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H.B. 378 Enrolled






Chief Sponsor: Todd E. Kiser

Senate Sponsor: Kevin T. Van Tassell

             8      LONG TITLE
             9      General Description:
             10          This bill modifies the Insurance Code by amending provisions relating to notice
             11      requirements for motor vehicle insurance carriers.
             12      Highlighted Provisions:
             13          This bill:
             14          .    requires an insurer that gives notice of nonrenewal or cancellation of insurance on a
             15      motor vehicle insurance policy for nonpayment of a premium to notify the
             16      lienholder if the insurer has been provided the name and mailing address of the
             17      lienholder;
             18          .    requires a lienholder to provide a current physical address of notification or an
             19      electronic address of notification to an insurer that is required to make a
             20      notification; and
             21          .    makes technical changes.
             22      Monies Appropriated in this Bill:
             23          None
             24      Other Special Clauses:
             25          None
             26      Utah Code Sections Affected:
             27      AMENDS:
             28          31A-21-303, as last amended by Laws of Utah 2006, Chapter 197

             30      Be it enacted by the Legislature of the state of Utah:
             31          Section 1. Section 31A-21-303 is amended to read:
             32           31A-21-303. Cancellation, issuance, renewal.
             33          (1) (a) Except as otherwise provided in this section, other statutes, or by rule under
             34      Subsection (1)(c), this section applies to all policies of insurance:
             35          (i) except for:
             36          (A) life insurance;
             37          (B) accident and health insurance; and
             38          (C) annuities; and
             39          (ii) if the policies of insurance are issued on forms that are subject to filing under
             40      Subsection 31A-21-201 (1).
             41          (b) A policy may provide terms more favorable to insureds than this section requires.
             42          (c) The commissioner may by rule totally or partially exempt from this section classes
             43      of insurance policies in which the insureds do not need protection against arbitrary or
             44      unannounced termination.
             45          (d) The rights provided by this section are in addition to and do not prejudice any
             46      other rights the insureds may have at common law or under other statutes.
             47          (2) (a) As used in this Subsection (2), "grounds" means:
             48          (i) material misrepresentation;
             49          (ii) substantial change in the risk assumed, unless the insurer should reasonably have
             50      foreseen the change or contemplated the risk when entering into the contract;
             51          (iii) substantial breaches of contractual duties, conditions, or warranties;
             52          (iv) attainment of the age specified as the terminal age for coverage, in which case the
             53      insurer may cancel by notice under Subsection (2)(c), accompanied by a tender of proportional
             54      return of premium; or
             55          (v) in the case of motor vehicle insurance, revocation or suspension of the driver's
             56      license of:
             57          (A) the named insured; or

             58          (B) any other person who customarily drives the motor vehicle.
             59          (b) (i) Except as provided in Subsection (2)(e) or unless the conditions of Subsection
             60      (2)(b)(ii) are met, an insurance policy may not be canceled by the insurer before the earlier of:
             61          (A) the expiration of the agreed term; or
             62          (B) one year from the effective date of the policy or renewal.
             63          (ii) Notwithstanding Subsection (2)(b)(i), an insurance policy may be canceled by the
             64      insurer for:
             65          (A) nonpayment of a premium when due; or
             66          (B) on grounds defined in Subsection (2)(a).
             67          (c) (i) The cancellation provided by Subsection (2)(b), except cancellation for
             68      nonpayment of premium, is effective no sooner than 30 days after the delivery or first-class
             69      mailing of a written notice to the policyholder.
             70          (ii) Cancellation for nonpayment of premium is effective no sooner than 10 days after
             71      delivery or first class mailing of a written notice to the policyholder.
             72          (d) (i) Notice of cancellation for nonpayment of premium shall include a statement of
             73      the reason for cancellation.
             74          (ii) Subsection (7) applies to the notice required for grounds of cancellation other than
             75      nonpayment of premium.
             76          (e) (i) Subsections (2)(a) through (d) do not apply to any insurance contract that has
             77      not been previously renewed if the contract has been in effect less than 60 days when the
             78      written notice of cancellation is mailed or delivered.
             79          (ii) A cancellation under this Subsection (2)(e) may not be effective until at least 10
             80      days after the delivery to the insured of a written notice of cancellation.
             81          (iii) If the notice required by this Subsection (2)(e) is sent by first-class mail, postage
             82      prepaid, to the insured at the insured's last-known address, delivery is considered
             83      accomplished after the passing, since the mailing date, of the mailing time specified in the
             84      Utah Rules of Civil Procedure.
             85          (iv) A policy cancellation subject to this Subsection (2)(e) is not subject to the

             86      procedures described in Subsection (7).
             87          (3) A policy may be issued for a term longer than one year or for an indefinite term if
             88      the policy includes a clause providing for cancellation by the insurer by giving notice as
             89      provided in Subsection (4)(b)(i) 30 days prior to any anniversary date.
             90          (4) (a) Subject to Subsections (2), (3), and (4)(b), a policyholder has a right to have
             91      the policy renewed:
             92          (i) on the terms then being applied by the insurer to similar risks; and
             93          (ii) (A) for an additional period of time equivalent to the expiring term if the agreed
             94      term is one year or less; or
             95          (B) for one year if the agreed term is longer than one year.
             96          (b) Except as provided in Subsections (4)(c) and (5), the right to renewal under
             97      Subsection (4)(a) is extinguished if:
             98          (i) at least 30 days prior to the policy expiration or anniversary date a notice of
             99      intention not to renew the policy beyond the agreed expiration or anniversary date is delivered
             100      or sent by first-class mail by the insurer to the policyholder at the policyholder's last-known
             101      address;
             102          (ii) not more than 45 nor less than 14 days prior to the due date of the renewal
             103      premium, the insurer delivers or sends by first-class mail a notice to the policyholder at the
             104      policyholder's last-known address, clearly stating:
             105          (A) the renewal premium;
             106          (B) how the renewal premium may be paid; and
             107          (C) that failure to pay the renewal premium by the due date extinguishes the
             108      policyholder's right to renewal;
             109          (iii) the policyholder has:
             110          (A) accepted replacement coverage; or
             111          (B) requested or agreed to nonrenewal; or
             112          (iv) the policy is expressly designated as nonrenewable.
             113          (c) Unless the conditions of Subsection (4)(b)(iii) or (iv) apply, an insurer may not fail

             114      to renew an insurance policy as a result of a telephone call or other inquiry that:
             115          (i) references a policy coverage; and
             116          (ii) does not result in the insured requesting payment of a claim.
             117          (d) Failure to renew under this Subsection (4) is subject to Subsection (5).
             118          (5) Notwithstanding Subsection (4), an insurer may not fail to renew the following
             119      personal lines insurance policies solely on the basis of:
             120          (a) in the case of a motor vehicle insurance policy:
             121          (i) a claim from the insured that:
             122          (A) results from an accident in which:
             123          (I) the insured is not at fault; and
             124          (II) the driver of the motor vehicle that is covered by the motor vehicle insurance
             125      policy is 21 years of age or older; and
             126          (B) is the only claim meeting the condition of Subsection (5)(a)(i)(A) within a
             127      36-month period;
             128          (ii) a single traffic violation by an insured that:
             129          (A) is a violation of a speed limit under Title 41, Chapter 6a, Traffic Code;
             130          (B) is not in excess of 10 miles per hour over the speed limit;
             131          (C) is not a traffic violation under:
             132          (I) Section 41-6a-601 ;
             133          (II) Section 41-6a-604 ; or
             134          (III) Section 41-6a-605 ;
             135          (D) is not a violation by an insured driver who is younger than 21 years of age; and
             136          (E) is the only violation meeting the conditions of Subsections (5)(a)(ii)(A) through
             137      (D) within a 36-month period; or
             138          (iii) a claim for damage that:
             139          (A) results solely from:
             140          (I) wind;
             141          (II) hail;

             142          (III) lightning; or
             143          (IV) an earthquake;
             144          (B) is not preventable by the exercise of reasonable care; and
             145          (C) is the only claim meeting the conditions of Subsections (5)(a)(iii)(A) and (B)
             146      within a 36-month period; and
             147          (b) in the case of a homeowner's insurance policy, a claim by the insured that is for
             148      damage that:
             149          (i) results solely from:
             150          (A) wind;
             151          (B) hail; or
             152          (C) lightning;
             153          (ii) is not preventable by the exercise of reasonable care; and
             154          (iii) is the only claim meeting the conditions of Subsections (5)(b)(i) and (ii) within a
             155      36-month period.
             156          (6) (a) (i) Subject to Subsection (6)(b), if the insurer offers or purports to renew the
             157      policy, but on less favorable terms or at higher rates, the new terms or rates take effect on the
             158      renewal date if the insurer delivered or sent by first-class mail to the policyholder notice of the
             159      new terms or rates at least 30 days prior to the expiration date of the prior policy.
             160          (ii) If the insurer did not give the prior notification described in Subsection (6)(a)(i) to
             161      the policyholder, the new terms or rates do not take effect until 30 days after the notice is
             162      delivered or sent by first-class mail, in which case the policyholder may elect to cancel the
             163      renewal policy at any time during the 30-day period.
             164          (iii) Return premiums or additional premium charges shall be calculated
             165      proportionately on the basis that the old rates apply.
             166          (b) Subsection (6)(a) does not apply if the only change in terms that is adverse to the
             167      policyholder is:
             168          (i) a rate increase generally applicable to the class of business to which the policy
             169      belongs;

             170          (ii) a rate increase resulting from a classification change based on the altered nature or
             171      extent of the risk insured against; or
             172          (iii) a policy form change made to make the form consistent with Utah law.
             173          (7) (a) If a notice of cancellation or nonrenewal under Subsection (2)(c) does not state
             174      with reasonable precision the facts on which the insurer's decision is based, the insurer shall
             175      send by first-class mail or deliver that information within 10 working days after receipt of a
             176      written request by the policyholder.
             177          (b) A notice under Subsection (2)(c) is not effective unless it contains information
             178      about the policyholder's right to make the request.
             179          (8) (a) An insurer that gives a notice of nonrenewal or cancellation of insurance on a
             180      motor vehicle insurance policy issued in accordance with the requirements of Chapter 22, Part
             181      3, Motor Vehicle Insurance, for nonpayment of a premium shall provide notice of nonrenewal
             182      or cancellation to a lienholder if the insurer has been provided the name and mailing address
             183      of the lienholder.
             184          (b) The notice described in Subsection (8)(a) shall be provided to the lienholder by
             185      first class mail or, if agreed by the parties, any electronic means of communication.
             186          (c) A lienholder shall provide a current physical address of notification or an
             187      electronic address of notification to an insurer that is required to make a notification under
             188      Subsection (8)(a).
             189          [(8)] (9) If a risk-sharing plan under Section 31A-2-214 exists for the kind of coverage
             190      provided by the insurance being cancelled or nonrenewed, a notice of cancellation or
             191      nonrenewal required under Subsection (2)(c) or (4)(b)(i) may not be effective unless it
             192      contains instructions to the policyholder for applying for insurance through the available
             193      risk-sharing plan.
             194          [(9)] (10) There is no liability on the part of, and no cause of action against, any
             195      insurer, its authorized representatives, agents, employees, or any other person furnishing to the
             196      insurer information relating to the reasons for cancellation or nonrenewal or for any statement
             197      made or information given by them in complying or enabling the insurer to comply with this

             198      section unless actual malice is proved by clear and convincing evidence.
             199          [(10)] (11) This section does not alter any common law right of contract rescission for
             200      material misrepresentation.

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