First Substitute S.B. 189

Senator Michael G. Waddoups proposes to substitute the following bill:

1 MOTOR VEHICLE INSURANCE POLICY COVERAGE
2 2000 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: Michael G. Waddoups
5 AN ACT RELATING TO INSURANCE; AMENDING UNINSURED AND UNDERINSURED
6 MOTORIST COVERAGE PROVISIONS.
7 This act affects sections of Utah Code Annotated 1953 as follows:
8 AMENDS:
9 31A-22-305, as last amended by Chapter 158, Laws of Utah 1999
10 Be it enacted by the Legislature of the state of Utah:
11 Section 1. Section 31A-22-305 is amended to read:
12 31A-22-305. Uninsured and underinsured motorist coverage.
13 (1) As used in this section, "covered persons" includes:
14 (a) the named insured;
15 (b) persons related to the named insured by blood, marriage, adoption, or guardianship,
16 who are residents of the named insured's household, including those who usually make their home
17 in the same household but temporarily live elsewhere;
18 (c) any person occupying or using a motor vehicle referred to in the policy or owned by
19 a self-insurer; and
20 (d) any person who is entitled to recover damages against the owner or operator of the
21 uninsured or underinsured motor vehicle because of bodily injury to or death of persons under
22 Subsection (1)(a), (b), or (c).
23 (2) As used in this section, "uninsured motor vehicle" includes:
24 (a) (i) a vehicle, the operation, maintenance, or use of which is not covered under a
25 liability policy at the time of an injury-causing occurrence; or

26 (ii) (A) a vehicle covered with lower liability limits than required by Section 31A-22-304 ;
27 (B) the vehicle described in Subsection (2)(a)(ii)(A) is uninsured to the extent of the
28 deficiency;
29 (b) an unidentified vehicle that left the scene of an accident proximately caused by the
30 vehicle operator;
31 (c) a vehicle covered by a liability policy, but coverage for an accident is disputed by the
32 liability insurer for more than 60 days or, beginning with the effective date of this act, continues
33 to be disputed for more than 60 days; or
34 (d) (i) an insured vehicle if, before or after the accident, the liability insurer of the vehicle
35 is declared insolvent by a court of competent jurisdiction;
36 (ii) the vehicle described in Subsection (2)(d)(i) is uninsured only to the extent that the
37 claim against the insolvent insurer is not paid by a guaranty association or fund.
38 (3) (a) Uninsured motorist coverage under Subsection 31A-22-302 (1)(b) provides
39 coverage for covered persons who are legally entitled to recover damages from owners or operators
40 of uninsured motor vehicles because of bodily injury, sickness, disease, or death [in limits that at
41 least equal the minimum bodily injury limits for motor vehicle liability policies under Section
42 31A-22-304 ].
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 all coverage amounts up to and including the maximum amount available by the
63 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 [(i)] (ii) This coverage is secondary to any other insurance covering an injured covered
81 person.
82 [(ii)] (c) [This coverage does not apply to an employee, who is injured by an uninsured
83 motorist, whose exclusive remedy is] Uninsured motorist coverage:
84 (i) is secondary to the benefits provided by Title 34A, Chapter 2, Workers' Compensation
85 Act[.];
86 (ii) may not be subrogated by the Workers' Compensation insurance carrier;
87 (iii) may not be reduced by any benefits provided by Workers' Compensation insurance;

88 and
89 (iv) may be reduced by health insurance subrogation only after the covered person has
90 been made whole.
91 [(c)] (d) As used in this Subsection (4):
92 (i) "Governmental entity" has the same meaning as under Section 63-30-2 .
93 (ii) "Motor vehicle" has the same meaning as under Section 41-1a-102 .
94 (5) When a covered person alleges that an uninsured motor vehicle under Subsection (2)(b)
95 proximately caused an accident without touching the covered person or the vehicle occupied by
96 the covered person, the covered person must show the existence of the uninsured motor vehicle
97 by clear and convincing evidence consisting of more than the covered person's testimony.
98 (6) (a) The limit of liability for uninsured motorist coverage for two or more motor
99 vehicles may not be added together, combined, or stacked to determine the limit of insurance
100 coverage available to an injured person for any one accident.
101 (b) (i) Subsection (6)(a) applies to all persons except a covered person as defined under
102 Subsection (7)(b)(ii).
103 (ii) A covered person as defined under Subsection (7)(b)(ii) is entitled to the highest limits
104 of uninsured motorist coverage afforded for any one vehicle that the covered person is the named
105 insured or an insured family member.
106 (iii) This coverage shall be in addition to the coverage on the vehicle the covered person
107 is occupying.
108 (iv) Neither the primary nor the secondary coverage may be set off against the other.
109 (c) Coverage on a motor vehicle occupied at the time of an accident shall be primary
110 coverage, and the coverage elected by a person described under Subsections (1)(a) and (b) shall
111 be secondary coverage.
112 (7) (a) Uninsured motorist coverage under this section applies to bodily injury, sickness,
113 disease, or death of covered persons while occupying or using a motor vehicle only if the motor
114 vehicle is described in the policy under which a claim is made, or if the motor vehicle is a newly
115 acquired or replacement vehicle covered under the terms of the policy. Except as provided in
116 Subsection (6) or (7), a covered person injured in a vehicle described in a policy that includes
117 uninsured motorist benefits may not elect to collect uninsured motorist coverage benefits from any
118 other motor vehicle insurance policy under which he is a covered person.

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

150 insured's motor vehicle policy.
151 (c) Underinsured motorist coverage may not be sold with limits that are less than $10,000
152 for one person in any one accident and at least $20,000 for two or more persons in any one
153 accident.
154 (d) The acknowledgment under Subsection (9)(b) continues for that issuer of the
155 underinsured motorist coverage until the insured, in writing, requests different underinsured
156 motorist coverage from the insurer.
157 [(b)] (e) The named insured's underinsured motorist coverage, as described in Subsection
158 (9)(a), is secondary to the liability coverage of an owner or operator of an underinsured motor
159 vehicle, as described in Subsection (8). Underinsured motorist coverage may not be set off against
160 the liability coverage of the owner or operator of an underinsured motor vehicle, but shall be added
161 to, combined with, or stacked upon the liability coverage of the owner or operator of the
162 underinsured motor vehicle to determine the limit of coverage available to the injured person.
163 [(c)] (f) (i) [For new policies or contracts written after January 1, 1993, a] A named insured
164 may reject underinsured motorist coverage by an express writing to the insurer that provides
165 liability coverage under Subsection 31A-22-302 (1)(a).
166 (ii) This written rejection shall be on a form provided by the insurer that includes a
167 reasonable explanation of the purpose of underinsured motorist coverage and when it would be
168 applicable.
169 (iii) This rejection continues for that issuer of the liability coverage until the insured in
170 writing requests underinsured motorist coverage from that liability insurer.
171 [(ii)] (g) In conjunction with the first [three] two renewal notices sent after January 1,
172 [1993] 2001, for policies existing on that date, the insurer shall [notify the insured of the
173 availability of underinsured motorist coverage along with estimated ranges of premiums for the
174 coverage. The department shall provide standard language to be used by insurers to fulfill the
175 insurers' duty under this Subsection (9).] disclose in the same medium as the premium renewal
176 notice, an explanation of the purpose of underinsured motorist coverage and the costs associated
177 with all coverage amounts up to and including the maximum amount available by the insurer under
178 the insured's motor vehicle policy.
179 (ii) The disclosure shall be sent to all insureds that carry underinsured motorist coverage
180 limits in an amount less than the insured's motor vehicle liability policy limits or the maximum

181 underinsured motorist coverage limits available by the insurer under the insured's motor vehicle
182 policy.
183 (10) (a) Underinsured motorist coverage under this section applies to bodily injury,
184 sickness, disease, or death of an insured while occupying or using a motor vehicle owned by,
185 furnished, or available for the regular use of the insured, a resident spouse, or resident relative of
186 the insured, only if the motor vehicle is described in the policy under which a claim is made, or
187 if the motor vehicle is a newly acquired or replacement vehicle covered under the terms of the
188 policy. Except as provided in this Subsection (10), a covered person injured in a vehicle described
189 in a policy that includes underinsured motorist benefits may not elect to collect underinsured
190 motorist coverage benefits from any other motor vehicle insurance policy under which he is a
191 named insured.
192 (b) (i) The limit of liability for underinsured motorist coverage for two or more motor
193 vehicles may not be added together, combined, or stacked to determine the limit of insurance
194 coverage available to an injured person for any one accident.
195 (ii) Subsection (10)(b)(i) applies to all persons except a covered person as defined under
196 Subsection (10)(c)(i)(B).
197 (iii) Coverage on a motor vehicle occupied at the time of an accident shall be primary
198 coverage, and the coverage elected by a person described under Subsections (1)(a) and (b) shall
199 be secondary coverage.
200 (c) Underinsured motorist coverage:
201 (i) is secondary to the benefits provided by Title 34A, Chapter 2, Workers' Compensation
202 Act;
203 (ii) may not be subrograted by the Workers' Compensation insurance carrier;
204 (iii) may not be reduced by any benefits provided by Workers' Compensation insurance;
205 and
206 (iv) may be reduced by health insurance subrogation only after the covered person has
207 been made whole.
208 [(c)] (d) (i) Each of the following persons may also recover underinsured motorist
209 coverage benefits under any other policy in which they are described as a "covered person" as
210 defined under Subsection (1):
211 (A) a covered person injured as a pedestrian by an underinsured motor vehicle; or

212 (B) a covered person injured while occupying or using a motor vehicle that is not owned
213 by, furnished, or available for the regular use of the covered person, the covered person's resident
214 spouse, or the covered person's resident relative.
215 (ii) This coverage shall only be available as a secondary source of coverage.
216 (iii) A covered person as defined under Subsection (10)[(c)] (b)(i)(B) is entitled to the
217 highest limits of underinsured motorist coverage afforded for any one vehicle that the covered
218 person is the named insured or an insured family member.
219 (iv) This coverage shall be in addition to the coverage on the vehicle the covered person
220 is occupying.
221 (v) Neither the primary nor the secondary coverage may be set off against the other.
222 [(d)] (e) A covered injured person is not barred against making subsequent elections if
223 recovery is unavailable under previous elections.
224 (11) A claim may not be brought by a covered person against a motor vehicle underinsured
225 motorist policy more than three years after the date of the liability policy payment.