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S.B. 225

             1     

UNINSURED AND UNDERINSURED MOTORIST

             2     
COVERAGE

             3     
2004 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Sponsor: Dan R. Eastman

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Insurance Code to amend provisions relating to uninsured and
             10      underinsured motorist coverage.
             11      Highlighted Provisions:
             12          This bill:
             13          .    defines "interpolicy stacking";
             14          .    provides that interpolicy stacking is prohibited except in certain circumstances; and
             15          .    makes technical changes.
             16      Monies Appropriated in this Bill:
             17          None
             18      Other Special Clauses:
             19          This bill provides for retroactive application.
             20      Utah Code Sections Affected:
             21      AMENDS:
             22          31A-22-305, as last amended by Chapters 76 and 218, Laws of Utah 2003
             23     
             24      Be it enacted by the Legislature of the state of Utah:
             25          Section 1. Section 31A-22-305 is amended to read:
             26           31A-22-305. Uninsured and underinsured motorist coverage.
             27          (1) As used in this section, "covered persons" includes:


             28          (a) the named insured;
             29          (b) persons related to the named insured by blood, marriage, adoption, or guardianship,
             30      who are residents of the named insured's household, including those who usually make their
             31      home in the same household but temporarily live elsewhere;
             32          (c) any person occupying or using a motor vehicle:
             33          (i) referred to in the policy; or
             34          (ii) owned by a self-insurer; and
             35          (d) any person who is entitled to recover damages against the owner or operator of the
             36      uninsured or underinsured motor vehicle because of bodily injury to or death of persons under
             37      Subsection (1)(a), (b), or (c).
             38          (2) As used in this section, "uninsured motor vehicle" includes:
             39          (a) (i) a motor vehicle, the operation, maintenance, or use of which is not covered
             40      under a liability policy at the time of an injury-causing occurrence; or
             41          (ii) (A) a motor vehicle covered with lower liability limits than required by Section
             42      31A-22-304 ; and
             43          (B) the motor vehicle described in Subsection (2)(a)(ii)(A) is uninsured to the extent of
             44      the deficiency;
             45          (b) an unidentified motor vehicle that left the scene of an accident proximately caused
             46      by the motor vehicle operator;
             47          (c) a motor vehicle covered by a liability policy, but coverage for an accident is
             48      disputed by the liability insurer for more than 60 days or continues to be disputed for more than
             49      60 days; or
             50          (d) (i) an insured motor vehicle if, before or after the accident, the liability insurer of
             51      the motor vehicle is declared insolvent by a court of competent jurisdiction; and
             52          (ii) the motor vehicle described in Subsection (2)(d)(i) is uninsured only to the extent
             53      that the claim against the insolvent insurer is not paid by a guaranty association or fund.
             54          (3) (a) Uninsured motorist coverage under Subsection 31A-22-302 (1)(b) provides
             55      coverage for covered persons who are legally entitled to recover damages from owners or
             56      operators of uninsured motor vehicles because of bodily injury, sickness, disease, or death.
             57          (b) For new policies written on or after January 1, 2001, the limits of uninsured
             58      motorist coverage shall be equal to the lesser of the limits of the insured's motor vehicle


             59      liability coverage or the maximum uninsured motorist coverage limits available by the insurer
             60      under the insured's motor vehicle policy, unless the insured purchases coverage in a lesser
             61      amount by signing an acknowledgment form provided by the insurer that:
             62          (i) waives the higher coverage;
             63          (ii) reasonably explains the purpose of uninsured motorist coverage; and
             64          (iii) discloses the additional premiums required to purchase uninsured motorist
             65      coverage with limits equal to the lesser of the limits of the insured's motor vehicle liability
             66      coverage or the maximum uninsured motorist coverage limits available by the insurer under the
             67      insured's motor vehicle policy.
             68          (c) Self-insurers, including governmental entities, may elect to provide uninsured
             69      motorist coverage in an amount that is less than their maximum self-insured retention under
             70      Subsections (3)(b) and (4)(a) by issuing a declaratory memorandum or policy statement from
             71      the chief financial officer or chief risk officer that declares the:
             72          (i) self-insured entity's coverage level; and
             73          (ii) process for filing an uninsured motorist claim.
             74          (d) Uninsured motorist coverage may not be sold with limits that are less than the
             75      minimum bodily injury limits for motor vehicle liability policies under Section 31A-22-304 .
             76          (e) The acknowledgment under Subsection (3)(b) continues for that issuer of the
             77      uninsured motorist coverage until the insured, in writing, requests different uninsured motorist
             78      coverage from the insurer.
             79          (f) (i) In conjunction with the first two renewal notices sent after January 1, 2001, for
             80      policies existing on that date, the insurer shall disclose in the same medium as the premium
             81      renewal notice, an explanation of the purpose of uninsured motorist coverage and the costs
             82      associated with increasing the coverage in amounts up to and including the maximum amount
             83      available by the insurer under the insured's motor vehicle policy.
             84          (ii) The disclosure shall be sent to all insureds that carry uninsured motorist coverage
             85      limits in an amount less than the insured's motor vehicle liability policy limits or the maximum
             86      uninsured motorist coverage limits available by the insurer under the insured's motor vehicle
             87      policy.
             88          (4) (a) (i) Except as provided in Subsection (4)(b), the named insured may reject
             89      uninsured motorist coverage by an express writing to the insurer that provides liability


             90      coverage under Subsection 31A-22-302 (1)(a).
             91          (ii) This rejection shall be on a form provided by the insurer that includes a reasonable
             92      explanation of the purpose of uninsured motorist coverage.
             93          (iii) This rejection continues for that issuer of the liability coverage until the insured in
             94      writing requests uninsured motorist coverage from that liability insurer.
             95          (b) (i) All persons, including governmental entities, that are engaged in the business of,
             96      or that accept payment for, transporting natural persons by motor vehicle, and all school
             97      districts that provide transportation services for their students, shall provide coverage for all
             98      motor vehicles used for that purpose, by purchase of a policy of insurance or by self-insurance,
             99      uninsured motorist coverage of at least $25,000 per person and $500,000 per accident.
             100          (ii) This coverage is secondary to any other insurance covering an injured covered
             101      person.
             102          (c) Uninsured motorist coverage:
             103          (i) is secondary to the benefits provided by Title 34A, Chapter 2, Workers'
             104      Compensation Act;
             105          (ii) may not be subrogated by the Workers' Compensation insurance carrier;
             106          (iii) may not be reduced by any benefits provided by Workers' Compensation
             107      insurance;
             108          (iv) may be reduced by health insurance subrogation only after the covered person has
             109      been made whole;
             110          (v) may not be collected for bodily injury or death sustained by a person:
             111          (A) while committing a violation of Section 41-1a-1314 ;
             112          (B) who, as a passenger in a vehicle, has knowledge that the vehicle is being operated
             113      in violation of Section 41-1a-1314 ; or
             114          (C) while committing a felony; and
             115          (vi) notwithstanding Subsection (4)(c)(v), may be recovered:
             116          (A) for a person under 18 years of age who is injured within the scope of Subsection
             117      (4)(c)(v) but limited to medical and funeral expenses; or
             118          (B) by a law enforcement officer as defined in Section 53-13-103 , who is injured
             119      within the course and scope of the law enforcement officer's duties.
             120          (d) As used in this Subsection (4):


             121          (i) "Governmental entity" has the same meaning as under Section 63-30-2 .
             122          (ii) "Motor vehicle" has the same meaning as under Section 41-1a-102 .
             123          (5) When a covered person alleges that an uninsured motor vehicle under Subsection
             124      (2)(b) proximately caused an accident without touching the covered person or the motor
             125      vehicle occupied by the covered person, the covered person must show the existence of the
             126      uninsured motor vehicle by clear and convincing evidence consisting of more than the covered
             127      person's testimony.
             128          (6) (a) The limit of liability for uninsured motorist coverage for two or more motor
             129      vehicles may not be added together, combined, or stacked to determine the limit of insurance
             130      coverage available to an injured person for any one accident.
             131          (b) (i) Subsection (6)(a) applies to all persons except a covered person as defined under
             132      Subsection (7)(b)(ii).
             133          (ii) A covered person as defined under Subsection (7)(b)(ii) is entitled to the highest
             134      limits of uninsured motorist coverage afforded for any one motor vehicle that the covered
             135      person is the named insured or an insured family member.
             136          (iii) This coverage shall be in addition to the coverage on the motor vehicle the covered
             137      person is occupying.
             138          (iv) Neither the primary nor the secondary coverage may be set off against the other.
             139          (c) Coverage on a motor vehicle occupied at the time of an accident shall be primary
             140      coverage, and the coverage elected by a person described under Subsections (1)(a) and (b) shall
             141      be secondary coverage.
             142          (7) (a) Uninsured motorist coverage under this section applies to bodily injury,
             143      sickness, disease, or death of covered persons while occupying or using a motor vehicle only if
             144      the motor vehicle is described in the policy under which a claim is made, or if the motor
             145      vehicle is a newly acquired or replacement motor vehicle covered under the terms of the policy.
             146      Except as provided in Subsection (6) or this Subsection (7), a covered person injured in a
             147      motor vehicle described in a policy that includes uninsured motorist benefits may not elect to
             148      collect uninsured motorist coverage benefits from any other motor vehicle insurance policy
             149      under which he is a covered person.
             150          (b) Each of the following persons may also recover uninsured motorist benefits under
             151      any one other policy in which they are described as a "covered person" as defined in Subsection


             152      (1):
             153          (i) a covered person injured as a pedestrian by an uninsured motor vehicle; and
             154          (ii) except as provided in Subsection (7)(c), a covered person injured while occupying
             155      or using a motor vehicle that is not owned, leased, or furnished, to the covered person, to the
             156      covered person's spouse, or to the covered person's resident parent or resident sibling.
             157          (c) (i) A covered person may recover benefits from no more than two additional
             158      policies, one additional policy from each parent's household if the covered person is:
             159          (A) a dependent minor of parents who reside in separate households; and
             160          (B) injured while occupying or using a motor vehicle that is not owned, leased, or
             161      furnished to the covered person, the covered person's resident parent, or to the covered person's
             162      resident sibling.
             163          (ii) Each parent's policy under this Subsection (7)(c) is liable only for the percentage of
             164      the damages that the limit of liability of each parent's policy of uninsured motorist coverage
             165      bears to the total of all uninsured coverage applicable to the accident.
             166          (d) A covered person's recovery under any available policies may not exceed the full
             167      amount of damages.
             168          (e) A covered person in Subsection (7)(b) is not barred against making subsequent
             169      elections if recovery is unavailable under previous elections.
             170          (f) (i) As used in this section, "interpolicy stacking" means recovering benefits for a
             171      single incident of loss under more than one insurance policy.
             172          (ii) Except to the extent permitted by Subsection (6) and this Subsection (7),
             173      interpolicy stacking is prohibited for uninsured motorist coverage.
             174          (8) (a) As used in this section, "underinsured motor vehicle" includes a motor vehicle,
             175      the operation, maintenance, or use of which is covered under a liability policy at the time of an
             176      injury-causing occurrence, but which has insufficient liability coverage to compensate fully the
             177      injured party for all special and general damages.
             178          (b) The term "underinsured motor vehicle" does not include:
             179          (i) a motor vehicle that is covered under the liability coverage of the same policy that
             180      also contains the underinsured motorist coverage;
             181          (ii) an uninsured motor vehicle as defined in Subsection (2); or
             182          (iii) a motor vehicle owned or leased by the named insured, the named insured's


             183      spouse, or any dependant of the named insured.
             184          (9) (a) (i) Underinsured motorist coverage under Subsection 31A-22-302 (1)(c)
             185      provides coverage for covered persons who are legally entitled to recover damages from
             186      owners or operators of underinsured motor vehicles because of bodily injury, sickness, disease,
             187      or death.
             188          (ii) A covered person occupying or using a motor vehicle owned, leased, or furnished
             189      to the covered person, the covered person's spouse, or covered person's resident relative may
             190      recover underinsured benefits only if the motor vehicle is:
             191          (A) described in the policy under which a claim is made; or
             192          (B) a newly acquired or replacement motor vehicle covered under the terms of the
             193      policy.
             194          (b) For new policies written on or after January 1, 2001, the limits of underinsured
             195      motorist coverage shall be equal to the lesser of the limits of the insured's motor vehicle
             196      liability coverage or the maximum underinsured motorist coverage limits available by the
             197      insurer under the insured's motor vehicle policy, unless the insured purchases coverage in a
             198      lesser amount by signing an acknowledgment form provided by the insurer that:
             199          (i) waives the higher coverage;
             200          (ii) reasonably explains the purpose of underinsured motorist coverage; and
             201          (iii) discloses the additional premiums required to purchase underinsured motorist
             202      coverage with limits equal to the lesser of the limits of the insured's motor vehicle liability
             203      coverage or the maximum underinsured motorist coverage limits available by the insurer under
             204      the insured's motor vehicle policy.
             205          (c) Self-insurers, including governmental entities, may elect to provide underinsured
             206      motorist coverage in an amount that is less than their maximum self-insured retention under
             207      Subsections (9)(b) and (9)(g) by issuing a declaratory memorandum or policy statement from
             208      the chief financial officer or chief risk officer that declares the:
             209          (i) self-insured entity's coverage level; and
             210          (ii) process for filing an underinsured motorist claim.
             211          (d) Underinsured motorist coverage may not be sold with limits that are less than
             212      $10,000 for one person in any one accident and at least $20,000 for two or more persons in any
             213      one accident.


             214          (e) The acknowledgment under Subsection (9)(b) continues for that issuer of the
             215      underinsured motorist coverage until the insured, in writing, requests different underinsured
             216      motorist coverage from the insurer.
             217          (f) The named insured's underinsured motorist coverage, as described in Subsection
             218      (9)(a), is secondary to the liability coverage of an owner or operator of an underinsured motor
             219      vehicle, as described in Subsection (8). Underinsured motorist coverage may not be set off
             220      against the liability coverage of the owner or operator of an underinsured motor vehicle, but
             221      shall be added to, combined with, or stacked upon the liability coverage of the owner or
             222      operator of the underinsured motor vehicle to determine the limit of coverage available to the
             223      injured person.
             224          (g) (i) A named insured may reject underinsured motorist coverage by an express
             225      writing to the insurer that provides liability coverage under Subsection 31A-22-302 (1)(a).
             226          (ii) This written rejection shall be on a form provided by the insurer that includes a
             227      reasonable explanation of the purpose of underinsured motorist coverage and when it would be
             228      applicable.
             229          (iii) This rejection continues for that issuer of the liability coverage until the insured in
             230      writing requests underinsured motorist coverage from that liability insurer.
             231          (h) (i) In conjunction with the first two renewal notices sent after January 1, 2001, for
             232      policies existing on that date, the insurer shall disclose in the same medium as the premium
             233      renewal notice, an explanation of the purpose of underinsured motorist coverage and the costs
             234      associated with increasing the coverage in amounts up to and including the maximum amount
             235      available by the insurer under the insured's motor vehicle policy.
             236          (ii) The disclosure shall be sent to all insureds that carry underinsured motorist
             237      coverage limits in an amount less than the insured's motor vehicle liability policy limits or the
             238      maximum underinsured motorist coverage limits available by the insurer under the insured's
             239      motor vehicle policy.
             240          (10) (a) (i) Except as provided in this Subsection (10), a covered person injured in a
             241      motor vehicle described in a policy that includes underinsured motorist benefits may not elect
             242      to collect underinsured motorist coverage benefits from any other motor vehicle insurance
             243      policy.
             244          (ii) The limit of liability for underinsured motorist coverage for two or more motor


             245      vehicles may not be added together, combined, or stacked to determine the limit of insurance
             246      coverage available to an injured person for any one accident.
             247          (iii) Subsection (10)(a)(ii) applies to all persons except a covered person as defined
             248      under Subsections (10)(b)(i) and (ii).
             249          (b) (i) Except as provided in Subsection (10)(b)(ii), a covered person injured while
             250      occupying, using, or maintaining a motor vehicle that is not owned, leased, or furnished to the
             251      covered person, the covered person's spouse, or the covered person's resident parent or resident
             252      sibling, may also recover benefits under any one other policy under which they are a covered
             253      person.
             254          (ii) (A) A covered person may recover benefits from no more than two additional
             255      policies, one additional policy from each parent's household if the covered person is:
             256          (I) a dependent minor of parents who reside in separate households; and
             257          (II) injured while occupying or using a motor vehicle that is not owned, leased, or
             258      furnished to the covered person, the covered person's resident parent, or the covered person's
             259      resident sibling.
             260          (B) Each parent's policy under this Subsection (10)(b)(ii) is liable only for the
             261      percentage of the damages that the limit of liability of each parent's policy of underinsured
             262      motorist coverage bears to the total of all underinsured coverage applicable to the accident.
             263          (iii) A covered person's recovery under any available policies may not exceed the full
             264      amount of damages.
             265          (iv) Underinsured coverage on a motor vehicle occupied at the time of an accident shall
             266      be primary coverage, and the coverage elected by a person described under Subsections (1)(a)
             267      and (b) shall be secondary coverage.
             268          (v) The primary and the secondary coverage may not be set off against the other.
             269          (vi) A covered person as defined under Subsection (10)(b)(i) is entitled to the highest
             270      limits of underinsured motorist coverage under only one additional policy per household
             271      applicable to that covered person as a named insured, spouse, or relative.
             272          (vii) A covered injured person is not barred against making subsequent elections if
             273      recovery is unavailable under previous elections.
             274          (viii) (A) As used in this section, "interpolicy stacking" means recovering benefits for a
             275      single incident of loss under more than one insurance policy.


             276          (B) Except to the extent permitted by this Subsection (10), interpolicy stacking is
             277      prohibited for underinsured motorist coverage.
             278          (c) Underinsured motorist coverage:
             279          (i) is secondary to the benefits provided by Title 34A, Chapter 2, Workers'
             280      Compensation Act;
             281          (ii) may not be subrogated by the Workers' Compensation insurance carrier;
             282          (iii) may not be reduced by any benefits provided by Workers' Compensation
             283      insurance;
             284          (iv) may be reduced by health insurance subrogation only after the covered person has
             285      been made whole;
             286          (v) may not be collected for bodily injury or death sustained by a person:
             287          (A) while committing a violation of Section 41-1a-1314 ;
             288          (B) who, as a passenger in a vehicle, has knowledge that the vehicle is being operated
             289      in violation of Section 41-1a-1314 ; or
             290          (C) while committing a felony; and
             291          (vi) notwithstanding Subsection (10)(c)(v), may be recovered:
             292          (A) for a person under 18 years of age who is injured within the scope of Subsection
             293      (10)(c)(v) but limited to medical and funeral expenses; or
             294          (B) by a law enforcement officer as defined in Section 53-13-103 , who is injured
             295      within the course and scope of the law enforcement officer's duties.
             296          (11) The inception of the loss under Subsection 31A-21-313 (1) for underinsured
             297      motorist claims occurs upon the date of the last liability policy payment.
             298          (12) (a) Within five business days after notification in a manner specified by the
             299      department that all liability insurers have tendered their liability policy limits, the underinsured
             300      carrier shall either:
             301          (i) waive any subrogation claim the underinsured carrier may have against the person
             302      liable for the injuries caused in the accident; or
             303          (ii) pay the insured an amount equal to the policy limits tendered by the liability carrier.
             304          (b) If neither option is exercised under Subsection (12)(a), the subrogation claim is
             305      deemed to be waived by the underinsured carrier.
             306          (13) Except as otherwise provided in this section, a covered person may seek, subject


             307      to the terms and conditions of the policy, additional coverage under any policy:
             308          (a) that provides coverage for damages resulting from motor vehicle accidents; and
             309          (b) that is not required to conform to Section 31A-22-302 .
             310          Section 2. Retroactive application.
             311          (1) Subsections 31A-22-305 (7)(f) and (10)(b)(viii) apply retroactively to any claim on
             312      or after January 1, 1995 for which as of May 3, 2004, a court of competent jurisdiction has not
             313      issued a final unappealable judgment or order.
             314          (2) The Legislature finds that the retroactive application of Subsections
             315      31A-22-305 (7)(f) and (10)(b)(viii):
             316          (a) does not enlarge, eliminate, or destroy vested rights; and
             317          (b) clarifies legislative intent.




Legislative Review Note
    as of 2-23-04 2:41 PM


This bill applies retroactively to claims on or after January 1, 1995. The due process clause of
the United States Constitution and the Utah Constitution restricts a legislature's ability to make
statutory changes retroactive. However, the Utah Supreme Court has recognized an exception
for statutory amendments that clarify an ambiguity in the original statute. Evans & Sutherland
Computer Corp. v. Utah State Tax Comm'n
, 953 P.2d 435, 440 (Utah 1997). This exception
applies if the amendments are not substantive amendments that enlarge, eliminate, or destroy
vested contractual rights. Keegan v. State, 896 P.2d 618, 620-21 (Utah 1995); see also,
Thomas v. Color Country Management, 492 Utah Adv. Rep. 9 (Utah 2004)(Durham, J.,
concurring). It is for a court to determine whether the retroactive amendments in this bill are
procedural rather than substantive amendments that enlarge, eliminate, or destroy substantive
rights.

Office of Legislative Research and General Counsel


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