First Substitute H.B. 261

This document includes House Committee Amendments incorporated into the bill on Fri, Feb 18, 2005 at 2:32 PM by chopkin. --> This document includes House Floor Amendments incorporated into the bill on Wed, Feb 23, 2005 at 1:35 PM by chopkin. -->

Representative Kerry W. Gibson proposes the following substitute bill:

1 MOTORBOAT LIABILITY INSURANCE AMENDMENTS
2 2005 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: Kerry W. Gibson
5
6 LONG TITLE
7 General Description:
8 This bill modifies the Insurance Code, the State Boating Act, and the Financial
9 Responsibility of Personal Watercraft Owners and Operators Act by amending
10 provisions related to motorboat insurance.
11 Highlighted Provisions:
12 This bill:
13 . defines motorboat and includes personal watercraft in the definition of motorboat;
14 . requires that each resident owner and certain nonresident owners of a motorboat
15 shall maintain owner's or operator's security if the motorboat is operated on the
16 waters of the state;
17 . provides that it is a class B misdemeanor to operate a motorboat on the waters of the
18 state without certain owner's or operator's security being in effect;
19 . requires a person operating a motorboat to carry evidence of owner's or operator's
20 security for the motorboat and display it upon demand of a peace officer;
21 . provides certain requirements for a certificate of self-funded coverage for
22 motorboats;
23 . provides certain requirements for claims adjustment for persons who maintain
24 motorboat owner's or operator's security by means other than an insurance policy;
25 . provides requirements for a liability insurance policy purchased to satisfy the

26 owner's or operator's security requirement for motorboats;
27 . provides minimum limits for a motorboat liability coverage policy; and
28 . makes technical changes.
29 Monies Appropriated in this Bill:
30 None
31 Other Special Clauses:
32 None
33 Utah Code Sections Affected:
34 AMENDS:
35 31A-22-315, as last amended by Chapter 90, Laws of Utah 2004
36 31A-22-1501, as enacted by Chapter 348, Laws of Utah 1997
37 31A-22-1502, as enacted by Chapter 348, Laws of Utah 1997
38 31A-22-1503, as enacted by Chapter 348, Laws of Utah 1997
39 31A-22-1504, as enacted by Chapter 348, Laws of Utah 1997
40 73-18-13.5, as enacted by Chapter 348, Laws of Utah 1997
41 73-18c-101, as enacted by Chapter 348, Laws of Utah 1997
42 73-18c-102, as enacted by Chapter 348, Laws of Utah 1997
43 73-18c-301, as enacted by Chapter 348, Laws of Utah 1997
44 73-18c-302, as enacted by Chapter 348, Laws of Utah 1997
45 73-18c-303, as enacted by Chapter 348, Laws of Utah 1997
46 73-18c-304, as last amended by Chapter 298, Laws of Utah 2003
47 73-18c-306, as enacted by Chapter 348, Laws of Utah 1997
48 73-18c-307, as last amended by Chapter 90, Laws of Utah 2004
49
50 Be it enacted by the Legislature of the state of Utah:
51 Section 1. Section 31A-22-315 is amended to read:
52 31A-22-315. Motor vehicle insurance reporting -- Penalty.
53 (1) (a) Each insurer that issues a policy that includes motor vehicle liability coverage,
54 uninsured motorist coverage, underinsured motorist coverage, or personal injury coverage
55 under this part shall before the seventh day of each calendar month provide to the Department
56 of Public Safety's designated agent selected in accordance with Title 41, Chapter 12a, Part 8,

57 Uninsured Motorist Identification Database Program, a record of each motor vehicle insurance
58 policy in effect for vehicles registered or garaged in Utah as of the previous month that was
59 issued by the insurer.
60 (b) This Subsection (1) does not preclude more frequent reporting.
61 (2) The record shall include:
62 (a) the name, date of birth, and driver license number, if the insured provides a driver
63 license number to the insurer, of each insured owner or operator, and the address of the named
64 insured;
65 (b) the make, year, and vehicle identification number of each insured vehicle; and
66 (c) the policy number, effective date, and expiration date of each policy.
67 (3) Each insurer shall provide this information [on magnetic tape] by an electronic
68 means or [in] by another form the Department of Public Safety's designated agent agrees to
69 accept.
70 (4) (a) The commissioner may, following procedures set forth in Title 63, Chapter 46b,
71 Administrative Procedures Act, assess a fine against an insurer of up to $250 for each day the
72 insurer fails to comply with this section.
73 (b) If an insurer shows that the failure to comply with this section was inadvertent,
74 accidental, or the result of excusable neglect, the commissioner shall excuse the fine.
75 Section 2. Section 31A-22-1501 is amended to read:
76 Part 15. Liability Insurance for Motorboats
77 31A-22-1501. Definitions.
78 As used in this part:
79 (1) "Motorboat" has the same meaning as defined under Section 73-18c-102 .
80 [(1)] (2) "Operator" has the same meaning as under Section 73-18c-102 .
81 [(2)] (3) "Owner" has the same meaning as under Section 73-18c-102 .
82 [(3) "Personal watercraft" has the same meaning as under Section 73-18-2 .]
83 (4) ["Personal watercraft] "Motorboat business" means a [personal watercraft]
84 motorboat sales agency, repair shop, service station, storage garage, or public marina.
85 (5) "Rental company" means any person or organization in the business of providing
86 [personal watercraft] motorboats to the public.
87 (6) "Renter" means any person or organization obtaining the use of a [personal

88 watercraft] motorboat from a rental company under the terms of a rental agreement.
89 Section 3. Section 31A-22-1502 is amended to read:
90 31A-22-1502. Motorboat liability coverage.
91 (1) A liability insurance policy purchased to satisfy the owner's or operator's security
92 requirement of Section 73-18c-301 shall:
93 (a) name the [personal watercraft] motorboat owner or operator in whose name the
94 policy was purchased, state that named insured's address, the coverage afforded, the premium
95 charged, the policy period, and the limits of liability;
96 (b) (i) if it is an owner's policy:
97 (A) designate by appropriate reference each [personal watercraft] motorboat on which
98 coverage is granted;
99 (B) insure the person named in the policy;
100 (C) insure any other person using any named [personal watercraft] motorboat with the
101 express or implied permission of the named insured; and
102 (D) except as provided in Subsection (7), insure any person included in Subsection
103 (1)(c) against loss from the liability imposed by law for damages arising out of the ownership,
104 maintenance, or use of the named [personal watercraft] motorboat within the United States and
105 Canada, subject to limits exclusive of interest and costs, for each [personal watercraft]
106 motorboat, in amounts not less than the minimum limits specified under Section 31A-22-1503 ;
107 or
108 (ii) if it is an operator's policy, insure the person named as insured against loss from the
109 liability imposed upon him or her by law for damages arising out of the insured's use of any
110 [personal watercraft] motorboat not owned by the insured, within the same territorial limits and
111 with the same limits of liability as in an owner's policy under Subsection (1)(b)(i); and
112 (c) except as provided in Subsection (7), insure persons related to the named insured by
113 blood, marriage, adoption, or guardianship who are residents of the named insured's household,
114 including those who usually make their home in the same household but temporarily live
115 elsewhere, to the same extent as the named insured.
116 (2) A liability insurance policy covering [personal watercraft] a motorboat may:
117 (a) provide for the prorating of the insurance under that policy with other valid and
118 collectible insurance;

119 (b) grant any lawful coverage in addition to the required [personal watercraft]
120 motorboat liability coverage;
121 (c) if the policy is issued to a person other than a [personal watercraft] motorboat
122 business, limit the coverage afforded to a [personal watercraft] motorboat business or its
123 officers, agents, or employees to the minimum limits under Section 31A-22-1503 , and to those
124 instances when there is no other valid and collectible insurance with at least those limits,
125 whether the other insurance is primary, excess, or contingent; and
126 (d) if issued to a [personal watercraft] motorboat business, restrict coverage afforded to
127 anyone other than the [personal watercraft] motorboat business or its officers, agents, or
128 employees to the minimum limits under Section 31A-22-1503 , and to those instances when
129 there is no other valid and collectible insurance with at least those limits, whether the other
130 insurance is primary, excess, or contingent.
131 (3) [Personal watercraft] Motorboat liability coverage need not insure any liability:
132 (a) under any workers' compensation law under Title 34A, Utah Labor Code;
133 (b) resulting from bodily injury to or death of an employee of the named insured, other
134 than a domestic employee, while engaged in the employment of the insured, or while engaged
135 in the operation, maintenance, or repair of a designated [personal watercraft] motorboat; or
136 (c) resulting from damage to property owned by, rented to, bailed to, or transported by
137 the insured.
138 (4) An insurance carrier providing [personal watercraft] motorboat liability coverage
139 has the right to settle any claim covered by the policy, and if the settlement is made in good
140 faith, the amount of the settlement is deductible from the limits of liability specified under
141 Section 31A-22-1503 .
142 (5) A policy containing [personal watercraft] motorboat liability coverage imposes on
143 the insurer the duty to defend, in good faith, any person insured under the policy against any
144 claim or suit seeking damages which would be payable under the policy.
145 (6) (a) If a policy containing [personal watercraft] motorboat liability coverage
146 provides an insurer with the defense of lack of cooperation on the part of the insured, that
147 defense is not effective against a third person making a claim against the insurer, unless there
148 was collusion between the third person and the insured.
149 (b) If the defense of lack of cooperation is not effective against the claimant, after

150 payment, the insurer is subrogated to the injured person's claim against the insured to the extent
151 of the payment and is entitled to reimbursement by the insured after the injured third person has
152 been made whole with respect to the claim against the insured.
153 (7) A policy of [personal watercraft] motorboat liability coverage may specifically
154 exclude from coverage a person who is a resident of the named insured's household, including
155 a person who usually makes his or her home in the same household but temporarily lives
156 elsewhere, if each person excluded from coverage satisfies the owner's or operator's security
157 requirement of Section [ 73-18c-101 ] 73-18c-301 , independently of the named insured's proof
158 of owner's or operator's security.
159 Section 4. Section 31A-22-1503 is amended to read:
160 31A-22-1503. Motorboat liability policy minimum limits.
161 Policies containing [personal watercraft] motorboat liability coverage may not limit the
162 insurer's liability under that coverage below the following:
163 (1) (a) $25,000 because of liability for bodily injury to or death of one person, arising
164 out of the use of a [personal watercraft] motorboat in any one accident;
165 (b) subject to the limit for one person in Subsection (1)(a), in the amount of $50,000
166 because of liability for bodily injury to or death of two or more persons arising out of the use of
167 a [personal watercraft] motorboat in any one accident; and
168 (c) in the amount of $15,000 because of liability for injury to, or destruction of,
169 property of others arising out of the use of a [personal watercraft] motorboat in any one
170 accident; or
171 (2) $65,000 in any one accident whether arising from bodily injury to or the death of
172 others, or from destruction of, or damage to, the property of others.
173 Section 5. Section 31A-22-1504 is amended to read:
174 31A-22-1504. Mandatory coverage.
175 (1) A rental company shall provide its renters with primary coverage meeting the
176 requirements of Title 73, Chapter 18c, Financial Responsibility of [Personal Watercraft]
177 Motorboat Owners and Operators Act.
178 (2) All coverage shall include primary defense costs and may not be waived.
179 Section 6. Section 73-18-13.5 is amended to read:
180 73-18-13.5. Motorboat accidents -- Investigation and report of operator security

181 -- Agency action if no security -- Surrender of registration materials.
182 (1) Upon request of a peace officer investigating an accident involving a [personal
183 watercraft] motorboat as defined in Section 73-18c-102 , the operator of the [personal
184 watercraft] motorboat shall provide evidence of the owner's or operator's security required
185 under Section 73-18c-301 .
186 (2) The peace officer shall record on a form approved by the division:
187 (a) the information provided by the operator;
188 (b) whether the operator provided insufficient or no information; and
189 (c) whether the peace officer finds reasonable cause to believe that any information
190 given is not correct.
191 (3) The peace officer shall deposit all completed forms with the peace officer's agency,
192 which shall forward the forms to the division no later than ten days after receipt.
193 (4) (a) The division shall revoke the registration of a [personal watercraft] motorboat as
194 defined in Section 73-18c-102 involved in an accident unless the owner or operator can
195 demonstrate to the division compliance with the owner's or operator's security requirement of
196 Section 73-18c-301 at the time of the accident.
197 (b) Any registration revoked may not be renewed for a period of one year following the
198 date of revocation.
199 (5) A person may appeal a revocation issued under Subsection (4) in accordance with
200 procedures established by the board by rule that are consistent with Title 63, Chapter 46b,
201 Administrative Procedures Act.
202 (6) (a) Any person whose registration is revoked under Subsection (4) shall return the
203 registration card and decals for the [personal watercraft] motorboat to the division.
204 (b) If the person fails to return the registration materials as required, they shall be
205 confiscated under Section 73-18-13.6 .
206 (7) The board may make rules for the enforcement of this section.
207 (8) In this section, "evidence of owner's or operator's security" includes any one of the
208 following:
209 (a) the operator's:
210 (i) insurance policy;
211 (ii) binder notice;

212 (iii) renewal notice; or
213 (iv) card issued by an insurance company as evidence of insurance;
214 (b) a copy of a surety bond, certified by the surety, which conforms to Section
215 73-18c-102 ;
216 (c) a certificate of the state treasurer issued under Section 73-18c-305 ; or
217 (d) a certificate of self-funded coverage issued under Section 73-18c-306 .
218 Section 7. Section 73-18c-101 is amended to read:
219 CHAPTER 18c. FINANCIAL RESPONSIBILITY OF MOTORBOAT
220 OWNERS AND OPERATORS ACT
221 73-18c-101. Title.
222 This chapter [may be cited] is known as the "Financial Responsibility of [Personal
223 Watercraft] Motorboat Owners and Operators Act."
224 Section 8. Section 73-18c-102 is amended to read:
225 73-18c-102. Definitions.
226 As used in this chapter:
227 (1) "Board" means the Board of Parks and Recreation.
228 (2) "Division" means the Division of Parks and Recreation.
229 (3) "Judgment" means any judgment that is final by:
230 (a) expiration without appeal of the time within which an appeal might have been
231 perfected; or
232 (b) final affirmation on appeal, rendered by a court of competent jurisdiction of any
233 state or of the United States, upon a cause of action for damages:
234 (i) arising out of the ownership, maintenance, or use of any personal watercraft,
235 including damages for care and loss of services because of bodily injury to or death of any
236 person, or because of injury to or destruction of property including the loss of use of the
237 property; or
238 (ii) on a settlement agreement.
239 (4) (a) "Motorboat" has the same meaning as defined in Section 73-18-2 .
240 (b) "Motorboat" includes personal watercraft H. regardless of the manufacturer
240a listed horsepower .H .
241 (c) "Motorboat" does not include a boat with a motor with a manufacturer listed
242 horsepower of 50 horsepower or less.

243 [(4)] (5) "Nonresident" means any person who is not a resident of Utah.
244 [(5)] (6) "Operator" means the person who is in control of a [personal watercraft]
245 motorboat while it is in use.
246 [(6)] (7) (a) "Owner" means a person, other than a lien holder, holding a proprietary
247 interest in or the title to a [personal watercraft] motorboat.
248 (b) "Owner" includes a person entitled to the use or possession of a [personal
249 watercraft] motorboat subject to an interest by another person, reserved or created by
250 agreement and securing payment or performance of an obligation.
251 (c) "Owner" does not include a lessee under a lease not intended as security.
252 [(7)] (8) "Owner's or operator's security," "owner's security," or "operator's security"
253 means any of the following:
254 (a) an insurance policy or combination of policies conforming to Sections
255 31A-22-1502 and 31A-22-1503 , which is issued by an insurer authorized to do business in
256 Utah;
257 (b) a surety bond issued by an insurer authorized to do a surety business in Utah in
258 which the surety is subject to the minimum coverage limits and other requirements of policies
259 conforming to Sections 31A-22-1502 and 31A-22-1503 , which names the division as a creditor
260 under the bond for the use of persons entitled to the proceeds of the bond;
261 (c) a deposit with the state treasurer of cash or securities complying with Section
262 73-18c-305 ;
263 (d) a certificate of self-funded coverage issued under Section 73-18c-306 ; or
264 (e) a policy conforming to Sections 31A-22-1502 and 31A-22-1503 issued by the Risk
265 Management Fund created in Section 63A-4-201 .
266 [(8)] (9) "Personal watercraft" has the same meaning as provided in Section 73-18-2 .
267 [(9)] (10) "Registration" means the issuance of the registration cards and decals issued
268 under the laws of Utah pertaining to the registration of [personal watercraft] motorboats.
269 [(10)] (11) "Registration materials" means the evidences of [personal watercraft]
270 motorboat registration, including all registration cards and decals.
271 [(11)] (12) "Self-insurance" has the same meaning as provided in Section 31A-1-301 .
272 [(12)] (13) "Waters of the state" means any waters within the territorial limits of this
273 state.

274 Section 9. Section 73-18c-301 is amended to read:
275 73-18c-301. Requirement of owner's or operator's security.
276 (1) Each resident owner of a [personal watercraft] motorboat shall maintain owner's or
277 operator's security in effect at any time that the [personal watercraft] motorboat is operated on
278 waters of the state.
279 (2) Each nonresident owner of a [personal watercraft] motorboat that has been
280 physically present in this state for 90 or fewer days during the preceding 365 days shall
281 maintain the type and amount of owner's or operator's security required in his or her place of
282 residence at any time the [personal watercraft] motorboat is operated on waters of the state.
283 (3) Each nonresident owner of a [personal watercraft] motorboat that has been
284 physically present in this state more than 90 days during the preceding 365 days shall thereafter
285 maintain owner's or operator's security in effect at any time the [personal watercraft] motorboat
286 is operated on waters of the state.
287 (4) The state and each of its political subdivisions and their respective departments,
288 institutions, or agencies shall maintain owner's or operator's security in effect at any time their
289 [personal watercraft] motorboats are operated on waters of the state.
290 (5) Any other state is considered a nonresident owner of its [personal watercraft]
291 motorboat and is subject to Subsection (2) or (3).
292 (6) The United States, any political subdivision of it, or any of its agencies may
293 maintain owner's or operator's security in effect for their [personal watercraft] motorboats.
294 Section 10. Section 73-18c-302 is amended to read:
295 73-18c-302. Operating a motorboat without owner's or operator's security --
296 Penalty.
297 (1) Any owner of a [personal watercraft] motorboat on which owner's or operator's
298 security is required under Section 73-18c-301 , who operates the [personal watercraft]
299 motorboat or permits it to be operated on waters of the state without owner's security being in
300 effect is guilty of a class B misdemeanor.
301 (2) Any other person who operates a [personal watercraft] motorboat upon waters of
302 the state with the knowledge that the owner does not have owner's security in effect for the
303 [personal watercraft] motorboat is also guilty of a class B misdemeanor, unless that person has
304 in effect owner's or operator's security on a Utah-registered [personal watercraft] motorboat or

305 its equivalent that covers the operation, by him or her, of the [personal watercraft] motorboat in
306 question.
307 Section 11. Section 73-18c-303 is amended to read:
308 73-18c-303. Condition to obtaining registration.
309 The owner of a [personal watercraft] motorboat required to maintain owner's security
310 under Section 73-18c-301 shall be required to swear or affirm, in writing, that he or she has
311 owner's security in effect at the time of registering the [personal watercraft] motorboat.
312 Section 12. Section 73-18c-304 is amended to read:
313 73-18c-304. Evidence of owner's or operator's security to be carried when
314 operating a motorboat -- Defense -- Penalties.
315 (1) (a) (i) Except as provided in Subsection (1)(a)(ii), a person operating a [personal
316 watercraft] motorboat shall:
317 (A) have in the person's immediate possession evidence of owner's or operator's
318 security for the [personal watercraft] motorboat the person is operating; and
319 (B) display it upon demand of a peace officer.
320 (ii) A person operating a government-owned or government-leased [personal
321 watercraft] motorboat is exempt from the requirements of Subsection (1)(a)(i).
322 (b) Evidence of owner's or operator's security includes any one of the following:
323 (i) the operator's:
324 (A) insurance policy;
325 (B) binder notice;
326 (C) renewal notice; or
327 (D) card issued by an insurance company as evidence of insurance;
328 (ii) a copy of a surety bond, certified by the surety, which conforms to Section
329 73-18c-102 ;
330 (iii) a certificate of the state treasurer issued under Section 73-18c-305 ; or
331 (iv) a certificate of self-funded coverage issued under Section 73-18c-306 .
332 (2) It is an affirmative defense to a charge under this section that the person had
333 owner's or operator's security in effect for the [personal watercraft] motorboat the person was
334 operating at the time of the person's citation or arrest.
335 (3) (a) A letter from an insurance producer or company verifying that the person had

336 the required liability insurance coverage on the date specified is considered proof of owner's or
337 operator's security for purposes of Subsection (2).
338 (b) The court considering a citation issued under this section shall allow the letter
339 under Subsection (3)(a) and a copy of the citation to be faxed or mailed to the clerk of the court
340 to satisfy Subsection (2).
341 (4) A violation of this section is a class B misdemeanor.
342 (5) If a person is convicted of a violation of this section and if the person is the owner
343 of a [personal watercraft] motorboat, the court shall:
344 (a) require the person to surrender the person's registration materials to the court; and
345 (b) forward the registration materials, together with a copy of the conviction, to the
346 division.
347 (6) (a) Upon receiving notification from a court of a conviction for a violation of this
348 section, the division shall revoke the person's [personal watercraft] motorboat registration.
349 (b) Any registration revoked may not be renewed for a period of one year following the
350 date of revocation.
351 Section 13. Section 73-18c-306 is amended to read:
352 73-18c-306. Certificate of self-funded coverage as proof of owner's or operator's
353 security.
354 (1) The division may, upon the application of any person, issue a certificate of
355 self-funded coverage when it is satisfied that the person has:
356 (a) more than 24 [personal watercraft] motorboats; and
357 (b) H. [ deposits ] on deposit .H , in a form approved by the division, H. cash or .H
357a securities in an amount of $200,000
358 plus $100 for each [personal watercraft] motorboat up to and including 1,000 [personal
359 watercraft] motorboats and $50 for each [personal watercraft] motorboat over 1,000 [personal
360 watercraft] motorboats.
361 (2) Persons holding a certificate of self-funded coverage under this chapter shall pay
362 benefits to persons injured from the self-funded person's operation, maintenance, and use of
363 [personal watercraft] motorboats as would an insurer issuing a policy to the self-funded person
364 containing the coverages under Sections 31A-22-1502 and 31A-22-1503 .
365 (3) In accordance with Title 63, Chapter 46b, Administrative Procedures Act, the
366 division may, upon reasonable grounds, cancel the certificate. Failure to pay any judgment up

367 to the limit under Subsection 31A-22-1503 (2) within 30 days after the judgment is final is a
368 reasonable ground to cancel the certificate.
369 (4) Any government entity with self-funded coverage for government-owned [personal
370 watercraft] motorboats under Title 63, Chapter [30, Utah] 30d, Governmental Immunity Act of
371 Utah, meets the requirements of this section.
372 Section 14. Section 73-18c-307 is amended to read:
373 73-18c-307. Claims adjustment by persons with owner's or operator's security
374 other than insurance.
375 (1) An owner or operator of a [personal watercraft] motorboat who maintains owner's
376 or operator's security by a means other than an insurance policy under Section 73-18c-102 ,
377 shall refer all bodily injury claims against the owner's or operator's security to an independent
378 adjuster licensed under Title 31A, Chapter 26, Insurance Adjusters, or to an attorney.
379 (2) Unless otherwise provided by contract, any [personal watercraft] motorboat claim
380 adjustment expense incurred by a person maintaining owner's or operator's security by a means
381 other than an insurance policy under Section 73-18c-102 , shall be paid by the person who
382 maintains this type of owner's or operator's security.
383 (3) Owners and operators of [personal watercraft] motorboats maintaining owner's or
384 operator's security by a means other than an insurance policy under Section 73-18c-102 are
385 subject to the claim adjustment provisions of Title 31A, Chapter 26, Part 3, Claim Practices, in
386 connection with claims against persons which arise out of the ownership, maintenance, or use
387 of a [personal watercraft] motorboat.