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S.B. 49


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Senate Committee Amendments 2-1-2005 rd/sch
This document includes Senate Committee Amendments incorporated into the bill on Tue, Feb 1, 2005 at 11:53 AM by rday. -->              1
    
MOTOR VEHICLE LIABILITY COVERAGE

             2     
AMENDMENTS

             3     
2005 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 by amending provisions related to motor vehicle
             10      liability coverage.
             11      Highlighted Provisions:
             12          This bill:
             13          .    provides that motor vehicle liability coverage need not insure any liability that arises
             14      out of acts by the insured that are intended to cause S. property .S damage S. [ or ] , bodily .S              14a      injury S. [ ; and ] , or death;
             14b           .    provides that a motor vehicle that has been denied liability coverage for intentional
             14c      acts is covered under uninsured and underinsured motorist coverage; and .S
             15          .    makes technical changes.
             16      Monies Appropriated in this Bill:
             17          None
             18      Other Special Clauses:
             19          None
             20      Utah Code Sections Affected:
             21      AMENDS:
             22          31A-22-303, as last amended by Chapters 90 and 126, Laws of Utah 2004
             22a      S. 31A-22-305, as last amended by Chapters 117, 267 and 304, Laws of Utah 2004 .S
             23     

             24      Be it enacted by the Legislature of the state of Utah:
             25          Section 1. Section 31A-22-303 is amended to read:
             26           31A-22-303. Motor vehicle liability coverage.


             27          (1) (a) In addition to complying with the requirements of Chapter 21, Insurance



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             28
     Contracts in General, and Chapter 22, Part 2, Liability Insurance in General, a policy of motor
             29      vehicle liability coverage under Subsection 31A-22-302 (1)(a) shall:
             30          (i) name the motor vehicle owner or operator in whose name the policy was purchased,
             31      state that named insured's address, the coverage afforded, the premium charged, the policy
             32      period, and the limits of liability;
             33          (ii) (A) if it is an owner's policy, designate by appropriate reference all the motor
             34      vehicles on which coverage is granted, insure the person named in the policy, insure any other
             35      person using any named motor vehicle with the express or implied permission of the named
             36      insured, and, except as provided in Subsection (7), insure any person included in Subsection
             37      (1)(a)(iii) against loss from the liability imposed by law for damages arising out of the
             38      ownership, maintenance, or use of these motor vehicles within the United States and Canada,
             39      subject to limits exclusive of interest and costs, for each motor vehicle, in amounts not less
             40      than the minimum limits specified under Section 31A-22-304 ; or
             41          (B) if it is an operator's policy, insure the person named as insured against loss from
             42      the liability imposed upon him by law for damages arising out of the insured's use of any motor
             43      vehicle not owned by him, within the same territorial limits and with the same limits of liability
             44      as in an owner's policy under Subsection (1)(a)(ii)(A);
             45          (iii) except as provided in Subsection (7), insure persons related to the named insured
             46      by blood, marriage, adoption, or guardianship who are residents of the named insured's
             47      household, including those who usually make their home in the same household but
             48      temporarily live elsewhere, to the same extent as the named insured and the available coverage
             49      of the policy may not be reduced to the persons described in this Subsection (1)(a)(iii) because:
             50          (A) a permissive user driving a covered motor vehicle is at fault in causing an accident;
             51      or
             52          (B) the named insured or any of the persons described in this Subsection (1)(a)(iii)
             53      driving a covered motor vehicle is at fault in causing an accident; and
             54          (iv) cover damages or injury resulting from a covered driver of a motor vehicle who is
             55      stricken by an unforeseeable paralysis, seizure, or other unconscious condition and who is not
             56      reasonably aware that paralysis, seizure, or other unconscious condition is about to occur to the
             57      extent that a person of ordinary prudence would not attempt to continue driving.
             58          (b) The driver's liability under Subsection (1)(a)(iv) is limited to the insurance



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             59
     coverage.
             60          (2) (a) A policy containing motor vehicle liability coverage under Subsection
             61      31A-22-302 (1)(a) may:
             62          (i) provide for the prorating of the insurance under that policy with other valid and
             63      collectible insurance;
             64          (ii) grant any lawful coverage in addition to the required motor vehicle liability
             65      coverage;
             66          (iii) if the policy is issued to a person other than a motor vehicle business, limit the
             67      coverage afforded to a motor vehicle business or its officers, agents, or employees to the
             68      minimum limits under Section 31A-22-304 , and to those instances when there is no other valid
             69      and collectible insurance with at least those limits, whether the other insurance is primary,
             70      excess, or contingent; and
             71          (iv) if issued to a motor vehicle business, restrict coverage afforded to anyone other
             72      than the motor vehicle business or its officers, agents, or employees to the minimum limits
             73      under Section 31A-22-304 , and to those instances when there is no other valid and collectible
             74      insurance with at least those limits, whether the other insurance is primary, excess, or
             75      contingent.
             76          (b) (i) The liability insurance coverage of a permissive user of a motor vehicle owned
             77      by a motor vehicle business shall be primary coverage.
             78          (ii) The liability insurance coverage of a motor vehicle business shall be secondary to
             79      the liability insurance coverage of a permissive user as specified under Subsection (2)(b)(i).
             80          (3) Motor vehicle liability coverage need not insure any liability:
             81          (a) under any workers' compensation law under Title 34A, Utah Labor Code;
             82          (b) resulting from bodily injury to or death of an employee of the named insured, other
             83      than a domestic employee, while engaged in the employment of the insured, or while engaged
             84      in the operation, maintenance, or repair of a designated vehicle; [or]
             85          (c) resulting from damage to property owned by, rented to, bailed to, or transported by
             86      the insured[.]; or
             87          (d) arising out of acts by the insured that are intended to cause S. property .S damage
             87a      S. [ or ] , bodily .S injury S. , or death .S .
             88          (4) An insurance carrier providing motor vehicle liability coverage has the right to
             89      settle any claim covered by the policy, and if the settlement is made in good faith, the amount




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             90
     of the settlement is deductible from the limits of liability specified under Section 31A-22-304 .
             91          (5) A policy containing motor vehicle liability coverage imposes on the insurer the
             92      duty to defend, in good faith, any person insured under the policy against any claim or suit
             93      seeking damages which would be payable under the policy.
             94          (6) (a) If a policy containing motor vehicle liability coverage provides an insurer with
             95      the defense of lack of cooperation on the part of the insured, that defense is not effective
             96      against a third person making a claim against the insurer, unless there was collusion between
             97      the third person and the insured.
             98          (b) If the defense of lack of cooperation is not effective against the claimant, after
             99      payment, the insurer is subrogated to the injured person's claim against the insured to the extent
             100      of the payment and is entitled to reimbursement by the insured after the injured third person has
             101      been made whole with respect to the claim against the insured.
             102          (7) A policy of motor vehicle liability coverage under Subsection 31A-22-302 (1) may
             103      specifically exclude from coverage a person who is a resident of the named insured's
             104      household, including a person who usually makes his home in the same household but
             105      temporarily lives elsewhere, if:
             106          (a) at the time of the proposed exclusion, each person excluded from coverage satisfies
             107      the owner's or operator's security requirement of Section 41-12a-301 , independently of the
             108      named insured's proof of owner's or operator's security;
             109          (b) the named insured and the person excluded from coverage each provide written
             110      consent to the exclusion; and
             111          (c) the insurer includes the name of each person excluded from coverage in the
             112      evidence of insurance provided to an additional insured or loss payee.
             113          (8) A policy of motor vehicle liability coverage may limit coverage to the policy
             114      minimum limits under Section 31A-22-304 if the insured motor vehicle is operated by a person
             115      who has consumed any alcohol or any illegal drug or illegal substance if the policy or a
             116      specifically reduced premium was extended to the insured upon express written declaration
             117      executed by the insured that the insured motor vehicle would not be so operated.
             118          (9) (a) When a claim is brought exclusively by a named insured or a person described
             119      in Subsection (1)(a)(iii) and asserted exclusively against a named insured or an individual
             120      described in Subsection (1)(a)(iii), the claimant may elect to resolve the claim:



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             121
         (i) by submitting the claim to binding arbitration; or
             122          (ii) through litigation.
             123          (b) Once the claimant has elected to commence litigation under Subsection (9)(a)(ii),
             124      the claimant may not elect to resolve the claim through binding arbitration under this section
             125      without the written consent of both parties and the defendant's liability insurer.
             126          (c) (i) Unless otherwise agreed on in writing by the parties, a claim that is submitted to
             127      binding arbitration under Subsection (9)(a)(i) shall be resolved by a panel of three arbitrators.
             128          (ii) Unless otherwise agreed on in writing by the parties, each party shall select an
             129      arbitrator. The arbitrators selected by the parties shall select a third arbitrator.
             130          (d) Unless otherwise agreed on in writing by the parties, each party will pay the fees
             131      and costs of the arbitrator that party selects. Both parties shall share equally the fees and costs
             132      of the third arbitrator.
             133          (e) Except as otherwise provided in this section, an arbitration procedure conducted
             134      under this section shall be governed by Title 78, Chapter 31a, Utah Uniform Arbitration Act,
             135      unless otherwise agreed on in writing by the parties.
             136          (f) (i) Discovery shall be conducted in accordance with Rules 26b through 36, Utah
             137      Rules of Civil Procedure.
             138          (ii) All issues of discovery shall be resolved by the arbitration panel.
             139          (g) A written decision of two of the three arbitrators shall constitute a final decision of
             140      the arbitration panel.
             141          (h) Prior to the rendering of the arbitration award:
             142          (i) the existence of a liability insurance policy may be disclosed to the arbitration
             143      panel; and
             144          (ii) the amount of all applicable liability insurance policy limits may not be disclosed to
             145      the arbitration panel.
             146          (i) The amount of the arbitration award may not exceed the liability limits of all the
             147      defendant's applicable liability insurance policies, including applicable liability umbrella
             148      policies. If the initial arbitration award exceeds the liability limits of all applicable liability
             149      insurance policies, the arbitration award shall be reduced to an amount equal to the liability
             150      limits of all applicable liability insurance policies.
             151          (j) The arbitration award is the final resolution of all claims between the parties unless



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     the award was procured by corruption, fraud, or other undue means.
             153          (k) If the arbitration panel finds that the action was not brought, pursued, or defended
             154      in good faith, the arbitration panel may award reasonable fees and costs against the party that
             155      failed to bring, pursue, or defend the claim in good faith.
             156          (l) Nothing in this section is intended to limit any claim under any other portion of an
             157      applicable insurance policy.
             158          (10) An at-fault driver or an insurer issuing a policy of insurance under this part that is
             159      covering an at-fault driver may not reduce compensation to an injured party based on the
             160      injured party not being covered by a policy of insurance that provides personal injury
             161      protection coverage under Sections 31A-22-306 through 31A-22-309 .
             161a      S. Section 2. Section 31A-22-305 is amended to read:
             161b              31A-22-305.   Uninsured and underinsured motorist coverage.
             161c              (1) As used in this section, "covered persons" includes:
             161d              (a) the named insured;
             161e              (b) persons related to the named insured by blood, marriage, adoption, or
             161f      guardianship, who are residents of the named insured's household, including those who
             161g      usually make their home in the same household but temporarily live elsewhere;
             161h              (c) any person occupying or using a motor vehicle:
             161i              (i) referred to in the policy; or
             161j              (ii) owned by a self-insured; and
             161k              (d) any person who is entitled to recover damages against the owner or operator
             161l      of the uninsured or underinsured motor vehicle because of bodily injury to or death of persons
             161m      under Subsection (1)(a), (b), or (c).
             161n              (2) As used in this section, "uninsured motor vehicle" includes:
             161o              (a) (i) a motor vehicle, the operation, maintenance, or use of which is not
             161p      covered under a liability policy at the time of an injury-causing occurrence; or
             161q              (ii) (A) a motor vehicle covered with lower liability limits than required by
             161r      Section 31A-22-304; and
             161s              (B) the motor vehicle described in Subsection (2)(a)(ii)(A) is uninsured to the
             161t      extent of the deficiency;
             161u              (b) an unidentified motor vehicle that left the scene of an accident proximately
             161v      caused by the motor vehicle operator;


             161w              (c) a motor vehicle covered by a liability policy, but coverage for an accident is
             161x      disputed by the liability insurer for more than 60 days or continues to be disputed for .S


            
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161y
     S. more than 60 days;
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             161z              (d) (i) an insured motor vehicle if, before or after the accident, the liability
             161aa      insurer of the motor vehicle is declared insolvent by a court of competent jurisdiction; and
             161ab              (ii) the motor vehicle described in Subsection (2)(d)(i) is uninsured only to the
             161ac      extent that the claim against the insolvent insurer is not paid by a guaranty association or
             161ad      fund
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             161ae          (e) a motor vehicle covered by a liability policy, but coverage has been denied by the
             161af      liability insurer under Subsection 31A-22-303(3)(d).
             161ag              (3) (a) Uninsured motorist coverage under Subsection 31A-22-302(1)(b)
             161ah      provides coverage for covered persons who are legally entitled to recover damages from
             161ai      owners or operators of uninsured motor vehicles because of bodily injury, sickness, disease, or
             161aj      death.
             161ak              (b) For new policies written on or after January 1, 2001, the limits of uninsured
             161al      motorist coverage shall be equal to the lesser of the limits of the insured's motor vehicle
             161am      liability coverage or the maximum uninsured motorist coverage limits available by the insurer
             161an      under the insured's motor vehicle policy, unless the insured purchases coverage in a lesser
             161ao      amount by signing an acknowledgment form provided by the insurer that:
             161ap              (i) waives the higher coverage;
             161aq              (ii) reasonably explains the purpose of uninsured motorist coverage; and
             161ar              (iii) discloses the additional premiums required to purchase uninsured motorist
             161as      coverage with limits equal to the lesser of the limits of the insured's motor vehicle liability
             161at      coverage or the maximum uninsured motorist coverage limits available by the insurer under
             161au      the insured's motor vehicle policy.
             161av              (c) A self-insured, including a governmental entity, may elect to provide
             161aw      uninsured motorist coverage in an amount that is less than its maximum self-insured retention
             161ax      under Subsections (3)(b) and (4)(a) by issuing a declaratory memorandum or policy statement
             161ay      from the chief financial officer or chief risk officer that declares the:
             161az              (i) self-insured entity's coverage level; and
             161ba              (ii) process for filing an uninsured motorist claim.
             161bb              (d) Uninsured motorist coverage may not be sold with limits that are less than
             161bc      the minimum bodily injury limits for motor vehicle liability policies under Section 31A-22-304.
             161bd              (e) The acknowledgment under Subsection (3)(b) continues for that issuer of the


             161be      uninsured motorist coverage until the insured, in writing, requests different uninsured
             161bf      motorist coverage from the insurer. .S


            
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161bg
         S.    (f) (i) In conjunction with the first two renewal notices sent after January 1,
             161bh      2001, for policies existing on that date, the insurer shall disclose in the same medium as the
             161bi      premium renewal notice, an explanation of:
             161bj              (A) the purpose of uninsured motorist coverage; and
             161bk              (B) the costs associated with increasing the coverage in amounts up to and
             161bl      including the maximum amount available by the insurer under the insured's motor vehicle
             161bm      policy.
             161bn              (ii) The disclosure required under this Subsection (3)(f) shall be sent to all
             161bo      insureds that carry uninsured motorist coverage limits in an amount less than the insured's
             161bp      motor vehicle liability policy limits or the maximum uninsured motorist coverage limits
             161bq      available by the insurer under the insured's motor vehicle policy.
             161br              (4) (a) (i) Except as provided in Subsection (4)(b), the named insured may reject
             161bs      uninsured motorist coverage by an express writing to the insurer that provides liability
             161bt      coverage under Subsection 31A-22-302(1)(a).
             161bu              (ii) This rejection shall be on a form provided by the insurer that includes a
             161bv      reasonable explanation of the purpose of uninsured motorist coverage.
             161bw              (iii) This rejection continues for that issuer of the liability coverage until the
             161bx      insured in writing requests uninsured motorist coverage from that liability insurer.
             161by              (b) (i) All persons, including governmental entities, that are engaged in the
             161bz      business of, or that accept payment for, transporting natural persons by motor vehicle, and all
             161ca      school districts that provide transportation services for their students, shall provide coverage
             161cb      for all motor vehicles used for that purpose, by purchase of a policy of insurance or by
             161cc      self-insurance, uninsured motorist coverage of at least $25,000 per person and $500,000 per
             161cd      accident.
             161ce              (ii) This coverage is secondary to any other insurance covering an injured
             161cf      covered person.
             161cg              (c) Uninsured motorist coverage:
             161ch              (i) is secondary to the benefits provided by Title 34A, Chapter 2, Workers'
             161ci      Compensation Act;
             161cj              (ii) may not be subrogated by the workers' compensation insurance carrier;
             161ck              (iii) may not be reduced by any benefits provided by workers' compensation
             161cl      insurance;


             161cm              (iv) may be reduced by health insurance subrogation only after the covered
             161cn      person has been made whole; .S


            
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161co
         S.    (v) may not be collected for bodily injury or death sustained by a person:
             161cp              (A) while committing a violation of Section 41-1a-1314;
             161cq              (B) who, as a passenger in a vehicle, has knowledge that the vehicle is being
             161cr      operated in violation of Section 41-1a-1314; or
             161cs              (C) while committing a felony; and
             161ct              (vi) notwithstanding Subsection (4)(c)(v), may be recovered:
             161cu              (A) for a person under 18 years of age who is injured within the scope of
             161cv      Subsection (4)(c)(v) but limited to medical and funeral expenses; or
             161cw              (B) by a law enforcement officer as defined in Section 53-13-103, who is injured
             161cx      within the course and scope of the law enforcement officer's duties.
             161cy              (d) As used in this Subsection (4), "motor vehicle" has the same meaning as
             161cz      under Section 41-1a-102.
             161da              (5) When a covered person alleges that an uninsured motor vehicle under
             161db      Subsection (2)(b) proximately caused an accident without touching the covered person or the
             161dc      motor vehicle occupied by the covered person, the covered person must show the existence of
             161dd      the uninsured motor vehicle by clear and convincing evidence consisting of more than the
             161de      covered person's testimony.
             161df              (6) (a) The limit of liability for uninsured motorist coverage for two or more
             161dg      motor vehicles may not be added together, combined, or stacked to determine the limit of
             161dh      insurance coverage available to an injured person for any one accident.
             161di              (b) (i) Subsection (6)(a) applies to all persons except a covered person as defined
             161dj      under Subsection (7)(b)(ii).
             161dk              (ii) A covered person as defined under Subsection (7)(b)(ii) is entitled to the
             161dl      highest limits of uninsured motorist coverage afforded for any one motor vehicle that the
             161dm      covered person is the named insured or an insured family member.
             161dn              (iii) This coverage shall be in addition to the coverage on the motor vehicle the
             161do      covered person is occupying.
             161dp              (iv) Neither the primary nor the secondary coverage may be set off against the
             161dq      other.
             161dr              (c) Coverage on a motor vehicle occupied at the time of an accident shall be
             161ds      primary coverage, and the coverage elected by a person described under Subsections (1)(a)
             161dt      and (b) shall be secondary coverage.


             161du              (7) (a) Uninsured motorist coverage under this section applies to bodily injury,
             161dv      sickness, disease, or death of covered persons while occupying or using a motor vehicle only.S


            
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161dw
     S. if the motor vehicle is described in the policy under which a claim is made, or if the motor
             161dx      vehicle is a newly acquired or replacement motor vehicle covered under the terms of the policy.
             161dy      Except as provided in Subsection (6) or this Subsection (7), a covered person injured in a
             161dz      motor vehicle described in a policy that includes uninsured motorist benefits may not elect to
             161ea      collect uninsured motorist coverage benefits from any other motor vehicle insurance policy
             161eb      under which the person is a covered person.
             161ec              (b) Each of the following persons may also recover uninsured motorist benefits
             161ed      under any one other policy in which they are described as a "covered person" as defined in
             161ee      Subsection (1):
             161ef              (i) a covered person injured as a pedestrian by an uninsured motor vehicle; and
             161eg              (ii) except as provided in Subsection (7)(c), a covered person injured while
             161eh      occupying or using a motor vehicle that is not owned, leased, or furnished:
             161ei              (A) to the covered person;
             161ej              (B) to the covered person's spouse; or
             161ek              (C) to the covered person's resident parent or resident sibling.
             161el              (c) (i) A covered person may recover benefits from no more than two additional
             161em      policies, one additional policy from each parent's household if the covered person is:
             161en              (A) a dependent minor of parents who reside in separate households; and
             161eo              (B) injured while occupying or using a motor vehicle that is not owned, leased,
             161ep      or furnished:
             161eq              (I) to the covered person;
             161er              (II) to the covered person's resident parent; or
             161es              (III) to the covered person's resident sibling.
             161et              (ii) Each parent's policy under this Subsection (7)(c) is liable only for the
             161eu      percentage of the damages that the limit of liability of each parent's policy of uninsured
             161ev      motorist coverage bears to the total of both parents' uninsured coverage applicable to the
             161ew      accident.
             161ex              (d) A covered person's recovery under any available policies may not exceed the
             161ey      full amount of damages.
             161ez              (e) A covered person in Subsection (7)(b) is not barred against making
             161fa      subsequent elections if recovery is unavailable under previous elections.
             161fb              (f) (i) As used in this section, "interpolicy stacking" means recovering benefits


             161fc      for a single incident of loss under more than one insurance policy.
             161fd              (ii) Except to the extent permitted by Subsection (6) and this Subsection .S


            
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161fe
     S. (7), interpolicy stacking is prohibited for uninsured motorist coverage.
             161ff              (8) (a) As used in this section, "underinsured motor vehicle" includes a motor
             161fg      vehicle, the operation, maintenance, or use of which is covered under a liability policy at the
             161fh      time of an injury-causing occurrence, but which has insufficient liability coverage to
             161fi      compensate fully the injured party for all special and general damages.
             161fj              (b) The term "underinsured motor vehicle" does not include:
             161fk              (i) a motor vehicle that is covered under the liability coverage of the same policy
             161fl      that also contains the underinsured motorist coverage;
             161fm              (ii) an uninsured motor vehicle as defined in Subsection (2); or
             161fn              (iii) a motor vehicle owned or leased by:
             161fo              (A) the named insured;
             161fp              (B) the named insured's spouse; or
             161fq              (C) any dependent of the named insured.
             161fr              (9) (a) (i) Underinsured motorist coverage under Subsection 31A-22-302(1)(c)
             161fs      provides coverage for covered persons who are legally entitled to recover damages from
             161ft      owners or operators of underinsured motor vehicles because of bodily injury, sickness, disease,
             161fu      or death.
             161fv              (ii) A covered person occupying or using a motor vehicle owned, leased, or
             161fw      furnished to the covered person, the covered person's spouse, or covered person's resident
             161fx      relative may recover underinsured benefits only if the motor vehicle is:
             161fy              (A) described in the policy under which a claim is made; or
             161fz              (B) a newly acquired or replacement motor vehicle covered under the terms of
             161ga      the policy.
             161gb              (b) For new policies written on or after January 1, 2001, the limits of
             161gc      underinsured motorist coverage shall be equal to the lesser of the limits of the insured's motor
             161gd      vehicle liability coverage or the maximum underinsured motorist coverage limits available by
             161ge      the insurer under the insured's motor vehicle policy, unless the insured purchases coverage in
             161gf      a lesser amount by signing an acknowledgment form provided by the insurer that:
             161gg              (i) waives the higher coverage;
             161gh              (ii) reasonably explains the purpose of underinsured motorist coverage; and
             161gi              (iii) discloses the additional premiums required to purchase underinsured
             161gj      motorist coverage with limits equal to the lesser of the limits of the insured's motor vehicle


             161gk      liability coverage or the maximum underinsured motorist coverage limits available by the
             161gl      insurer under the insured's motor vehicle policy. .S


            
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161gm
         S.    (c) A self-insured, including a governmental entity, may elect to provide
             161gn      underinsured motorist coverage in an amount that is less than its maximum self-insured
             161go      retention under Subsections (9)(b) and (9)(g) by issuing a declaratory memorandum or policy
             161gp      statement from the chief financial officer or chief risk officer that declares the:
             161gq              (i) self-insured entity's coverage level; and
             161gr              (ii) process for filing an underinsured motorist claim.
             161gs              (d) Underinsured motorist coverage may not be sold with limits that are less
             161gt      than:
             161gu              (i) $10,000 for one person in any one accident; and
             161gv              (ii) at least $20,000 for two or more persons in any one accident.
             161gw              (e) The acknowledgment under Subsection (9)(b) continues for that issuer of the
             161gx      underinsured motorist coverage until the insured, in writing, requests different underinsured
             161gy      motorist coverage from the insurer.
             161gz              (f) (i) The named insured's underinsured motorist coverage, as described in
             161ha      Subsection (9)(a), is secondary to the liability coverage of an owner or operator of an
             161hb      underinsured motor vehicle, as described in Subsection (8).
             161hc              (ii) Underinsured motorist coverage may not be set off against the liability
             161hd      coverage of the owner or operator of an underinsured motor vehicle, but shall be added to,
             161he      combined with, or stacked upon the liability coverage of the owner or operator of the
             161hf      underinsured motor vehicle to determine the limit of coverage available to the injured person.
             161hg              (g) (i) A named insured may reject underinsured motorist coverage by an
             161hh      express writing to the insurer that provides liability coverage under Subsection
             161hi      31A-22-302(1)(a).
             161hj              (ii) This written rejection shall be on a form provided by the insurer that
             161hk      includes a reasonable explanation of the purpose of underinsured motorist coverage and when
             161hl      it would be applicable.
             161hm              (iii) This rejection continues for that issuer of the liability coverage until the
             161hn      insured in writing requests underinsured motorist coverage from that liability insurer.
             161ho              (h) (i) In conjunction with the first two renewal notices sent after January 1,
             161hp      2001, for policies existing on that date, the insurer shall disclose in the same medium as the
             161hq      premium renewal notice, an explanation of:
             161hr              (A) the purpose of underinsured motorist coverage; and


             161hs              (B) the costs associated with increasing the coverage in amounts up to and
             161ht      including the maximum amount available by the insurer under the insured's motor .S


            
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161hu
     S. vehicle policy.
             161hv              (ii) The disclosure required by this Subsection (9)(h) shall be sent to all insureds
             161hw      that carry underinsured motorist coverage limits in an amount less than the insured's motor
             161hx      vehicle liability policy limits or the maximum underinsured motorist coverage limits available
             161hy      by the insurer under the insured's motor vehicle policy.
             161hz              (10) (a) (i) Except as provided in this Subsection (10), a covered person injured
             161ia      in a motor vehicle described in a policy that includes underinsured motorist benefits may not
             161ib      elect to collect underinsured motorist coverage benefits from any other motor vehicle
             161ic      insurance policy.
             161id              (ii) The limit of liability for underinsured motorist coverage for two or more
             161ie      motor vehicles may not be added together, combined, or stacked to determine the limit of
             161if      insurance coverage available to an injured person for any one accident.
             161ig              (iii) Subsection (10)(a)(ii) applies to all persons except a covered person
             161ih      described under Subsections (10)(b)(i) and (ii).
             161ii              (b) (i) Except as provided in Subsection (10)(b)(ii), a covered person injured
             161ij      while occupying, using, or maintaining a motor vehicle that is not owned, leased, or furnished
             161ik      to the covered person, the covered person's spouse, or the covered person's resident parent or
             161il      resident sibling, may also recover benefits under any one other policy under which they are a
             161im      covered person.
             161in              (ii) (A) A covered person may recover benefits from no more than two
             161io      additional policies, one additional policy from each parent's household if the covered person is:
             161ip              (I) a dependent minor of parents who reside in separate households; and
             161iq              (II) injured while occupying or using a motor vehicle that is not owned, leased,
             161ir      or furnished to the covered person, the covered person's resident parent, or the covered
             161is      person's resident sibling.
             161it              (B) Each parent's policy under this Subsection (10)(b)(ii) is liable only for the
             161iu      percentage of the damages that the limit of liability of each parent's policy of underinsured
             161iv      motorist coverage bears to the total of both parents' underinsured coverage applicable to the
             161iw      accident.
             161ix              (iii) A covered person's recovery under any available policies may not exceed
             161iy      the full amount of damages.
             161iz              (iv) Underinsured coverage on a motor vehicle occupied at the time of an


             161ja      accident shall be primary coverage, and the coverage elected by a person described under
             161jb      Subsections (1)(a) and (b) shall be secondary coverage. .S


            
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161jc
         S.    (v) The primary and the secondary coverage may not be set off against the
             161jd      other.
             161je              (vi) A covered person as described under Subsection (10)(b)(i) is entitled to the
             161jf      highest limits of underinsured motorist coverage under only one additional policy per
             161jg      household applicable to that covered person as a named insured, spouse, or relative.
             161jh              (vii) A covered injured person is not barred against making subsequent
             161ji      elections if recovery is unavailable under previous elections.
             161jj              (viii) (A) As used in this section, "interpolicy stacking" means recovering
             161jk      benefits for a single incident of loss under more than one insurance policy.
             161jl              (B) Except to the extent permitted by this Subsection (10), interpolicy stacking is
             161jm      prohibited for underinsured motorist coverage.
             161jn              (c) Underinsured motorist coverage:
             161jo              (i) is secondary to the benefits provided by Title 34A, Chapter 2, Workers'
             161jp      Compensation Act;
             161jq              (ii) may not be subrogated by the workers' compensation insurance carrier;
             161jr              (iii) may not be reduced by any benefits provided by workers' compensation
             161js      insurance;
             161jt              (iv) may be reduced by health insurance subrogation only after the covered
             161ju      person has been made whole;
             161jv              (v) may not be collected for bodily injury or death sustained by a person:
             161jw              (A) while committing a violation of Section 41-1a-1314;
             161jx              (B) who, as a passenger in a vehicle, has knowledge that the vehicle is being
             161jy      operated in violation of Section 41-1a-1314; or
             161jz              (C) while committing a felony; and
             161ka              (vi) notwithstanding Subsection (10)(c)(v), may be recovered:
             161kb              (A) for a person under 18 years of age who is injured within the scope of
             161kc      Subsection (10)(c)(v) but limited to medical and funeral expenses; or
             161kd              (B) by a law enforcement officer as defined in Section 53-13-103, who is injured
             161ke      within the course and scope of the law enforcement officer's duties.
             161kf              (11) The inception of the loss under Subsection 31A-21-313(1) for underinsured
             161kg      motorist claims occurs upon the date of the last liability policy payment.
             161kh              (12) (a) Within five business days after notification in a manner specified by the


             161ki      department that all liability insurers have tendered their liability policy limits, the
             161kj      underinsured carrier shall either: .S


            
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161kk
         S.    (i) waive any subrogation claim the underinsured carrier may have against the
             161kl      person liable for the injuries caused in the accident; or
             161km              (ii) pay the insured an amount equal to the policy limits tendered by the liability
             161kn      carrier.
             161ko              (b) If neither option is exercised under Subsection (12)(a), the subrogation claim
             161kp      is considered to be waived by the underinsured carrier.
             161kq              (13) Except as otherwise provided in this section, a covered person may seek,
             161kr      subject to the terms and conditions of the policy, additional coverage under any policy:
             161ks              (a) that provides coverage for damages resulting from motor vehicle accidents;
             161kt      and
             161ku              (b) that is not required to conform to Section 31A-22-302. .S





Legislative Review Note
    as of 1-20-05 2:00 PM


Based on a limited legal review, this legislation has not been determined to have a high
probability of being held unconstitutional.

Office of Legislative Research and General Counsel


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