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S.B. 172

This document includes House Floor Amendments incorporated into the bill on Thu, Mar 12, 2009 at 11:01 AM by ddonat. --> This document includes House Floor Amendments incorporated into the bill on Thu, Mar 12, 2009 at 11:02 AM by ddonat. -->             


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House Floor Amendments 3-12-2009 dd/sch
1
    
UNDERINSURED MOTORIST COVERAGE

             2     
AMENDMENTS

             3     
2009 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Stephen H. Urquhart

             6     
House Sponsor: Lorie D. Fowlke

             7     

             8      LONG TITLE
             9      General Description:
             10          This bill modifies the Insurance Code by amending provisions relating to underinsured
             11      motorist coverage.
             12      Highlighted Provisions:
             13          This bill:
             14          . H. [ provides that for an insurance policy or combination of policies providing
             15      underinsured motorist coverage issued or renewed on or after July 1, 2009, an
             16      underinsured motorist coverage carrier has no subrogration claim against the person
             17      liable for the injuries caused in the accident
] repeals the requirement that the Insurance

             17a      Department specify the manner of notification for a notification to the underinsured motorist
             17b      coverage carrier that all liability insurers have tendered their liability policy limits .H ; and
             18          .    makes technical changes.
             19      Monies Appropriated in this Bill:
             20          None
             21      Other Special Clauses:
             22          None
             23      Utah Code Sections Affected:
             24      AMENDS:
             25          31A-22-305.3, as last amended by Laws of Utah 2008, Chapter 3
             26     

             27      Be it enacted by the Legislature of the state of Utah:



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             28
         Section 1. Section 31A-22-305.3 is amended to read:
             29           31A-22-305.3. Underinsured motorist coverage.
             30          (1) As used in this section:
             31          (a) "Covered person" has the same meaning as defined in Section 31A-22-305 .
             32          (b) (i) "Underinsured motor vehicle" includes a motor vehicle, the operation,
             33      maintenance, or use of which is covered under a liability policy at the time of an injury-causing
             34      occurrence, but which has insufficient liability coverage to compensate fully the injured party
             35      for all special and general damages.
             36          (ii) The term "underinsured motor vehicle" does not include:
             37          (A) a motor vehicle that is covered under the liability coverage of the same policy that
             38      also contains the underinsured motorist coverage;
             39          (B) an uninsured motor vehicle as defined in Subsection 31A-22-305 (2); or
             40          (C) a motor vehicle owned or leased by:
             41          (I) the named insured;
             42          (II) the named insured's spouse; or
             43          (III) any dependent of the named insured.
             44          (2) (a) (i) Underinsured motorist coverage under Subsection 31A-22-302 (1)(c)
             45      provides coverage for covered persons who are legally entitled to recover damages from
             46      owners or operators of underinsured motor vehicles because of bodily injury, sickness, disease,
             47      or death.
             48          (ii) A covered person occupying or using a motor vehicle owned, leased, or furnished
             49      to the covered person, the covered person's spouse, or covered person's resident relative may
             50      recover underinsured benefits only if the motor vehicle is:
             51          (A) described in the policy under which a claim is made; or
             52          (B) a newly acquired or replacement motor vehicle covered under the terms of the
             53      policy.
             54          (b) For new policies written on or after January 1, 2001, the limits of underinsured
             55      motorist coverage shall be equal to the lesser of the limits of the insured's motor vehicle
             56      liability coverage or the maximum underinsured motorist coverage limits available by the
             57      insurer under the insured's motor vehicle policy, unless the insured purchases coverage in a
             58      lesser amount by signing an acknowledgment form that:



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             59
         (i) is filed with the department;
             60          (ii) is provided by the insurer;
             61          (iii) waives the higher coverage;
             62          (iv) reasonably explains the purpose of underinsured motorist coverage; and
             63          (v) discloses the additional premiums required to purchase underinsured motorist
             64      coverage with limits equal to the lesser of the limits of the insured's motor vehicle liability
             65      coverage or the maximum underinsured motorist coverage limits available by the insurer under
             66      the insured's motor vehicle policy.
             67          (c) A self-insured, including a governmental entity, may elect to provide underinsured
             68      motorist coverage in an amount that is less than its maximum self-insured retention under
             69      Subsections (2)(b) and (2)(g) by issuing a declaratory memorandum or policy statement from
             70      the chief financial officer or chief risk officer that declares the:
             71          (i) self-insured entity's coverage level; and
             72          (ii) process for filing an underinsured motorist claim.
             73          (d) Underinsured motorist coverage may not be sold with limits that are less than:
             74          (i) $10,000 for one person in any one accident; and
             75          (ii) at least $20,000 for two or more persons in any one accident.
             76          (e) The acknowledgment under Subsection (2)(b) continues for that issuer of the
             77      underinsured motorist coverage until the insured, in writing, requests different underinsured
             78      motorist coverage from the insurer.
             79          (f) (i) The named insured's underinsured motorist coverage, as described in Subsection
             80      (2)(a), is secondary to the liability coverage of an owner or operator of an underinsured motor
             81      vehicle, as described in Subsection (1).
             82          (ii) Underinsured motorist coverage may not be set off against the liability coverage of
             83      the owner or operator of an underinsured motor vehicle, but shall be added to, combined with,
             84      or stacked upon the liability coverage of the owner or operator of the underinsured motor
             85      vehicle to determine the limit of coverage available to the injured person.
             86          (g) (i) A named insured may reject underinsured motorist coverage by an express
             87      writing to the insurer that provides liability coverage under Subsection 31A-22-302 (1)(a).
             88          (ii) This written rejection shall be on a form provided by the insurer that includes a
             89      reasonable explanation of the purpose of underinsured motorist coverage and when it would be



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             90
     applicable.
             91          (iii) This rejection continues for that issuer of the liability coverage until the insured in
             92      writing requests underinsured motorist coverage from that liability insurer.
             93          (h) (i) In conjunction with the first two renewal notices sent after January 1, 2001, for
             94      policies existing on that date, the insurer shall disclose in the same medium as the premium
             95      renewal notice, an explanation of:
             96          (A) the purpose of underinsured motorist coverage; and
             97          (B) the costs associated with increasing the coverage in amounts up to and including
             98      the maximum amount available by the insurer under the insured's motor vehicle policy.
             99          (ii) The disclosure required by this Subsection (2)(h) shall be sent to all insureds that
             100      carry underinsured motorist coverage limits in an amount less than the insured's motor vehicle
             101      liability policy limits or the maximum underinsured motorist coverage limits available by the
             102      insurer under the insured's motor vehicle policy.
             103          (3) (a) (i) Except as provided in this Subsection (3), a covered person injured in a
             104      motor vehicle described in a policy that includes underinsured motorist benefits may not elect
             105      to collect underinsured motorist coverage benefits from any other motor vehicle insurance
             106      policy.
             107          (ii) The limit of liability for underinsured motorist coverage for two or more motor
             108      vehicles may not be added together, combined, or stacked to determine the limit of insurance
             109      coverage available to an injured person for any one accident.
             110          (iii) Subsection (3)(a)(ii) applies to all persons except a covered person described
             111      under Subsections (3)(b)(i) and (ii).
             112          (b) (i) Except as provided in Subsection (3)(b)(ii), a covered person injured while
             113      occupying, using, or maintaining a motor vehicle that is not owned, leased, or furnished to the
             114      covered person, the covered person's spouse, or the covered person's resident parent or resident
             115      sibling, may also recover benefits under any one other policy under which they are a covered
             116      person.
             117          (ii) (A) A covered person may recover benefits from no more than two additional
             118      policies, one additional policy from each parent's household if the covered person is:
             119          (I) a dependent minor of parents who reside in separate households; and
             120          (II) injured while occupying or using a motor vehicle that is not owned, leased, or



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             121
     furnished to the covered person, the covered person's resident parent, or the covered person's
             122      resident sibling.
             123          (B) Each parent's policy under this Subsection (3)(b)(ii) is liable only for the
             124      percentage of the damages that the limit of liability of each parent's policy of underinsured
             125      motorist coverage bears to the total of both parents' underinsured coverage applicable to the
             126      accident.
             127          (iii) A covered person's recovery under any available policies may not exceed the full
             128      amount of damages.
             129          (iv) Underinsured coverage on a motor vehicle occupied at the time of an accident shall
             130      be primary coverage, and the coverage elected by a person described under Subsections
             131      31A-22-305 (1)(a) and (b) shall be secondary coverage.
             132          (v) The primary and the secondary coverage may not be set off against the other.
             133          (vi) A covered person as described under Subsection (3)(b)(i) is entitled to the highest
             134      limits of underinsured motorist coverage under only one additional policy per household
             135      applicable to that covered person as a named insured, spouse, or relative.
             136          (vii) A covered injured person is not barred against making subsequent elections if
             137      recovery is unavailable under previous elections.
             138          (viii) (A) As used in this section, "interpolicy stacking" means recovering benefits for a
             139      single incident of loss under more than one insurance policy.
             140          (B) Except to the extent permitted by this Subsection (3), interpolicy stacking is
             141      prohibited for underinsured motorist coverage.
             142          (c) Underinsured motorist coverage:
             143          (i) is secondary to the benefits provided by Title 34A, Chapter 2, Workers'
             144      Compensation Act;
             145          (ii) may not be subrogated by the workers' compensation insurance carrier;
             146          (iii) may not be reduced by any benefits provided by workers' compensation insurance;
             147          (iv) may be reduced by health insurance subrogation only after the covered person has
             148      been made whole;
             149          (v) may not be collected for bodily injury or death sustained by a person:
             150          (A) while committing a violation of Section 41-1a-1314 ;
             151          (B) who, as a passenger in a vehicle, has knowledge that the vehicle is being operated



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House Floor Amendments 3-12-2009 dd/sch
             152
     in violation of Section 41-1a-1314 ; or
             153          (C) while committing a felony; and
             154          (vi) notwithstanding Subsection (3)(c)(v), may be recovered:
             155          (A) for a person under 18 years of age who is injured within the scope of Subsection
             156      (3)(c)(v) but limited to medical and funeral expenses; or
             157          (B) by a law enforcement officer as defined in Section 53-13-103 , who is injured
             158      within the course and scope of the law enforcement officer's duties.
             159          (4) The inception of the loss under Subsection 31A-21-313 (1) for underinsured
             160      motorist claims occurs upon the date of the last liability policy payment.
             161          (5) (a) H. [ [ ] Within [ ] ] [ Except as provided in Subsection (5)(c), within ] .H five
             161a      business days after
             162      notification H. [ in a manner specified by the department ] .H that all liability insurers have
             162a      tendered
             163      their liability policy limits, the underinsured carrier shall either:
             164          (i) waive any subrogation claim the underinsured carrier may have against the person
             165      liable for the injuries caused in the accident; or
             166          (ii) pay the insured an amount equal to the policy limits tendered by the liability carrier.
             167          (b) If neither option is exercised under Subsection (5)(a), the subrogation claim is
             168      considered to be waived by the underinsured carrier.
             169           H. [ (c) For an insurance policy or combination of policies providing underinsured motorist
             170      coverage issued or renewed on or after July 1, 2009, the underinsured motorist coverage carrier
             171      has no subrogation claim against the person liable for the injuries caused in the accident.
] .H

             172          (6) Except as otherwise provided in this section, a covered person may seek, subject to
             173      the terms and conditions of the policy, additional coverage under any policy:
             174          (a) that provides coverage for damages resulting from motor vehicle accidents; and
             175          (b) that is not required to conform to Section 31A-22-302 .
             176          (7) (a) When a claim is brought by a named insured or a person described in
             177      Subsection 31A-22-305 (1) and is asserted against the covered person's underinsured motorist
             178      carrier, the claimant may elect to resolve the claim:
             179          (i) by submitting the claim to binding arbitration; or
             180          (ii) through litigation.
             181          (b) Unless otherwise provided in the policy under which underinsured benefits are
             182      claimed, the election provided in Subsection (7)(a) is available to the claimant only.



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             183
         (c) Once the claimant has elected to commence litigation under Subsection (7)(a)(ii),
             184      the claimant may not elect to resolve the claim through binding arbitration under this section
             185      without the written consent of the underinsured motorist coverage carrier.
             186          (d) (i) Unless otherwise agreed to in writing by the parties, a claim that is submitted to
             187      binding arbitration under Subsection (7)(a)(i) shall be resolved by a single arbitrator.
             188          (ii) All parties shall agree on the single arbitrator selected under Subsection (7)(d)(i).
             189          (iii) If the parties are unable to agree on a single arbitrator as required under Subsection
             190      (7)(d)(ii), the parties shall select a panel of three arbitrators.
             191          (e) If the parties select a panel of three arbitrators under Subsection (7)(d)(iii):
             192          (i) each side shall select one arbitrator; and
             193          (ii) the arbitrators appointed under Subsection (7)(e)(i) shall select one additional
             194      arbitrator to be included in the panel.
             195          (f) Unless otherwise agreed to in writing:
             196          (i) each party shall pay an equal share of the fees and costs of the arbitrator selected
             197      under Subsection (7)(d)(i); or
             198          (ii) if an arbitration panel is selected under Subsection (7)(d)(iii):
             199          (A) each party shall pay the fees and costs of the arbitrator selected by that party; and
             200          (B) each party shall pay an equal share of the fees and costs of the arbitrator selected
             201      under Subsection (7)(e)(ii).
             202          (g) Except as otherwise provided in this section or unless otherwise agreed to in
             203      writing by the parties, an arbitration proceeding conducted under this section shall be governed
             204      by Title 78B, Chapter 11, Utah Uniform Arbitration Act.
             205          (h) The arbitration shall be conducted in accordance with Rules 26 through 37, 54, and
             206      68 of the Utah Rules of Civil Procedure.
             207          (i) All issues of discovery shall be resolved by the arbitrator or the arbitration panel.
             208          (j) A written decision by a single arbitrator or by a majority of the arbitration panel
             209      shall constitute a final decision.
             210          (k) (i) The amount of an arbitration award may not exceed the underinsured motorist
             211      policy limits of all applicable underinsured motorist policies, including applicable underinsured
             212      motorist umbrella policies.
             213          (ii) If the initial arbitration award exceeds the underinsured motorist policy limits of all



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             214
     applicable underinsured motorist policies, the arbitration award shall be reduced to an amount
             215      equal to the combined underinsured motorist policy limits of all applicable underinsured
             216      motorist policies.
             217          (l) The arbitrator or arbitration panel may not decide the issues of coverage or
             218      extra-contractual damages, including:
             219          (i) whether the claimant is a covered person;
             220          (ii) whether the policy extends coverage to the loss; or
             221          (iii) any allegations or claims asserting consequential damages or bad faith liability.
             222          (m) The arbitrator or arbitration panel may not conduct arbitration on a class-wide or
             223      class-representative basis.
             224          (n) If the arbitrator or arbitration panel finds that the action was not brought, pursued,
             225      or defended in good faith, the arbitrator or arbitration panel may award reasonable attorney fees
             226      and costs against the party that failed to bring, pursue, or defend the claim in good faith.
             227          (o) An arbitration award issued under this section shall be the final resolution of all
             228      claims not excluded by Subsection (7)(l) between the parties unless:
             229          (i) the award was procured by corruption, fraud, or other undue means; or
             230          (ii) either party, within 20 days after service of the arbitration award:
             231          (A) files a complaint requesting a trial de novo in the district court; and
             232          (B) serves the nonmoving party with a copy of the complaint requesting a trial de novo
             233      under Subsection (7)(o)(ii)(A).
             234          (p) (i) Upon filing a complaint for a trial de novo under Subsection (7)(o), the claim
             235      shall proceed through litigation pursuant to the Utah Rules of Civil Procedure and Utah Rules
             236      of Evidence in the district court.
             237          (ii) In accordance with Rule 38, Utah Rules of Civil Procedure, either party may
             238      request a jury trial with a complaint requesting a trial de novo under Subsection (7)(o)(ii)(A).
             239          (q) (i) If the claimant, as the moving party in a trial de novo requested under
             240      Subsection (7)(o), does not obtain a verdict that is at least $5,000 and is at least 20% greater
             241      than the arbitration award, the claimant is responsible for all of the nonmoving party's costs.
             242          (ii) If the underinsured motorist carrier, as the moving party in a trial de novo requested
             243      under Subsection (7)(o), does not obtain a verdict that is at least 20% less than the arbitration
             244      award, the underinsured motorist carrier is responsible for all of the nonmoving party's costs.



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             245
         (iii) Except as provided in Subsection (7)(q)(iv), the costs under this Subsection (7)(q)
             246      shall include:
             247          (A) any costs set forth in Rule 54(d), Utah Rules of Civil Procedure; and
             248          (B) the costs of expert witnesses and depositions.
             249          (iv) An award of costs under this Subsection (7)(q) may not exceed $2,500.
             250          (r) For purposes of determining whether a party's verdict is greater or less than the
             251      arbitration award under Subsection (7)(q), a court may not consider any recovery or other relief
             252      granted on a claim for damages if the claim for damages:
             253          (i) was not fully disclosed in writing prior to the arbitration proceeding; or
             254          (ii) was not disclosed in response to discovery contrary to the Utah Rules of Civil
             255      Procedure.
             256          (s) If a district court determines, upon a motion of the nonmoving party, that the
             257      moving party's use of the trial de novo process was filed in bad faith in accordance with
             258      Section 78B-5-825 , the district court may award reasonable attorney fees to the nonmoving
             259      party.
             260          (t) Nothing in this section is intended to limit any claim under any other portion of an
             261      applicable insurance policy.
             262          (u) If there are multiple underinsured motorist policies, as set forth in Subsection (3),
             263      the claimant may elect to arbitrate in one hearing the claims against all the underinsured
             264      motorist carriers.





Legislative Review Note
    as of 2-4-09 12:16 PM


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