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H.B. 227

This document includes House Committee Amendments incorporated into the bill on Fri, Mar 4, 2011 at 5:23 PM by Bbryner. -->              1     

TEST DRIVING VEHICLES

             2     
2011 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Fred C. Cox

             5     
Senate Sponsor: ____________

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Insurance Code and Motor Vehicle Business Regulation Act by
             10      amending provisions relating to motor vehicle liability coverage of a motor vehicle
             11      owned by a motor vehicle dealer.
             12      Highlighted Provisions:
             13          This bill:
             14          .    provides that before a motor vehicle dealer allows a permissive user other than an
             15      officer, agent, or employee of a motor vehicle business to operate a motor vehicle
             16      owned by the dealer:
             17              .    the dealer shall provide written notification to the permissive user that the
             18      liability insurance coverage of the permissive user shall be the primary
             19      coverage H. [ ; ] .H and
             20      H. [         . ] .H     the permissive user shall sign the written notification; H. or
             20a              . the dealer shall prominently display a sign on the premises of the motor vehicle
             20b      business that notifies the permissive user that the liability insurance coverage of the permissive
             20c      user shall be the primary coverage; .H
             21          .    provides that if a motor vehicle business fails to provide the H. [ written ] .H
             21a      notification:
             22              .    the liability insurance coverage of the motor vehicle business shall be primary
             23      coverage; and
             24              .    the liability insurance coverage of the permissive user of the motor vehicle
             25      owned by the motor vehicle business shall be secondary to the liability
             26      insurance coverage of the motor vehicle business;
             27          .    provides that H. under certain circumstances, .H a motor vehicle dealer is required
             27a      to have on file a signed, written



             28      notification at any time a permissive user is operating a motor vehicle owned by the dealer; and
             29          .    makes technical changes.
             30      Money Appropriated in this Bill:
             31          None
             32      Other Special Clauses:
             33          None
             34      Utah Code Sections Affected:
             35      AMENDS:
             36          31A-22-303, as last amended by Laws of Utah 2010, Chapter 172
             37      ENACTS:
             38          41-3-901, Utah Code Annotated 1953
             39     
             40      Be it enacted by the Legislature of the state of Utah:
             41          Section 1. Section 31A-22-303 is amended to read:
             42           31A-22-303. Motor vehicle liability coverage.
             43          (1) (a) In addition to complying with the requirements of Chapter 21, Insurance
             44      Contracts in General, and Chapter 22, Part 2, Liability Insurance in General, a policy of motor
             45      vehicle liability coverage under Subsection 31A-22-302 (1)(a) shall:
             46          (i) name the motor vehicle owner or operator in whose name the policy was purchased,
             47      state that named insured's address, the coverage afforded, the premium charged, the policy
             48      period, and the limits of liability;
             49          (ii) (A) if it is an owner's policy, designate by appropriate reference all the motor
             50      vehicles on which coverage is granted, insure the person named in the policy, insure any other
             51      person using any named motor vehicle with the express or implied permission of the named
             52      insured, and, except as provided in Section 31A-22-302.5 , insure any person included in
             53      Subsection (1)(a)(iii) against loss from the liability imposed by law for damages arising out of
             54      the ownership, maintenance, or use of these motor vehicles within the United States and
             55      Canada, subject to limits exclusive of interest and costs, for each motor vehicle, in amounts not
             56      less than the minimum limits specified under Section 31A-22-304 ; or
             57          (B) if it is an operator's policy, insure the person named as insured against loss from
             58      the liability imposed upon him by law for damages arising out of the insured's use of any motor


             59      vehicle not owned by him, within the same territorial limits and with the same limits of liability
             60      as in an owner's policy under Subsection (1)(a)(ii)(A);
             61          (iii) except as provided in Section 31A-22-302.5 , insure persons related to the named
             62      insured by blood, marriage, adoption, or guardianship who are residents of the named insured's
             63      household, including those who usually make their home in the same household but
             64      temporarily live elsewhere, to the same extent as the named insured;
             65          (iv) where a claim is brought by the named insured or a person described in Subsection
             66      (1)(a)(iii), the available coverage of the policy may not be reduced or stepped-down because:
             67          (A) a permissive user driving a covered motor vehicle is at fault in causing an accident;
             68      or
             69          (B) the named insured or any of the persons described in this Subsection (1)(a)(iii)
             70      driving a covered motor vehicle is at fault in causing an accident; and
             71          (v) cover damages or injury resulting from a covered driver of a motor vehicle who is
             72      stricken by an unforeseeable paralysis, seizure, or other unconscious condition and who is not
             73      reasonably aware that paralysis, seizure, or other unconscious condition is about to occur to the
             74      extent that a person of ordinary prudence would not attempt to continue driving.
             75          (b) The driver's liability under Subsection (1)(a)(v) is limited to the insurance
             76      coverage.
             77          (c) (i) "Guardianship" under Subsection (1)(a)(iii) includes the relationship between a
             78      foster parent and a minor who is in the legal custody of the Division of Child and Family
             79      Services if:
             80          (A) the minor resides in a foster home, as defined in Section 62A-2-101 , with a foster
             81      parent who is the named insured; and
             82          (B) the foster parent has signed to be jointly and severally liable for compensatory
             83      damages caused by the minor's operation of a motor vehicle in accordance with Section
             84      53-3-211 .
             85          (ii) "Guardianship" as defined under this Subsection (1)(c) ceases to exist when a
             86      minor described in Subsection (1)(c)(i)(A) is no longer a resident of the named insured's
             87      household.
             88          (2) (a) A policy containing motor vehicle liability coverage under Subsection
             89      31A-22-302 (1)(a) may:


             90          (i) provide for the prorating of the insurance under that policy with other valid and
             91      collectible insurance;
             92          (ii) grant any lawful coverage in addition to the required motor vehicle liability
             93      coverage;
             94          (iii) if the policy is issued to a person other than a motor vehicle business, limit the
             95      coverage afforded to a motor vehicle business or its officers, agents, or employees to the
             96      minimum limits under Section 31A-22-304 , and to those instances when there is no other valid
             97      and collectible insurance with at least those limits, whether the other insurance is primary,
             98      excess, or contingent; and
             99          (iv) if issued to a motor vehicle business, restrict coverage afforded to anyone other
             100      than the motor vehicle business or its officers, agents, or employees to the minimum limits
             101      under Section 31A-22-304 , and to those instances when there is no other valid and collectible
             102      insurance with at least those limits, whether the other insurance is primary, excess, or
             103      contingent.
             104          (b) (i) The liability insurance coverage of a permissive user of a motor vehicle owned
             105      by a motor vehicle business shall be primary coverage.
             106          (ii) The liability insurance coverage of a motor vehicle business shall be secondary to
             107      the liability insurance coverage of a permissive user as specified under Subsection (2)(b)(i).
             108          (iii) Before a motor vehicle business allows a permissive user of a motor vehicle to
             109      operate a motor vehicle owned by the motor vehicle business, the motor vehicle business shall
             110      provide written notification to the permissive user that the liability insurance coverage of the
             111      permissive user shall be the primary coverage as required in Section 41-3-901 .
             112          (iv) Notwithstanding Subsections (2)(b)(i) and (ii), if a motor vehicle business fails to
             113      provide written notification as required in Section 41-3-901 :
             114          (A) the liability insurance coverage of a motor vehicle business shall be primary
             115      coverage; and
             116          (B) the liability insurance coverage of a permissive user of a motor vehicle owned by a
             117      motor vehicle business shall be secondary to the liability insurance coverage of a motor vehicle
             118      business as specified under Subsection (2)(b)(iv)(A).
             119          (3) Motor vehicle liability coverage need not insure any liability:
             120          (a) under any workers' compensation law under Title 34A, Utah Labor Code;


             121          (b) resulting from bodily injury to or death of an employee of the named insured, other
             122      than a domestic employee, while engaged in the employment of the insured, or while engaged
             123      in the operation, maintenance, or repair of a designated vehicle; or
             124          (c) resulting from damage to property owned by, rented to, bailed to, or transported by
             125      the insured.
             126          (4) An insurance carrier providing motor vehicle liability coverage has the right to
             127      settle any claim covered by the policy, and if the settlement is made in good faith, the amount
             128      of the settlement is deductible from the limits of liability specified under Section 31A-22-304 .
             129          (5) A policy containing motor vehicle liability coverage imposes on the insurer the
             130      duty to defend, in good faith, any person insured under the policy against any claim or suit
             131      seeking damages which would be payable under the policy.
             132          (6) (a) If a policy containing motor vehicle liability coverage provides an insurer with
             133      the defense of lack of cooperation on the part of the insured, that defense is not effective
             134      against a third person making a claim against the insurer, unless there was collusion between
             135      the third person and the insured.
             136          (b) If the defense of lack of cooperation is not effective against the claimant, after
             137      payment, the insurer is subrogated to the injured person's claim against the insured to the extent
             138      of the payment and is entitled to reimbursement by the insured after the injured third person has
             139      been made whole with respect to the claim against the insured.
             140          (7) A policy of motor vehicle liability coverage may limit coverage to the policy
             141      minimum limits under Section 31A-22-304 if the insured motor vehicle is operated by a person
             142      who has consumed any alcohol or any illegal drug or illegal substance if the policy or a
             143      specifically reduced premium was extended to the insured upon express written declaration
             144      executed by the insured that the insured motor vehicle would not be so operated.
             145          (8) (a) When a claim is brought exclusively by a named insured or a person described
             146      in Subsection (1)(a)(iii) and asserted exclusively against a named insured or an individual
             147      described in Subsection (1)(a)(iii), the claimant may elect to resolve the claim:
             148          (i) by submitting the claim to binding arbitration; or
             149          (ii) through litigation.
             150          (b) Once the claimant has elected to commence litigation under Subsection (8)(a)(ii),
             151      the claimant may not elect to resolve the claim through binding arbitration under this section


             152      without the written consent of both parties and the defendant's liability insurer.
             153          (c) (i) Unless otherwise agreed on in writing by the parties, a claim that is submitted to
             154      binding arbitration under Subsection (8)(a)(i) shall be resolved by a panel of three arbitrators.
             155          (ii) Unless otherwise agreed on in writing by the parties, each party shall select an
             156      arbitrator. The arbitrators selected by the parties shall select a third arbitrator.
             157          (d) Unless otherwise agreed on in writing by the parties, each party will pay the fees
             158      and costs of the arbitrator that party selects. Both parties shall share equally the fees and costs
             159      of the third arbitrator.
             160          (e) Except as otherwise provided in this section, an arbitration procedure conducted
             161      under this section shall be governed by Title 78B, Chapter 11, Utah Uniform Arbitration Act,
             162      unless otherwise agreed on in writing by the parties.
             163          (f) (i) Discovery shall be conducted in accordance with Rules 26b through 36, Utah
             164      Rules of Civil Procedure.
             165          (ii) All issues of discovery shall be resolved by the arbitration panel.
             166          (g) A written decision of two of the three arbitrators shall constitute a final decision of
             167      the arbitration panel.
             168          (h) [Prior to] Before the rendering of the arbitration award:
             169          (i) the existence of a liability insurance policy may be disclosed to the arbitration
             170      panel; and
             171          (ii) the amount of all applicable liability insurance policy limits may not be disclosed to
             172      the arbitration panel.
             173          (i) The amount of the arbitration award may not exceed the liability limits of all the
             174      defendant's applicable liability insurance policies, including applicable liability umbrella
             175      policies. If the initial arbitration award exceeds the liability limits of all applicable liability
             176      insurance policies, the arbitration award shall be reduced to an amount equal to the liability
             177      limits of all applicable liability insurance policies.
             178          (j) The arbitration award is the final resolution of all claims between the parties unless
             179      the award was procured by corruption, fraud, or other undue means.
             180          (k) If the arbitration panel finds that the action was not brought, pursued, or defended
             181      in good faith, the arbitration panel may award reasonable fees and costs against the party that
             182      failed to bring, pursue, or defend the claim in good faith.


             183          (l) Nothing in this section is intended to limit any claim under any other portion of an
             184      applicable insurance policy.
             185          (9) An at-fault driver or an insurer issuing a policy of insurance under this part that is
             186      covering an at-fault driver may not reduce compensation to an injured party based on the
             187      injured party not being covered by a policy of insurance that provides personal injury
             188      protection coverage under Sections 31A-22-306 through 31A-22-309 .
             189          Section 2. Section 41-3-901 is enacted to read:
             190          41-3-901. Motor vehicle liability coverage for permissive user of motor vehicle.
             191          (1) Before a motor vehicle dealer allows a permissive user other than an officer, agent,
             192      or employee of a motor vehicle business to operate a motor vehicle owned by the dealer H. [ : ] , the
             192a      dealer shall provide notification to the permissive user that the liability insurance coverage of
             192b      the permissive user shall be the primary coverage as required by Subsection 31A-22-303(2)(b).
             192c          (2) Notification under Subsection (1) shall be provided as follows: .H
             193          (a) H. (i) .H the dealer shall provide written notification to the permissive user that the
             193a      liability
             194      insurance coverage of the permissive user shall be the primary coverage as required by
             195      Subsection 31A-22-303 (2)(b); and
             196           H. [ (b) ] (ii) .H the permissive user shall sign the written notification provided by the
             196a      dealer under
             197      Subsection H. [ (1)(a) ] (2)(a)(i) [ . ] ; or
             197a          (b) the dealer shall prominently display a sign on the premises of the motor vehicle
             197b      business that notifies the permissive user that the liability insurance coverage of the permissive
             197c      user shall be the primary coverage as required by Subsection 31A-22-303(2)(b).
             198           [ (2) The motor vehicle ] (3) If the dealer provides notification in the manner
             198a      described under Subsection (2)(a), the .H dealer shall have on file a signed, written notification
             198b      under
             199      Subsection H. [ (1) ] (2)(a) .H at any time a permissive user is operating a motor vehicle owned
             199a      by the dealer.
             200          (3) A person who violates this section is not subject to the criminal penalties described
             201      in Section 41-3-701 H. or any other criminal penalties .H .




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