Download Zipped Amended WordPerfect SB0224.ZIP
[Introduced][Status][Bill Documents][Fiscal Note][Bills Directory]

S.B. 224

This document includes Senate Committee Amendments incorporated into the bill on Thu, Feb 9, 2006 at 10:20 AM by rday. -->              1     

MOTOR VEHICLE INSURANCE AMENDMENTS

             2     
2006 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Sheldon L. Killpack

             5     
House Sponsor: Stephen H. Urquhart

             6     

             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Insurance Code by amending provisions related to arbitration for
             10      uninsured and underinsured motorist coverage claims.
             11      Highlighted Provisions:
             12          This bill:
             13          .    provides that the named insured or a covered person asserting a claim against the
             14      person's uninsured or underinsured motorist carrier may elect to resolve the claim
             15      by submitting the claim to binding arbitration or through litigation;
             16          .    provides procedures for resolving the claim through arbitration;
             17          .    provides that an arbitration award may not exceed the uninsured or underinsured
             18      motorist policy limits of all applicable uninsured or underinsured motorist policies,
             19      including any applicable umbrella uninsured or underinsured motorist policies;
             20          .    provides that the arbitrator or arbitration panel may award reasonable attorney's fees
             21      and costs if the claim was not brought, pursued, or defended in good faith;
             22          .    provides that an arbitration award issued by a single arbitrator or an arbitration
             23      panel shall be the final resolution of all claims unless:
             24              .    the award was procured by corruption, fraud, or other undue means; or
             25              .    either party files a notice for a trial de novo within 20 days of service of the
             26      arbitration award;
             27          .    provides that if a claimant, as the moving party in a trial de novo, does not receive a



Text Box

- 2 -
             28
     verdict that is at least $5,000 and is at least 20% greater than the arbitration award, the claimant
             29      is responsible for the nonmoving party's costs;
             30          .    provides that if an uninsured or underinsured motorist carrier, as the moving party
             31      in a trial de novo, does not receive a verdict that is at least 20% less than the
             32      arbitration award, the uninsured or underinsured motorist carrier is responsible for
             33      the nonmoving party's costs;
             34          .    provides that a court may award reasonable attorney fees if the court finds that a
             35      party's use of the de novo process was filed in bad faith;
             36          .    provides that if there are multiple uninsured or underinsured motorist policies, the
             37      plaintiff may elect to arbitrate in one hearing the claims against all the uninsured or
             38      underinsured motorist carriers; and
             39          .    makes technical changes.
             40      Monies Appropriated in this Bill:
             41          None
             42      Other Special Clauses:
             43          None
             44      Utah Code Sections Affected:
             45      AMENDS:
             46          31A-22-302, as last amended by Chapter 124, Laws of Utah 2005
             47          31A-22-305, as last amended by Chapters 117, 267 and 304, Laws of Utah 2004
             48      ENACTS:
             49          31A-22-305.3, Utah Code Annotated 1953
             50     

             51      Be it enacted by the Legislature of the state of Utah:
             52          Section 1. Section 31A-22-302 is amended to read:
             53           31A-22-302. Required components of motor vehicle insurance policies --
             54      Exceptions.
             55          (1) Every policy of insurance or combination of policies purchased to satisfy the
             56      owner's or operator's security requirement of Section 41-12a-301 shall include:
             57          (a) motor vehicle liability coverage under Sections 31A-22-303 and 31A-22-304 ;
             58          (b) uninsured motorist coverage under Section 31A-22-305 , unless affirmatively



Text Box

- 3 -
             59
     waived under Subsection 31A-22-305 (4);
             60          (c) underinsured motorist coverage under Section [ 31A-22-305 ] 31A-22-305.3 , unless
             61      affirmatively waived under Subsection [ 31A-22-305 (9)] 31A-22-305.3 (2); and
             62          (d) except as provided in Subsection (2) and subject to Subsection (3), personal injury
             63      protection under Sections 31A-22-306 through 31A-22-309 .
             64          (2) A policy of insurance or combination of policies, purchased to satisfy the owner's
             65      or operator's security requirement of Section 41-12a-301 for a motorcycle, trailer, or semitrailer
             66      is not required to have personal injury protection under Sections 31A-22-306 through
             67      31A-22-309 .
             68          (3) (a) First party medical coverages may be offered or included in policies issued to
             69      motorcycle, trailer, and semitrailer owners or operators.
             70          (b) Owners and operators of motorcycles, trailers, and semitrailers are not covered by
             71      personal injury protection coverages in connection with injuries incurred while operating any
             72      of these vehicles.
             73          (4) First party medical coverage expenses shall be governed by the relative value study
             74      provisions under Subsections 31A-22-307 (2) and (3).
             75          Section 2. Section 31A-22-305 is amended to read:
             76           31A-22-305. Uninsured motorist coverage.
             77          (1) As used in this section, "covered persons" includes:
             78          (a) the named insured;
             79          (b) persons related to the named insured by blood, marriage, adoption, or guardianship,
             80      who are residents of the named insured's household, including those who usually make their
             81      home in the same household but temporarily live elsewhere;
             82          (c) any person occupying or using a motor vehicle:
             83          (i) referred to in the policy; or
             84          (ii) owned by a self-insured; and
             85          (d) any person who is entitled to recover damages against the owner or operator of the
             86      uninsured or underinsured motor vehicle because of bodily injury to or death of persons under
             87      Subsection (1)(a), (b), or (c).
             88          (2) As used in this section, "uninsured motor vehicle" includes:
             89          (a) (i) a motor vehicle, the operation, maintenance, or use of which is not covered



Text Box

- 4 -
             90
     under a liability policy at the time of an injury-causing occurrence; or
             91          (ii) (A) a motor vehicle covered with lower liability limits than required by Section
             92      31A-22-304 ; and
             93          (B) the motor vehicle described in Subsection (2)(a)(ii)(A) is uninsured to the extent of
             94      the deficiency;
             95          (b) an unidentified motor vehicle that left the scene of an accident proximately caused
             96      by the motor vehicle operator;
             97          (c) a motor vehicle covered by a liability policy, but coverage for an accident is
             98      disputed by the liability insurer for more than 60 days or continues to be disputed for more than
             99      60 days; or
             100          (d) (i) an insured motor vehicle if, before or after the accident, the liability insurer of
             101      the motor vehicle is declared insolvent by a court of competent jurisdiction; and
             102          (ii) the motor vehicle described in Subsection (2)(d)(i) is uninsured only to the extent
             103      that the claim against the insolvent insurer is not paid by a guaranty association or fund.
             104          (3) (a) Uninsured motorist coverage under Subsection 31A-22-302 (1)(b) provides
             105      coverage for covered persons who are legally entitled to recover damages from owners or
             106      operators of uninsured motor vehicles because of bodily injury, sickness, disease, or death.
             107          (b) For new policies written on or after January 1, 2001, the limits of uninsured
             108      motorist coverage shall be equal to the lesser of the limits of the insured's motor vehicle
             109      liability coverage or the maximum uninsured motorist coverage limits available by the insurer
             110      under the insured's motor vehicle policy, unless the insured purchases coverage in a lesser
             111      amount by signing an acknowledgment form provided by the insurer that:
             112          (i) waives the higher coverage;
             113          (ii) reasonably explains the purpose of uninsured motorist coverage; and
             114          (iii) discloses the additional premiums required to purchase uninsured motorist
             115      coverage with limits equal to the lesser of the limits of the insured's motor vehicle liability
             116      coverage or the maximum uninsured motorist coverage limits available by the insurer under the
             117      insured's motor vehicle policy.
             118          (c) A self-insured, including a governmental entity, may elect to provide uninsured
             119      motorist coverage in an amount that is less than its maximum self-insured retention under
             120      Subsections (3)(b) and (4)(a) by issuing a declaratory memorandum or policy statement from



Text Box

- 5 -
             121
     the chief financial officer or chief risk officer that declares the:
             122          (i) self-insured entity's coverage level; and
             123          (ii) process for filing an uninsured motorist claim.
             124          (d) Uninsured motorist coverage may not be sold with limits that are less than the
             125      minimum bodily injury limits for motor vehicle liability policies under Section 31A-22-304 .
             126          (e) The acknowledgment under Subsection (3)(b) continues for that issuer of the
             127      uninsured motorist coverage until the insured, in writing, requests different uninsured motorist
             128      coverage from the insurer.
             129          (f) (i) In conjunction with the first two renewal notices sent after January 1, 2001, for
             130      policies existing on that date, the insurer shall disclose in the same medium as the premium
             131      renewal notice, an explanation of:
             132          (A) the purpose of uninsured motorist coverage; and
             133          (B) the costs associated with increasing the coverage in amounts up to and including
             134      the maximum amount available by the insurer under the insured's motor vehicle policy.
             135          (ii) The disclosure required under this Subsection (3)(f) shall be sent to all insureds that
             136      carry uninsured motorist coverage limits in an amount less than the insured's motor vehicle
             137      liability policy limits or the maximum uninsured motorist coverage limits available by the
             138      insurer under the insured's motor vehicle policy.
             139          (4) (a) (i) Except as provided in Subsection (4)(b), the named insured may reject
             140      uninsured motorist coverage by an express writing to the insurer that provides liability
             141      coverage under Subsection 31A-22-302 (1)(a).
             142          (ii) This rejection shall be on a form provided by the insurer that includes a reasonable
             143      explanation of the purpose of uninsured motorist coverage.
             144          (iii) This rejection continues for that issuer of the liability coverage until the insured in
             145      writing requests uninsured motorist coverage from that liability insurer.
             146          (b) (i) All persons, including governmental entities, that are engaged in the business of,
             147      or that accept payment for, transporting natural persons by motor vehicle, and all school
             148      districts that provide transportation services for their students, shall provide coverage for all
             149      motor vehicles used for that purpose, by purchase of a policy of insurance or by self-insurance,
             150      uninsured motorist coverage of at least $25,000 per person and $500,000 per accident.
             151          (ii) This coverage is secondary to any other insurance covering an injured covered



Text Box

- 6 -
             152
     person.
             153          (c) Uninsured motorist coverage:
             154          (i) is secondary to the benefits provided by Title 34A, Chapter 2, Workers'
             155      Compensation Act;
             156          (ii) may not be subrogated by the workers' compensation insurance carrier;
             157          (iii) may not be reduced by any benefits provided by workers' compensation insurance;
             158          (iv) may be reduced by health insurance subrogation only after the covered person has
             159      been made whole;
             160          (v) may not be collected for bodily injury or death sustained by a person:
             161          (A) while committing a violation of Section 41-1a-1314 ;
             162          (B) who, as a passenger in a vehicle, has knowledge that the vehicle is being operated
             163      in violation of Section 41-1a-1314 ; or
             164          (C) while committing a felony; and
             165          (vi) notwithstanding Subsection (4)(c)(v), may be recovered:
             166          (A) for a person under 18 years of age who is injured within the scope of Subsection
             167      (4)(c)(v) but limited to medical and funeral expenses; or
             168          (B) by a law enforcement officer as defined in Section 53-13-103 , who is injured
             169      within the course and scope of the law enforcement officer's duties.
             170          (d) As used in this Subsection (4), "motor vehicle" has the same meaning as under
             171      Section 41-1a-102 .
             172          (5) When a covered person alleges that an uninsured motor vehicle under Subsection
             173      (2)(b) proximately caused an accident without touching the covered person or the motor
             174      vehicle occupied by the covered person, the covered person must show the existence of the
             175      uninsured motor vehicle by clear and convincing evidence consisting of more than the covered
             176      person's testimony.
             177          (6) (a) The limit of liability for uninsured motorist coverage for two or more motor
             178      vehicles may not be added together, combined, or stacked to determine the limit of insurance
             179      coverage available to an injured person for any one accident.
             180          (b) (i) Subsection (6)(a) applies to all persons except a covered person as defined under
             181      Subsection (7)(b)(ii).
             182          (ii) A covered person as defined under Subsection (7)(b)(ii) is entitled to the highest



Text Box

- 7 -
             183
     limits of uninsured motorist coverage afforded for any one motor vehicle that the covered
             184      person is the named insured or an insured family member.
             185          (iii) This coverage shall be in addition to the coverage on the motor vehicle the covered
             186      person is occupying.
             187          (iv) Neither the primary nor the secondary coverage may be set off against the other.
             188          (c) Coverage on a motor vehicle occupied at the time of an accident shall be primary
             189      coverage, and the coverage elected by a person described under Subsections (1)(a) and (b) shall
             190      be secondary coverage.
             191          (7) (a) Uninsured motorist coverage under this section applies to bodily injury,
             192      sickness, disease, or death of covered persons while occupying or using a motor vehicle only if
             193      the motor vehicle is described in the policy under which a claim is made, or if the motor
             194      vehicle is a newly acquired or replacement motor vehicle covered under the terms of the policy.
             195      Except as provided in Subsection (6) or this Subsection (7), a covered person injured in a
             196      motor vehicle described in a policy that includes uninsured motorist benefits may not elect to
             197      collect uninsured motorist coverage benefits from any other motor vehicle insurance policy
             198      under which the person is a covered person.
             199          (b) Each of the following persons may also recover uninsured motorist benefits under
             200      any one other policy in which they are described as a "covered person" as defined in Subsection
             201      (1):
             202          (i) a covered person injured as a pedestrian by an uninsured motor vehicle; and
             203          (ii) except as provided in Subsection (7)(c), a covered person injured while occupying
             204      or using a motor vehicle that is not owned, leased, or furnished:
             205          (A) to the covered person;
             206          (B) to the covered person's spouse; or
             207          (C) to the covered person's resident parent or resident sibling.
             208          (c) (i) A covered person may recover benefits from no more than two additional
             209      policies, one additional policy from each parent's household if the covered person is:
             210          (A) a dependent minor of parents who reside in separate households; and
             211          (B) injured while occupying or using a motor vehicle that is not owned, leased, or
             212      furnished:
             213          (I) to the covered person;



Text Box

- 8 -
             214
         (II) to the covered person's resident parent; or
             215          (III) to the covered person's resident sibling.
             216          (ii) Each parent's policy under this Subsection (7)(c) is liable only for the percentage of
             217      the damages that the limit of liability of each parent's policy of uninsured motorist coverage
             218      bears to the total of both parents' uninsured coverage applicable to the accident.
             219          (d) A covered person's recovery under any available policies may not exceed the full
             220      amount of damages.
             221          (e) A covered person in Subsection (7)(b) is not barred against making subsequent
             222      elections if recovery is unavailable under previous elections.
             223          (f) (i) As used in this section, "interpolicy stacking" means recovering benefits for a
             224      single incident of loss under more than one insurance policy.
             225          (ii) Except to the extent permitted by Subsection (6) and this Subsection (7),
             226      interpolicy stacking is prohibited for uninsured motorist coverage.
             227          [(8) (a) As used in this section, "underinsured motor vehicle" includes a motor vehicle,
             228      the operation, maintenance, or use of which is covered under a liability policy at the time of an
             229      injury-causing occurrence, but which has insufficient liability coverage to compensate fully the
             230      injured party for all special and general damages.]
             231          [(b) The term "underinsured motor vehicle" does not include:]
             232          [(i) a motor vehicle that is covered under the liability coverage of the same policy that
             233      also contains the underinsured motorist coverage;]
             234          [(ii) an uninsured motor vehicle as defined in Subsection (2); or]
             235          [(iii) a motor vehicle owned or leased by:]
             236          [(A) the named insured;]
             237          [(B) the named insured's spouse; or]
             238          [(C) any dependent of the named insured.]
             239          [(9) (a) (i) Underinsured motorist coverage under Subsection 31A-22-302 (1)(c)
             240      provides coverage for covered persons who are legally entitled to recover damages from
             241      owners or operators of underinsured motor vehicles because of bodily injury, sickness, disease,
             242      or death.]
             243          [(ii) A covered person occupying or using a motor vehicle owned, leased, or furnished
             244      to the covered person, the covered person's spouse, or covered person's resident relative may



Text Box

- 9 -
             245
     recover underinsured benefits only if the motor vehicle is:]
             246          [(A) described in the policy under which a claim is made; or]
             247          [(B) a newly acquired or replacement motor vehicle covered under the terms of the
             248      policy.]
             249          [(b) For new policies written on or after January 1, 2001, the limits of underinsured
             250      motorist coverage shall be equal to the lesser of the limits of the insured's motor vehicle
             251      liability coverage or the maximum underinsured motorist coverage limits available by the
             252      insurer under the insured's motor vehicle policy, unless the insured purchases coverage in a
             253      lesser amount by signing an acknowledgment form provided by the insurer that:]
             254          [(i) waives the higher coverage;]
             255          [(ii) reasonably explains the purpose of underinsured motorist coverage; and]
             256          [(iii) discloses the additional premiums required to purchase underinsured motorist
             257      coverage with limits equal to the lesser of the limits of the insured's motor vehicle liability
             258      coverage or the maximum underinsured motorist coverage limits available by the insurer under
             259      the insured's motor vehicle policy.]
             260          [(c) A self-insured, including a governmental entity, may elect to provide underinsured
             261      motorist coverage in an amount that is less than its maximum self-insured retention under
             262      Subsections (9)(b) and (9)(g) by issuing a declaratory memorandum or policy statement from
             263      the chief financial officer or chief risk officer that declares the:]
             264          [(i) self-insured entity's coverage level; and]
             265          [(ii) process for filing an underinsured motorist claim.]
             266          [(d) Underinsured motorist coverage may not be sold with limits that are less than:]
             267          [(i) $10,000 for one person in any one accident; and]
             268          [(ii) at least $20,000 for two or more persons in any one accident.]
             269          [(e) The acknowledgment under Subsection (9)(b) continues for that issuer of the
             270      underinsured motorist coverage until the insured, in writing, requests different underinsured
             271      motorist coverage from the insurer.]
             272          [(f) (i) The named insured's underinsured motorist coverage, as described in Subsection
             273      (9)(a), is secondary to the liability coverage of an owner or operator of an underinsured motor
             274      vehicle, as described in Subsection (8).]
             275          [(ii) Underinsured motorist coverage may not be set off against the liability coverage of



Text Box

- 10 -
             276
     the owner or operator of an underinsured motor vehicle, but shall be added to, combined with,
             277      or stacked upon the liability coverage of the owner or operator of the underinsured motor
             278      vehicle to determine the limit of coverage available to the injured person.]
             279          [(g) (i) A named insured may reject underinsured motorist coverage by an express
             280      writing to the insurer that provides liability coverage under Subsection 31A-22-302 (1)(a).]
             281          [(ii) This written rejection shall be on a form provided by the insurer that includes a
             282      reasonable explanation of the purpose of underinsured motorist coverage and when it would be
             283      applicable.]
             284          [(iii) This rejection continues for that issuer of the liability coverage until the insured in
             285      writing requests underinsured motorist coverage from that liability insurer.]
             286          [(h) (i) In conjunction with the first two renewal notices sent after January 1, 2001, for
             287      policies existing on that date, the insurer shall disclose in the same medium as the premium
             288      renewal notice, an explanation of:]
             289          [(A) the purpose of underinsured motorist coverage; and]
             290          [(B) the costs associated with increasing the coverage in amounts up to and including
             291      the maximum amount available by the insurer under the insured's motor vehicle policy.]
             292          [(ii) The disclosure required by this Subsection (9)(h) shall be sent to all insureds that
             293      carry underinsured motorist coverage limits in an amount less than the insured's motor vehicle
             294      liability policy limits or the maximum underinsured motorist coverage limits available by the
             295      insurer under the insured's motor vehicle policy.]
             296          [(10) (a) (i) Except as provided in this Subsection (10), a covered person injured in a
             297      motor vehicle described in a policy that includes underinsured motorist benefits may not elect
             298      to collect underinsured motorist coverage benefits from any other motor vehicle insurance
             299      policy.]
             300          [(ii) The limit of liability for underinsured motorist coverage for two or more motor
             301      vehicles may not be added together, combined, or stacked to determine the limit of insurance
             302      coverage available to an injured person for any one accident.]
             303          [(iii) Subsection (10)(a)(ii) applies to all persons except a covered person described
             304      under Subsections (10)(b)(i) and (ii).]
             305          [(b) (i) Except as provided in Subsection (10)(b)(ii), a covered person injured while
             306      occupying, using, or maintaining a motor vehicle that is not owned, leased, or furnished to the



Text Box

- 11 -
             307
     covered person, the covered person's spouse, or the covered person's resident parent or resident
             308      sibling, may also recover benefits under any one other policy under which they are a covered
             309      person.]
             310          [(ii) (A) A covered person may recover benefits from no more than two additional
             311      policies, one additional policy from each parent's household if the covered person is:]
             312          [(I) a dependent minor of parents who reside in separate households; and]
             313          [(II) injured while occupying or using a motor vehicle that is not owned, leased, or
             314      furnished to the covered person, the covered person's resident parent, or the covered person's
             315      resident sibling.]
             316          [(B) Each parent's policy under this Subsection (10)(b)(ii) is liable only for the
             317      percentage of the damages that the limit of liability of each parent's policy of underinsured
             318      motorist coverage bears to the total of both parents' underinsured coverage applicable to the
             319      accident.]
             320          [(iii) A covered person's recovery under any available policies may not exceed the full
             321      amount of damages.]
             322          [(iv) Underinsured coverage on a motor vehicle occupied at the time of an accident
             323      shall be primary coverage, and the coverage elected by a person described under Subsections
             324      (1)(a) and (b) shall be secondary coverage.]
             325          [(v) The primary and the secondary coverage may not be set off against the other.]
             326          [(vi) A covered person as described under Subsection (10)(b)(i) is entitled to the
             327      highest limits of underinsured motorist coverage under only one additional policy per
             328      household applicable to that covered person as a named insured, spouse, or relative.]
             329          [(vii) A covered injured person is not barred against making subsequent elections if
             330      recovery is unavailable under previous elections.]
             331          [(viii) (A) As used in this section, "interpolicy stacking" means recovering benefits for
             332      a single incident of loss under more than one insurance policy.]
             333          [(B) Except to the extent permitted by this Subsection (10), interpolicy stacking is
             334      prohibited for underinsured motorist coverage.]
             335          [(c) Underinsured motorist coverage:]
             336          [(i) is secondary to the benefits provided by Title 34A, Chapter 2, Workers'
             337      Compensation Act;]



Text Box

- 12 -
             338
         [(ii) may not be subrogated by the workers' compensation insurance carrier;]
             339          [(iii) may not be reduced by any benefits provided by workers' compensation
             340      insurance;]
             341          [(iv) may be reduced by health insurance subrogation only after the covered person has
             342      been made whole;]
             343          [(v) may not be collected for bodily injury or death sustained by a person:]
             344          [(A) while committing a violation of Section 41-1a-1314 ;]
             345          [(B) who, as a passenger in a vehicle, has knowledge that the vehicle is being operated
             346      in violation of Section 41-1a-1314 ; or]
             347          [(C) while committing a felony; and]
             348          [(vi) notwithstanding Subsection (10)(c)(v), may be recovered:]
             349          [(A) for a person under 18 years of age who is injured within the scope of Subsection
             350      (10)(c)(v) but limited to medical and funeral expenses; or]
             351          [(B) by a law enforcement officer as defined in Section 53-13-103 , who is injured
             352      within the course and scope of the law enforcement officer's duties.]
             353          [(11) The inception of the loss under Subsection 31A-21-313 (1) for underinsured
             354      motorist claims occurs upon the date of the last liability policy payment.]
             355          [(12) (a) Within five business days after notification in a manner specified by the
             356      department that all liability insurers have tendered their liability policy limits, the underinsured
             357      carrier shall either:]
             358          [(i) waive any subrogation claim the underinsured carrier may have against the person
             359      liable for the injuries caused in the accident; or]
             360          [(ii) pay the insured an amount equal to the policy limits tendered by the liability
             361      carrier.]
             362          [(b) If neither option is exercised under Subsection (12)(a), the subrogation claim is
             363      considered to be waived by the underinsured carrier.]
             364          [(13) Except as otherwise provided in this section, a covered person may seek, subject
             365      to the terms and conditions of the policy, additional coverage under any policy:]
             366          [(a) that provides coverage for damages resulting from motor vehicle accidents; and]
             367          [(b) that is not required to conform to Section 31A-22-302 .]
             368          (8) (a) When a claim is brought by a named insured or a person described in



Text Box

- 13 -
             369
     Subsection (1) and is asserted against the covered person's uninsured motorist carrier, the
             370      claimant may elect to resolve the claim:
             371          (i) by submitting the claim to binding arbitration; or
             372          (ii) through litigation.
             373          (b) Unless otherwise provided in the policy under which uninsured benefits are
             374      claimed, the election provided in Subsection (8)(a) is available to the claimant only.
             375          (c) Once the claimant has elected to commence litigation under Subsection (8)(a)(ii),
             376      the claimant may not elect to resolve the claim through binding arbitration under this section
             377      without the written consent of the uninsured motorist carrier.
             378          (d) (i) Unless otherwise agreed to in writing by the parties, a claim that is submitted to
             379      binding arbitration under Subsection (8)(a)(i) shall be resolved by a single arbitrator.
             380          (ii) All parties shall agree on the single arbitrator selected under Subsection (8)(d)(i).
             381          (iii) If the parties are unable to agree on a single arbitrator as required under Subsection
             382      (8)(d)(ii), the parties shall select a panel of three arbitrators.
             383          (e) If the parties select a panel of three arbitrators under Subsection (8)(d)(iii):
             384          (i) each side shall select one arbitrator; and
             385          (ii) the arbitrators appointed under Subsection (8)(e)(i) shall select one additional
             386      arbitrator to be included in the panel.
             387          (f) Unless otherwise agreed to in writing:
             388          (i) each party shall pay an equal share of the fees and costs of the arbitrator selected
             389      under Subsection (8)(d)(i); or
             390          (ii) if an arbitration panel is selected under Subsection (8)(d)(iii):
             391          (A) each party shall pay the fees and costs of the arbitrator selected by that party; and
             392          (B) each party shall pay an equal share of the fees and costs of the arbitrator selected
             393      under Subsection (8)(e)(ii).
             394          (g) Except as otherwise provided in this section or unless otherwise agreed to in
             395      writing by the parties, an arbitration proceeding conducted under this section shall be governed
             396      by Title 78, Chapter 31a, Utah Uniform Arbitration Act.
             397          (h) The arbitration shall be conducted in accordance with Rules 26 through 37, 54, and
             398      68 of the Utah Rules of Civil Procedure.
             399          (i) All issues of discovery shall be resolved by the arbitrator or the arbitration panel.



Text Box

- 14 -
Senate Committee Amendments 2-9-2006 rd/sch
             400
         (j) A written decision by a single arbitrator or by a majority of the arbitration panel
             401      shall constitute a final decision.
             402          (k) (i) The amount of an arbitration award may not exceed the uninsured motorist
             403      policy limits of all applicable uninsured motorist policies, including applicable uninsured
             404      motorist umbrella policies.
             405          (ii) If the initial arbitration award exceeds the uninsured motorist policy limits of all
             406      applicable uninsured motorist policies, the arbitration award shall be reduced to an amount
             407      equal to the combined uninsured motorist policy limits of all applicable uninsured motorist
             408      policies.
             409          (l) The arbitrator or arbitration panel may not decide the issues of coverage or
             410      extra-contractual damages, including:
             411          (i) whether the claimant is a covered person;
             412          (ii) whether the policy extends coverage to the loss; or
             413          (iii) any allegations or claims asserting consequential damages or bad faith liability.
             414          (m) S. The arbitrator or arbitration panel may not conduct arbitration on a
             414a      class-wide or class-representative basis.
             414b          (n) .S If the arbitrator or arbitration panel finds that the action was not brought, pursued,
             415      or defended in good faith, the arbitrator or arbitration panel may award reasonable attorney fees
             416      and costs against the party that failed to bring, pursue, or defend the claim in good faith.
             417           S. [ (n) ] (o) .S An arbitration award issued under this section shall be the final resolution
             417a      of all
             418      claims not excluded by Subsection (8)(l) between the parties unless:
             419          (i) the award was procured by corruption, fraud, or other undue means; or
             420          (ii) either party, within 20 days after service of the arbitration award:
             421          (A) files a complaint requesting a trial de novo in the district court; and
             422          (B) serves the nonmoving party with a copy of the complaint requesting a trial de novo
             423      under Subsection (8) S. [ (n) ] (o) .S (ii)(A).
             424           S. [ (o) ] (p) .S (i) Upon filing a complaint for a trial de novo under Subsection (8)
             424a      S. [ (n) ] (o) .S , the claim
             425      shall proceed through litigation pursuant to the Utah Rules of Civil Procedure and Utah Rules
             426      of Evidence in the district court.
             427          (ii) In accordance with Rule 38, Utah Rules of Civil Procedure, either party may
             428      request a jury trial with a complaint requesting a trial de novo under Subsection (8) S. [ (n) ] (o) .S
             428a      (ii)(A).
             429           S. [ (p) ] (q) .S (i) If the claimant, as the moving party in a trial de novo requested under
             430      Subsection (8) S. [ (n) ] (o) .S , does not obtain a verdict that is at least $5,000 and is at least 20%
             430a      greater



Text Box

- 15 -
Senate Committee Amendments 2-9-2006 rd/sch
             431
     than the arbitration award, the claimant is responsible for all of the nonmoving party's costs.
             432          (ii) If the uninsured motorist carrier, as the moving party in a trial de novo requested
             433      under Subsection (8) S. [ (n) ] (o) .S , does not obtain a verdict that is at least 20% less than the
             433a      arbitration
             434      award, the uninsured motorist carrier is responsible for all of the nonmoving party's costs.
             435          (iii) Except as provided in Subsection (8) S. [ (p) ] (q) .S (iv), the costs under this
             435a      Subsection (8) S. [ (p) ] (q) .S
             436      shall include:
             437          (A) any costs set forth in Rule 54(d), Utah Rules of Civil Procedure; and
             438          (B) the costs of expert witnesses and depositions.
             439          (iv) An award of costs under this Subsection (8) S. [ (p) ] (q) .S may not exceed $2,500.
             440           S. [ (q) ] (r) .S For purposes of determining whether a party's verdict is greater or less than
             440a      the
             441      arbitration award under Subsection (8) S. [ (p) ] (q) .S , a court may not consider any recovery or
             441a      other relief
             442      granted on a claim for damages if the claim for damages:
             443          (i) was not fully disclosed in writing prior to the arbitration proceeding; or
             444          (ii) was not disclosed in response to discovery contrary to the Utah Rules of Civil
             445      Procedure.
             446           S. [ (r) ] (s) .S If a district court determines, upon a motion of the nonmoving party, that
             446a      the
             447      moving party's use of the trial de novo process was filed in bad faith in accordance with
             448      Section 78-27-56 , the district court may award reasonable attorney fees to the nonmoving
             449      party.
             450           S. [ (s) ] (t) .S Nothing in this section is intended to limit any claim under any other portion
             450a      of an
             451      applicable insurance policy.
             452           S. [ (t) ] (u) .S If there are multiple uninsured motorist policies, as set forth in Subsection
             452a      (7), the
             453      claimant may elect to arbitrate in one hearing the claims against all the uninsured motorist
             454      carriers.
             455          Section 3. Section 31A-22-305.3 is enacted to read:
             456          31A-22-305.3. Underinsured motorist coverage.
             457          (1) As used in this section:
             458          (a) "Covered person" has the same meaning as defined in Section 31A-22-305 .
             459          (b) (i) "Underinsured motor vehicle" includes a motor vehicle, the operation,
             460      maintenance, or use of which is covered under a liability policy at the time of an injury-causing
             461      occurrence, but which has insufficient liability coverage to compensate fully the injured party



Text Box

- 16 -
             462
     for all special and general damages.
             463          (ii) The term "underinsured motor vehicle" does not include:
             464          (A) a motor vehicle that is covered under the liability coverage of the same policy that
             465      also contains the underinsured motorist coverage;
             466          (B) an uninsured motor vehicle as defined in Subsection 31A-22-305 (2); or
             467          (C) a motor vehicle owned or leased by:
             468          (I) the named insured;
             469          (II) the named insured's spouse; or
             470          (III) any dependent of the named insured.
             471          (2) (a) (i) Underinsured motorist coverage under Subsection 31A-22-302 (1)(c)
             472      provides coverage for covered persons who are legally entitled to recover damages from
             473      owners or operators of underinsured motor vehicles because of bodily injury, sickness, disease,
             474      or death.
             475          (ii) A covered person occupying or using a motor vehicle owned, leased, or furnished
             476      to the covered person, the covered person's spouse, or covered person's resident relative may
             477      recover underinsured benefits only if the motor vehicle is:
             478          (A) described in the policy under which a claim is made; or
             479          (B) a newly acquired or replacement motor vehicle covered under the terms of the
             480      policy.
             481          (b) For new policies written on or after January 1, 2001, the limits of underinsured
             482      motorist coverage shall be equal to the lesser of the limits of the insured's motor vehicle
             483      liability coverage or the maximum underinsured motorist coverage limits available by the
             484      insurer under the insured's motor vehicle policy, unless the insured purchases coverage in a
             485      lesser amount by signing an acknowledgment form provided by the insurer that:
             486          (i) waives the higher coverage;
             487          (ii) reasonably explains the purpose of underinsured motorist coverage; and
             488          (iii) discloses the additional premiums required to purchase underinsured motorist
             489      coverage with limits equal to the lesser of the limits of the insured's motor vehicle liability
             490      coverage or the maximum underinsured motorist coverage limits available by the insurer under
             491      the insured's motor vehicle policy.
             492          (c) A self-insured, including a governmental entity, may elect to provide underinsured



Text Box

- 17 -
             493
     motorist coverage in an amount that is less than its maximum self-insured retention under
             494      Subsections (2)(b) and (2)(g) by issuing a declaratory memorandum or policy statement from
             495      the chief financial officer or chief risk officer that declares the:
             496          (i) self-insured entity's coverage level; and
             497          (ii) process for filing an underinsured motorist claim.
             498          (d) Underinsured motorist coverage may not be sold with limits that are less than:
             499          (i) $10,000 for one person in any one accident; and
             500          (ii) at least $20,000 for two or more persons in any one accident.
             501          (e) The acknowledgment under Subsection (2)(b) continues for that issuer of the
             502      underinsured motorist coverage until the insured, in writing, requests different underinsured
             503      motorist coverage from the insurer.
             504          (f) (i) The named insured's underinsured motorist coverage, as described in Subsection
             505      (2)(a), is secondary to the liability coverage of an owner or operator of an underinsured motor
             506      vehicle, as described in Subsection (1).
             507          (ii) Underinsured motorist coverage may not be set off against the liability coverage of
             508      the owner or operator of an underinsured motor vehicle, but shall be added to, combined with,
             509      or stacked upon the liability coverage of the owner or operator of the underinsured motor
             510      vehicle to determine the limit of coverage available to the injured person.
             511          (g) (i) A named insured may reject underinsured motorist coverage by an express
             512      writing to the insurer that provides liability coverage under Subsection 31A-22-302 (1)(a).
             513          (ii) This written rejection shall be on a form provided by the insurer that includes a
             514      reasonable explanation of the purpose of underinsured motorist coverage and when it would be
             515      applicable.
             516          (iii) This rejection continues for that issuer of the liability coverage until the insured in
             517      writing requests underinsured motorist coverage from that liability insurer.
             518          (h) (i) In conjunction with the first two renewal notices sent after January 1, 2001, for
             519      policies existing on that date, the insurer shall disclose in the same medium as the premium
             520      renewal notice, an explanation of:
             521          (A) the purpose of underinsured motorist coverage; and
             522          (B) the costs associated with increasing the coverage in amounts up to and including
             523      the maximum amount available by the insurer under the insured's motor vehicle policy.



Text Box

- 18 -
             524
         (ii) The disclosure required by this Subsection (2)(h) shall be sent to all insureds that
             525      carry underinsured motorist coverage limits in an amount less than the insured's motor vehicle
             526      liability policy limits or the maximum underinsured motorist coverage limits available by the
             527      insurer under the insured's motor vehicle policy.
             528          (3) (a) (i) Except as provided in this Subsection (3), a covered person injured in a
             529      motor vehicle described in a policy that includes underinsured motorist benefits may not elect
             530      to collect underinsured motorist coverage benefits from any other motor vehicle insurance
             531      policy.
             532          (ii) The limit of liability for underinsured motorist coverage for two or more motor
             533      vehicles may not be added together, combined, or stacked to determine the limit of insurance
             534      coverage available to an injured person for any one accident.
             535          (iii) Subsection (3)(a)(ii) applies to all persons except a covered person described
             536      under Subsections (3)(b)(i) and (ii).
             537          (b) (i) Except as provided in Subsection (3)(b)(ii), a covered person injured while
             538      occupying, using, or maintaining a motor vehicle that is not owned, leased, or furnished to the
             539      covered person, the covered person's spouse, or the covered person's resident parent or resident
             540      sibling, may also recover benefits under any one other policy under which they are a covered
             541      person.
             542          (ii) (A) A covered person may recover benefits from no more than two additional
             543      policies, one additional policy from each parent's household if the covered person is:
             544          (I) a dependent minor of parents who reside in separate households; and
             545          (II) injured while occupying or using a motor vehicle that is not owned, leased, or
             546      furnished to the covered person, the covered person's resident parent, or the covered person's
             547      resident sibling.
             548          (B) Each parent's policy under this Subsection (3)(b)(ii) is liable only for the
             549      percentage of the damages that the limit of liability of each parent's policy of underinsured
             550      motorist coverage bears to the total of both parents' underinsured coverage applicable to the
             551      accident.
             552          (iii) A covered person's recovery under any available policies may not exceed the full
             553      amount of damages.
             554          (iv) Underinsured coverage on a motor vehicle occupied at the time of an accident shall



Text Box

- 19 -
             555
     be primary coverage, and the coverage elected by a person described under Subsections
             556      31A-22-305 (1)(a) and (b) shall be secondary coverage.
             557          (v) The primary and the secondary coverage may not be set off against the other.
             558          (vi) A covered person as described under Subsection (3)(b)(i) is entitled to the highest
             559      limits of underinsured motorist coverage under only one additional policy per household
             560      applicable to that covered person as a named insured, spouse, or relative.
             561          (vii) A covered injured person is not barred against making subsequent elections if
             562      recovery is unavailable under previous elections.
             563          (viii) (A) As used in this section, "interpolicy stacking" means recovering benefits for a
             564      single incident of loss under more than one insurance policy.
             565          (B) Except to the extent permitted by this Subsection (3), interpolicy stacking is
             566      prohibited for underinsured motorist coverage.
             567          (c) Underinsured motorist coverage:
             568          (i) is secondary to the benefits provided by Title 34A, Chapter 2, Workers'
             569      Compensation Act;
             570          (ii) may not be subrogated by the workers' compensation insurance carrier;
             571          (iii) may not be reduced by any benefits provided by workers' compensation insurance;
             572          (iv) may be reduced by health insurance subrogation only after the covered person has
             573      been made whole;
             574          (v) may not be collected for bodily injury or death sustained by a person:
             575          (A) while committing a violation of Section 41-1a-1314 ;
             576          (B) who, as a passenger in a vehicle, has knowledge that the vehicle is being operated
             577      in violation of Section 41-1a-1314 ; or
             578          (C) while committing a felony; and
             579          (vi) notwithstanding Subsection (3)(c)(v), may be recovered:
             580          (A) for a person under 18 years of age who is injured within the scope of Subsection
             581      (3)(c)(v) but limited to medical and funeral expenses; or
             582          (B) by a law enforcement officer as defined in Section 53-13-103 , who is injured
             583      within the course and scope of the law enforcement officer's duties.
             584          (4) The inception of the loss under Subsection 31A-21-313 (1) for underinsured
             585      motorist claims occurs upon the date of the last liability policy payment.



Text Box

- 20 -
             586
         (5) (a) Within five business days after notification in a manner specified by the
             587      department that all liability insurers have tendered their liability policy limits, the underinsured
             588      carrier shall either:
             589          (i) waive any subrogation claim the underinsured carrier may have against the person
             590      liable for the injuries caused in the accident; or
             591          (ii) pay the insured an amount equal to the policy limits tendered by the liability carrier.
             592          (b) If neither option is exercised under Subsection (5)(a), the subrogation claim is
             593      considered to be waived by the underinsured carrier.
             594          (6) Except as otherwise provided in this section, a covered person may seek, subject to
             595      the terms and conditions of the policy, additional coverage under any policy:
             596          (a) that provides coverage for damages resulting from motor vehicle accidents; and
             597          (b) that is not required to conform to Section 31A-22-302 .
             598          (7) (a) When a claim is brought by a named insured or a person described in
             599      Subsection 31A-22-305 (1) and is asserted against the covered person's underinsured motorist
             600      carrier, the claimant may elect to resolve the claim:
             601          (i) by submitting the claim to binding arbitration; or
             602          (ii) through litigation.
             603          (b) Unless otherwise provided in the policy under which underinsured benefits are
             604      claimed, the election provided in Subsection (7)(a) is available to the claimant only.
             605          (c) Once the claimant has elected to commence litigation under Subsection (7)(a)(ii),
             606      the claimant may not elect to resolve the claim through binding arbitration under this section
             607      without the written consent of the underinsured motorist coverage carrier.
             608          (d) (i) Unless otherwise agreed to in writing by the parties, a claim that is submitted to
             609      binding arbitration under Subsection (7)(a)(i) shall be resolved by a single arbitrator.
             610          (ii) All parties shall agree on the single arbitrator selected under Subsection (7)(d)(i).
             611          (iii) If the parties are unable to agree on a single arbitrator as required under Subsection
             612      (7)(d)(ii), the parties shall select a panel of three arbitrators.
             613          (e) If the parties select a panel of three arbitrators under Subsection (7)(d)(iii):
             614          (i) each side shall select one arbitrator; and
             615          (ii) the arbitrators appointed under Subsection (7)(e)(i) shall select one additional
             616      arbitrator to be included in the panel.



Text Box

- 21 -
Senate Committee Amendments 2-9-2006 rd/sch
             617
         (f) Unless otherwise agreed to in writing:
             618          (i) each party shall pay an equal share of the fees and costs of the arbitrator selected
             619      under Subsection (7)(d)(i); or
             620          (ii) if an arbitration panel is selected under Subsection (7)(d)(iii):
             621          (A) each party shall pay the fees and costs of the arbitrator selected by that party; and
             622          (B) each party shall pay an equal share of the fees and costs of the arbitrator selected
             623      under Subsection (7)(e)(ii).
             624          (g) Except as otherwise provided in this section or unless otherwise agreed to in
             625      writing by the parties, an arbitration proceeding conducted under this section shall be governed
             626      by Title 78, Chapter 31a, Utah Uniform Arbitration Act.
             627          (h) The arbitration shall be conducted in accordance with Rules 26 through 37, 54, and
             628      68 of the Utah Rules of Civil Procedure.
             629          (i) All issues of discovery shall be resolved by the arbitrator or the arbitration panel.
             630          (j) A written decision by a single arbitrator or by a majority of the arbitration panel
             631      shall constitute a final decision.
             632          (k) (i) The amount of an arbitration award may not exceed the underinsured motorist
             633      policy limits of all applicable underinsured motorist policies, including applicable underinsured
             634      motorist umbrella policies.
             635          (ii) If the initial arbitration award exceeds the underinsured motorist policy limits of all
             636      applicable underinsured motorist policies, the arbitration award shall be reduced to an amount
             637      equal to the combined underinsured motorist policy limits of all applicable underinsured
             638      motorist policies.
             639          (l) The arbitrator or arbitration panel may not decide the issues of coverage or
             640      extra-contractual damages, including:
             641          (i) whether the claimant is a covered person;
             642          (ii) whether the policy extends coverage to the loss; or
             643          (iii) any allegations or claims asserting consequential damages or bad faith liability.
             644          (m) S. The arbitrator or arbitration panel may not conduct arbitration on a
             644a      class-wide or class-representative basis.
             644b          (n) .S If the arbitrator or arbitration panel finds that the action was not brought, pursued,
             645      or defended in good faith, the arbitrator or arbitration panel may award reasonable attorney fees
             646      and costs against the party that failed to bring, pursue, or defend the claim in good faith.
             647           S. [ (n) ] (o) .S An arbitration award issued under this section shall be the final resolution
             647a      of all



Text Box

- 22 -
Senate Committee Amendments 2-9-2006 rd/sch
             648
     claims not excluded by Subsection (7)(l) between the parties unless:
             649          (i) the award was procured by corruption, fraud, or other undue means; or
             650          (ii) either party, within 20 days after service of the arbitration award:
             651          (A) files a complaint requesting a trial de novo in the district court; and
             652          (B) serves the nonmoving party with a copy of the complaint requesting a trial de novo
             653      under Subsection (7) S. [ (n) ] (o) .S (ii)(A).
             654           S. [ (o) ] (p) .S (i) Upon filing a complaint for a trial de novo under Subsection (7) S.
             654a      [ (n) ] (o) .S , the
             654a      claim
             655      shall proceed through litigation pursuant to the Utah Rules of Civil Procedure and Utah Rules
             656      of Evidence in the district court.
             657          (ii) In accordance with Rule 38, Utah Rules of Civil Procedure, either party may
             658      request a jury trial with a complaint requesting a trial de novo under Subsection (7) S. [ (n) ] (o) .S
             658a      (ii)(A).
             659           S. [ (p) ] (q) .S (i) If the claimant, as the moving party in a trial de novo requested under
             660      Subsection (7) S. [ (n) ] (o) .S , does not obtain a verdict that is at least $5,000 and is at least 20%
             660a      greater
             661      than the arbitration award, the claimant is responsible for all of the nonmoving party's costs.
             662          (ii) If the underinsured motorist carrier, as the moving party in a trial de novo requested
             663      under Subsection (7) S. [ (n) ] (o) .S , does not obtain a verdict that is at least 20% less than the
             663a      arbitration
             664      award, the underinsured motorist carrier is responsible for all of the nonmoving party's costs.
             665          (iii) Except as provided in Subsection (7) S. [ (p) ] (q) .S (iv), the costs under this
             665a      Subsection (7) S. [ (p) ] (q) .S
             666      shall include:
             667          (A) any costs set forth in Rule 54(d), Utah Rules of Civil Procedure; and
             668          (B) the costs of expert witnesses and depositions.
             669          (iv) An award of costs under this Subsection (7) S. [ (p) ] (q) .S may not exceed $2,500.
             670           S. [ (q) ] (r) .S For purposes of determining whether a party's verdict is greater or less than
             670a      the
             671      arbitration award under Subsection (7) S. [ (p) ] (q) .S , a court may not consider any recovery or
             671a      other relief
             672      granted on a claim for damages if the claim for damages:
             673          (i) was not fully disclosed in writing prior to the arbitration proceeding; or
             674          (ii) was not disclosed in response to discovery contrary to the Utah Rules of Civil
             675      Procedure.
             676           S. [ (r) ] (s) .S If a district court determines, upon a motion of the nonmoving party, that
             676a      the
             677      moving party's use of the trial de novo process was filed in bad faith in accordance with
             678      Section 78-27-56 , the district court may award reasonable attorney fees to the nonmoving



Text Box

- 23 -
Senate Committee Amendments 2-9-2006 rd/sch
             679
     party.
             680           S. [ (s) ] (t) .S Nothing in this section is intended to limit any claim under any other portion
             680a      of an
             681      applicable insurance policy.
             682           S. [ (t) ] (u) .S If there are multiple underinsured motorist policies, as set forth in
             682a      Subsection (3),
             683      the claimant may elect to arbitrate in one hearing the claims against all the underinsured
             684      motorist carriers.





Legislative Review Note
    as of 2-1-06 11:30 AM


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


[Bill Documents][Bills Directory]