, and to those instances when there is no other valid and collectible insurance
6 with at least those limits, whether the other insurance is primary, excess, or contingent.
7 (b) (i) The liability insurance coverage of a permissive user of a motor vehicle owned by
8 a motor vehicle business shall be primary coverage.
9 (ii) The liability insurance coverage of a motor vehicle business shall be secondary to the
10 liability insurance coverage of a permissive user as specified under Subsection (2)(b)(i).
11 (3) Motor vehicle liability coverage need not insure any liability:
12 (a) under any workers' compensation law under Title 34A;
13 (b) resulting from bodily injury to or death of an employee of the named insured, other
14 than a domestic employee, while engaged in the employment of the insured, or while engaged in
15 the operation, maintenance, or repair of a designated vehicle; or
16 (c) resulting from damage to property owned by, rented to, bailed to, or transported by the
17 insured.
18 (4) An insurance carrier providing motor vehicle liability coverage has the right to settle
19 any claim covered by the policy, and if the settlement is made in good faith, the amount of the
20 settlement is deductible from the limits of liability specified under Section 31A-22-304.
21 (5) A policy containing motor vehicle liability coverage imposes on the insurer the duty
22 to defend, in good faith, any person insured under the policy against any claim or suit seeking
23 damages which would be payable under the policy.
24 (6) (a) If a policy containing motor vehicle liability coverage provides an insurer with the
25 defense of lack of cooperation on the part of the insured, that defense is not effective against a third
26 person making a claim against the insurer, unless there was collusion between the third person and
27 the insured.
28 (b) If the defense of lack of cooperation is not effective against the claimant, after
29 payment, the insurer is subrogated to the injured person's claim against the insured to the extent
30 of the payment and is entitled to reimbursement by the insured after the injured third person has
31 been made whole with respect to the claim against the insured.

- 3 -

1 (7) A policy of motor vehicle liability coverage under Subsection 31A-22-302(1) may
2 specifically exclude from coverage a person who is a resident of the named insured's household,
3 including a person who usually makes his home in the same household but temporarily lives
4 elsewhere, if each person excluded from coverage satisfies the owner's or operator's security
5 requirement of Section 41-12a-301, independently of the named insured's proof of owner's or
6 operator's security.
7 Section 3. Section 31A-22-314 is amended to read:
8 31A-22-314. Mandatory coverage.
9 (1) A rental company shall provide its renters with [primary] coverage meeting the
10 requirements of Title 41, Chapter 12a, Financial Responsibility of Motor Vehicle Owners and
11 Operators Act. [All coverage shall include primary defense costs and may not be waived.]
12 (2) The coverage required under Subsection (1) shall be excess or secondary coverage to
13 any other valid and collectible insurance of the renter.




Legislative Review Note
as of 2-6-98 3:22 PM

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

Office of Legislative Research and General Counsel

- 4 -