S.B. 88

1

MOTOR VEHICLE INSURANCE AMENDMENTS
2 1999 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: Howard A. Stephenson
5 AN ACT RELATING TO INSURANCE; AMENDING MOTOR VEHICLE INSURANCE
6 PROVISIONS; S [ AND ] s MAKING TECHNICAL CORRECTIONS S ; AND PROVIDING AN
6a EFFECTIVE DATE s .
7 This act affects sections of Utah Code Annotated 1953 as follows:
8 AMENDS:
9 31A-22-305, as last amended by Chapter 375, Laws of Utah 1997
10 31A-22-305.5, as enacted by Chapter 321, Laws of Utah 1990
11 S [ 31A-26-303, as last amended by Chapter 91, Laws of Utah 1987 ] s
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; [or]
33 (c) a vehicle covered by a liability policy, but coverage for an accident is disputed by the
34 liability insurer S FOR MORE THAN 60 DAYS s S OR, BEGINNING WITH THE EFFECTIVE DATE OF
34a THIS ACT, CONTINUES TO BE DISPUTED FOR MORE THAN 60 DAYS s ; or
35 [(c)] (d) (i) an insured vehicle if, before or after the accident, the liability insurer of the
36 vehicle is declared insolvent by a court of competent jurisdiction;
37 (ii) the vehicle described in Subsection (2)[(c)](d)(i) is uninsured only to the extent that
38 the claim against the insolvent insurer is not paid by a guaranty association or fund.
39 (3) Uninsured motorist coverage under Subsection 31A-22-302 (1)(b) provides coverage
40 for covered persons who are legally entitled to recover damages from owners or operators of
41 uninsured motor vehicles because of bodily injury, sickness, disease, or death in limits that at least
42 equal the minimum bodily injury limits for motor vehicle liability policies under Section
43 31A-22-304 .
44 (4) (a) Except as provided in Subsection (4)(b), the named insured may reject uninsured
45 motorist coverage by an express writing to the insurer that provides liability coverage under
46 Subsection 31A-22-302 (1)(a). This rejection continues for that issuer of the liability coverage until
47 the insured in writing requests uninsured motorist coverage from that liability insurer.
48 (b) All persons, including governmental entities, that are engaged in the business of, or that
49 accept payment for, transporting natural persons by motor vehicle, and all school districts that
50 provide transportation services for their students, shall provide coverage for all vehicles used for
51 that purpose, by purchase of a policy of insurance or by self-insurance, uninsured motorist
52 coverage of at least $25,000 per person and $500,000 per accident.
53 (i) This coverage is secondary to any other insurance covering an injured covered person.
54 (ii) This coverage does not apply to an employee, who is injured by an uninsured motorist,
55 whose exclusive remedy is provided by Title 34A, Chapter 2, Workers' Compensation Act.
56 (c) As used in this Subsection (4):
57 (i) "Governmental entity" has the same meaning as under Section 63-30-2 .
58 (ii) "Motor vehicle" has the same meaning as under Section 41-1a-102 .

59 (5) When a covered person alleges that an uninsured motor vehicle under Subsection (2)(b)
60 proximately caused an accident without touching the covered person or the vehicle occupied by
61 the covered person, the covered person must show the existence of the uninsured motor vehicle
62 by clear and convincing evidence consisting of more than the covered person's testimony.
63 (6) (a) The limit of liability for uninsured motorist coverage for two or more motor
64 vehicles may not be added together, combined, or stacked to determine the limit of insurance
65 coverage available to an injured person for any one accident.
66 (b) (i) Subsection (6)(a) applies to all persons except a covered person as defined under
67 Subsection (7)(b)(ii).
68 (ii) A covered person as defined under Subsection (7)(b)(ii) is entitled to the highest limits
69 of uninsured motorist coverage afforded for any one vehicle that the covered person is the named
70 insured or an insured family member.
71 (iii) This coverage shall be in addition to the coverage on the vehicle the covered person
72 is occupying.
73 (iv) Neither the primary nor the secondary coverage may be set off against the other.
74 (c) Coverage on a motor vehicle occupied at the time of an accident shall be primary
75 coverage, and the coverage elected by a person described under Subsections (1)(a) and (b) shall
76 be secondary coverage.
77 (7) (a) Uninsured motorist coverage under this section applies to bodily injury, sickness,
78 disease, or death of covered persons while occupying or using a motor vehicle only if the motor
79 vehicle is described in the policy under which a claim is made, or if the motor vehicle is a newly
80 acquired or replacement vehicle covered under the terms of the policy. Except as provided in
81 Subsection (6) or (7), a covered person injured in a vehicle described in a policy that includes
82 uninsured motorist benefits may not elect to collect uninsured motorist coverage benefits from any
83 other motor vehicle insurance policy under which he is a covered person.
84 (b) Each of the following persons may also recover uninsured motorist benefits under any
85 other policy in which they are described as a "covered person" as defined in Subsection (1):
86 (i) a covered person injured as a pedestrian by an uninsured motor vehicle; and
87 (ii) a covered person injured while occupying or using a motor vehicle that is not owned
88 by, furnished, or available for the regular use of the covered person, the covered person's resident
89 spouse, or the covered person's resident relative.

90 (c) A covered person in Subsection (7)(b) is not barred against making subsequent
91 elections if recovery is unavailable under previous elections.
92 (8) (a) As used in this section, "underinsured motor vehicle" includes a vehicle, the
93 operation, maintenance, or use of which is covered under a liability policy at the time of an
94 injury-causing occurrence, but which has insufficient liability coverage to compensate fully the
95 injured party for all special and general damages.
96 (b) The term "underinsured motor vehicle" does not include:
97 (i) a motor vehicle that is covered under the liability coverage of the same policy that also
98 contains the underinsured motorist coverage; or
99 (ii) an uninsured motor vehicle as defined in Subsection (2).
100 (9) (a) Underinsured motorist coverage under Subsection 31A-22-302 (1)(c) provides
101 coverage for covered persons who are legally entitled to recover damages from owners or operators
102 of underinsured motor vehicles because of bodily injury, sickness, disease, or death in limits of at
103 least $10,000 for one person in any one accident, and at least $20,000 for two or more persons in
104 any one accident.
105 (b) The named insured's underinsured motorist coverage, as described in Subsection (9)(a),
106 is secondary to the liability coverage of an owner or operator of an underinsured motor vehicle,
107 as described in Subsection (8). Underinsured motorist coverage may not be set off against the
108 liability coverage of the owner or operator of an underinsured motor vehicle, but shall be added
109 to, combined with, or stacked upon the liability coverage of the owner or operator of the
110 underinsured motor vehicle to determine the limit of coverage available to the injured person.
111 (c) (i) For new policies or contracts written after January 1, 1993, a named insured may
112 reject underinsured motorist coverage by an express writing to the insurer that provides liability
113 coverage under Subsection 31A-22-302 (1)(a). This rejection continues for that issuer of the
114 liability coverage until the insured in writing requests underinsured motorist coverage from that
115 liability insurer.
116 (ii) In conjunction with the first three renewal notices sent after January 1, 1993, for
117 policies existing on that date, the insurer shall notify the insured of the availability of underinsured
118 motorist coverage along with estimated ranges of premiums for the coverage. The department
119 shall provide standard language to be used by insurers to fulfill the insurers' duty under this
120 Subsection (9).

121 (10) (a) Underinsured motorist coverage under this section applies to bodily injury,
122 sickness, disease, or death of an insured while occupying or using a motor vehicle owned by,
123 furnished, or available for the regular use of the insured, a resident spouse, or resident relative of
124 the insured, only if the motor vehicle is described in the policy under which a claim is made, or
125 if the motor vehicle is a newly acquired or replacement vehicle covered under the terms of the
126 policy. Except as provided in Subsection (10), a covered person injured in a vehicle described in
127 a policy that includes underinsured motorist benefits may not elect to collect underinsured motorist
128 coverage benefits from any other motor vehicle insurance policy under which he is a named
129 insured.
130 (b) (i) The limit of liability for underinsured motorist coverage for two or more motor
131 vehicles may not be added together, combined, or stacked to determine the limit of insurance
132 coverage available to an injured person for any one accident.
133 (ii) Subsection (10)(b)(i) applies to all persons except a covered person as defined under
134 Subsection (10)(c)(i)(B).
135 (iii) Coverage on a motor vehicle occupied at the time of an accident shall be primary
136 coverage, and the coverage elected by a person described under Subsections (1)(a) and (b) shall
137 be secondary coverage.
138 (c) (i) Each of the following persons may also recover underinsured motorist coverage
139 benefits under any other policy in which they are described as a "covered person" as defined under
140 Subsection (1):
141 (A) a covered person injured as a pedestrian by an underinsured motor vehicle; or
142 (B) a covered person injured while occupying or using a motor vehicle that is not owned
143 by, furnished, or available for the regular use of the covered person, the covered person's resident
144 spouse, or the covered person's resident relative.
145 (ii) This coverage shall only be available as a secondary source of coverage.
146 (iii) A covered person as defined under Subsection (10)(c)(i)(B) is entitled to the highest
147 limits of underinsured motorist coverage afforded for any one vehicle that the covered person is
148 the named insured or an insured family member.
149 (iv) This coverage shall be in addition to the coverage on the vehicle the covered person
150 is occupying.
151 (v) Neither the primary nor the secondary coverage may be set off against the other.

152 (d) A covered injured person is not barred against making subsequent elections if recovery
153 is unavailable under previous elections.
154 Section 2. Section 31A-22-305.5 is amended to read:
155 31A-22-305.5. Property damage protection.
156 (1) At the request of the named insured, every motor vehicle liability policy of insurance
157 under Sections 31A-22-303 and 31A-22-304 or combination of policies purchased to satisfy the
158 owner's or operator's security requirement of Section 41-12a-301 which policy does not provide
159 insurance for collision damage shall provide coverage for property damage to the motor vehicle
160 described in the policy for the benefit of covered persons, as defined under Section 31A-22-305 ,
161 who are legally entitled to recover damages from the owner or operator of an uninsured motor
162 vehicle, as defined under Subsections 31A-22-305 (2)(a), (c) and [(c)] (d), arising out of the
163 operation, maintenance, or use of an uninsured motor vehicle.
164 (2) The coverage provided under this section shall include payment for loss or damage to
165 the motor vehicle described in the policy, not to exceed the motor vehicle's actual cash value or
166 $3,500, whichever is less. Property damage does not include compensation for loss of use of the
167 motor vehicle.
168 (3) The coverage provided under this section shall be payable only if:
169 (a) the occurrence causing the property damage involves actual physical contact between
170 the covered motor vehicle and an uninsured motor vehicle;
171 (b) the owner, operator, or license plate number of the uninsured motor vehicle is
172 identified; and
173 (c) the insured or someone on his behalf reports the occurrence within ten days to the
174 insurer or his agent.
175 (4) The coverage provided under this section shall be subject to a $250 deductible and
176 shall be excess to any other insurance covering property damage to the motor vehicle described
177 in the policy.
178 (5) The insurer providing coverage under this section may make available additional
179 deductibles at appropriate premium rates.
180 (6) No rating surcharge may be applied to any policy of motor vehicle insurance issued in
181 this state as a result of payment of a claim made under this section.
182 S [ Section 3. Section 31A-26-303 is amended to read: s

183 S 31A-26-303. Unfair claim settlement practices.
184 (1) [No] An insurer or person representing an insurer may not engage in any unfair claim
185 settlement practice under Subsections (2), (3), and (4).
186 (2) Each of the following acts is an unfair claim settlement practice:
187 (a) knowingly misrepresenting material facts or the contents of insurance policy provisions
188 at issue in connection with a claim under an insurance contract; however, this provision does not
189 include the failure to disclose information;
190 (b) attempting to use a policy application which was altered by the insurer without notice
191 to, or knowledge[,] or consent of, the insured as the basis for settling or refusing to settle a claim;
192 or
193 (c) failing to settle a claim promptly under one portion of the insurance policy coverage,
194 where liability and the amount of loss are reasonably clear, in order to influence settlements under
195 other portions of the insurance policy coverage, but this Subsection (2) (c) applies only to claims
196 made by persons in direct privity of contract with the insurer.
197 (3) Each of the following is an unfair claim settlement practice if committed or performed
198 with such frequency as to indicate a general business practice by an insurer or persons representing
199 an insurer:
200 (a) failing to acknowledge and act promptly upon communications about claims under
201 insurance policies;
202 (b) failing to adopt and implement reasonable standards for the prompt investigation and
203 processing of claims under insurance policies;
204 (c) compelling insureds to institute litigation to recover amounts due under an insurance
205 policy by offering substantially less than the amounts ultimately recovered in actions brought by
206 those insureds when the amounts claimed were reasonably near to the amounts recovered;
207 (d) failing, after payment of a claim, to inform insureds or beneficiaries, upon request by
208 them, of the coverage under which payment was made;
209 (e) failing to promptly provide to the insured a reasonable explanation of the basis for
210 denial of a claim or for the offer of a compromise settlement;
211 (f) appealing from substantially all arbitration awards in favor of insureds for the purpose
212 of compelling them to accept settlements or compromises for less than the amount awarded in
213 arbitration; s

214 S (g) delaying the investigation or payment of claims by requiring an insured, claimant, or
215 the physician of either to submit a preliminary claim report and then requiring the subsequent
216 submission of formal proof of loss forms which contain substantially the same information; or
217 (h) not attempting in good faith to effectuate a prompt, fair, and equitable settlement of
218 claims in which liability is reasonably clear.
219 (4) The commissioner may define by rule, acts or general business practices which are
220 unfair claim settlement practices, after a finding that those practices are misleading, deceptive,
221 unfairly discriminatory, overreaching, or an unreasonable restraint on competition.
222 (5) This section [does not] and rules made under Subsection (4) may create [any] a private
223 cause of action. ]
223a Section 3. Effective date.
223b IF APPROVED BY TWO-THIRDS OF ALL MEMBERS ELECTED TO EACH HOUSE, THIS ACT
223c TAKES EFFECT UPON APPROVAL BY THE GOVERNOR, OR THE DAY FOLLOWING THE
223d CONSTITUTIONAL TIME LIMIT OF UTAH CONSTITUTION ARTICLE VII, SECTION 8, WITHOUT THE
223e GOVERNOR'S SIGNATURE, OR IN THE CASE OF A VETO, THE DATE OF VETO OVERRIDE. s




Legislative Review Note
as of 1-5-99 9:44 AM

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

Office of Legislative Research and General Counsel