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H.B. 79

This document includes House Committee Amendments incorporated into the bill on Fri, Feb 4, 2011 at 11:32 AM by lerror. --> This document includes House Floor Amendments incorporated into the bill on Mon, Feb 14, 2011 at 12:48 PM by jeyring. -->              1     





Chief Sponsor: Todd E. Kiser

Senate Sponsor: Howard A. Stephenson

             8      LONG TITLE
             9      General Description:
             10          This bill modifies the Insurance Code to address issues related to certificates of
             11      insurance for property and casualty insurance.
             12      Highlighted Provisions:
             13          This bill:
             14          .    provides for the scope of the provisions;
             15          .    defines terms;
             16          .    requires filing of forms, with exceptions;
             17          .    addresses the scope of certificates of insurance;
             18          .    requires certain language to be included in a certificate of insurance;
             19      H. [     .    provides for the charging of a service fee; ] .H
             20          .    prohibits false and misleading practices;
             21          .    addresses notice requirements;
             22          .    provides for enforcement; and
             23          .    authorizes rulemaking.
             24      Money Appropriated in this Bill:
             25          None
             26      Other Special Clauses:
             27          None

             28      Utah Code Sections Affected:
             29      ENACTS:
             30          31A-22-1701, Utah Code Annotated 1953
             31          31A-22-1702, Utah Code Annotated 1953
             32          31A-22-1703, Utah Code Annotated 1953
             33          31A-22-1704, Utah Code Annotated 1953
             34          31A-22-1705, Utah Code Annotated 1953
             35          31A-22-1706, Utah Code Annotated 1953
             36          31A-22-1707, Utah Code Annotated 1953
             38      Be it enacted by the Legislature of the state of Utah:
             39          Section 1. Section 31A-22-1701 is enacted to read:
Part 17. Property and Casualty Certificate of Insurance Act

             41          31A-22-1701. Title -- Scope of part.
             42          (1) This part is known as the "Property and Casualty Certificate of Insurance Act."
             43          (2) H. [ This ] (a) Except as provided in Subsection (2)(b), this .H
             43a      part applies to H. [ :
             44          (a)
] .H
a certificate of insurance issued on or after May 10, 2011, as evidence of insurance
             45      coverage on property, operations, or risks located in this state H. [ ; and ] .
             45a          (b) This part applies on and after July 1, 2012, to a certificate of insurance that is
             45b      issued as evidence of insurance coverage on property, operations, or risks located in this state
             45c      if the certificate of insurance is an exhibit to a contract executed before July 1, 2012.
             46           [ (b) regardless ] (c) This part applies, regardless .H of where located, H. to .H the
             46a      following in relation to a certificate of insurance
             47      described in Subsection (2) H. [ (a) ] (b) .H :
             48          (i) a certificate holder;
             49          (ii) a policyholder;
             50          (iii) an insurer; or
             51          (iv) an insurance producer.
             52          Section 2. Section 31A-22-1702 is enacted to read:
             53          31A-22-1702. Definitions.
             54          Notwithstanding Section 31A-1-301 , as used in this part:
             55          (1) "Certificate holder" means a person who:
             56          (a) requests, obtains, or possesses a certificate of insurance; and
             57          (b) is not a policyholder.
             58          (2) "Certificate of insurance" means a document that is prepared H. for .H or issued
             58a      H. to a person who is not a policyholder .H as evidence

             59      of insurance H. [ coverage ] .H , regardless of how it is titled or described.
             60          (3) "Insurer" means:
             61          (a) an insurer as defined in Section 31A-1-301 ; and
             62          (b) any other person engaged in the business of making insurance or a surety contract.
             63          (4) "Person," in addition to the definition in Section 31A-1-301 , includes:
             64          (a) to the extent not prohibited by federal law:
             65          (i) the federal government; or
             66          (ii) an administrative unit of the federal government;
             67          (b) the state;
             68          (c) an administrative unit of the state;
             69          (d) a political subdivision of the state; or
             70          (e) an administrative unit of a political subdivision of the state.
             71          (5) "Policyholder" means a person who contracts with a property and casualty insurer
             72      for insurance coverage.
             73          Section 3. Section 31A-22-1703 is enacted to read:
             74          31A-22-1703. Filing of form.
             75          (1) Notwithstanding Section 31A-21-201 , a person may not:
             76          (a) prepare, issue, or request the issuance of a certificate of insurance unless the
             77      certificate of insurance form is filed with the commissioner; or
             78          (b) modify a filed certificate of insurance form unless filed with the commissioner.
             79          (2) The commissioner shall object to the use of, or prohibit the use of, a certificate of
             80      insurance form filed under this section if the certificate of insurance form:
             81          (a) is unfair, misleading, or deceptive;
             82          (b) violates public policy;
             83          (c) fails to comply with Section 31A-22-1704 ; or
             84          (d) violates any law, including a rule made by the commissioner in accordance with
             85      Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
             86          (3) A standard certificate of insurance form filed for use by a nationally recognized
             87      insurance rating organization that is licensed by the commissioner, is considered filed for use
             88      for purposes of this section or Section 31A-21-201 .
             89          Section 4. Section 31A-22-1704 is enacted to read:

             90          31A-22-1704. Scope of certificate of insurance -- Required statement H. [ -- Fee ] .H .
             91          (1) A certificate of insurance is not an insurance policy and does not affirmatively or
             92      negatively amend, extend, or alter the coverage afforded by an insurance policy to which a
             93      certificate of insurance refers.
             94          (2) A certificate of insurance may not confer to a certificate holder a right that is not
             95      provided by an insurance policy to which the certificate of insurance refers.
             96          (3) (a) A certificate of insurance may not refer to a contract that is not an insurance
             97      policy, including a construction or service contract.
             98          (b) Notwithstanding any requirement, term, or condition of a document with respect to
             99      which a certificate of insurance may be issued or may pertain, the insurance coverage afforded
             100      by a referenced insurance policy is subject to the terms, exclusions, and conditions of the
             101      insurance policy itself.
             102           H. [ (4) A certificate of insurance shall contain a statement similar to the following: "This
             103      certificate of insurance is issued as a matter of information only and confers no rights upon the
             104      certificate holder. This certificate of insurance does not amend, extend, or alter the coverage,
             105      terms, exclusions, and conditions afforded by an insurance policy referenced in this certificate
             106      of insurance."
] .H

             107          Section 5. Section 31A-22-1705 is enacted to read:
             108          31A-22-1705. False or misleading practices.
             109          (1) A person may not H. knowingly .H request or require the issuance of a
             109a      certificate of insurance from
             110      an insurer, insurance producer, or policyholder that contains false or misleading information
             111      concerning an insurance policy to which the certificate of insurance refers.
             112          (2) A person may not knowingly prepare or issue a certificate of insurance that:
             113          (a) contains false or misleading information; or
             114          (b) purports to affirmatively or negatively alter, amend, or extend the coverage
             115      provided by an insurance policy to which the certificate of insurance refers.
             116          (3) (a) A person may not prepare, issue, or request an opinion letter or other document,
             117      either in addition to or in lieu of a certificate of insurance that is inconsistent with this part.
             118          (b) An insurer or insurance producer may prepare or issue an addendum to a certificate
             119      of insurance that clarifies or explains the coverage provided by an insurance policy if the
             120      addendum complies with this part.

             121          Section 6. Section 31A-22-1706 is enacted to read:
             122          31A-22-1706. Notice of cancellation, nonrenewal, or material change.
             123          (1) A certificate holder only has a right to a notice of cancellation, nonrenewal, a
             124      material change, or to a similar notice if H. [ :
             125          (a) the certificate holder is named as an additional insured in the insurance policy to
             126      which the certificate of insurance refers or in an addendum to the insurance policy; and
             127          (b) the insurance policy or an endorsement requires notice to be provided to the
             128      certificate holder.
] the certificate holder has rights to the notice under the terms of the insurance

             128a      policy to which the certificate of insurance refers, or under any rider, or endorsement to the
             128b      insurance policy. .H
             129          (2) The terms and conditions of a notice described in Subsection (1), including the
             130      required timing of the notice, is governed by the insurance policy. A certificate of insurance
             131      may not alter a term or condition of the notice.
             132          Section 7. Section 31A-22-1707 is enacted to read:
             133          31A-22-1707. Enforcement -- Rulemaking.
             134          (1) A certificate of insurance or other document that is prepared, issued, or requested in
             135      violation of this part is void.
             136          (2) The commissioner may bring action in accordance with Section 31A-2-308 and
             137      Title 63G, Chapter 4, Administrative Procedures Act, for a violation of this part.
             138          (3) The commissioner may:
             139          (a) examine and investigate the activities of any person who the commissioner believes
             140      has been or is engaged in an act prohibited by this part;
             141          (b) enforce this part; and
             142          (c) impose a penalty or enforce a remedy authorized by this title for a violation of this
             143      part.
             144          (4) The commissioner may make rules in accordance with Title 63G, Chapter 3, Utah
             145      Administrative Rulemaking Act, that are necessary and proper to carry out this part.

Legislative Review Note
    as of 1-26-11 3:48 PM

Office of Legislative Research and General Counsel

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