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H.B. 79 Enrolled






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          .    prohibits false and misleading practices;
             20          .    addresses notice requirements;
             21          .    provides for enforcement; and
             22          .    authorizes rulemaking.
             23      Money Appropriated in this Bill:
             24          None
             25      Other Special Clauses:
             26          None
             27      Utah Code Sections Affected:
             28      ENACTS:
             29          31A-22-1701, Utah Code Annotated 1953

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

             40          31A-22-1701. Title -- Scope of part.
             41          (1) This part is known as the "Property and Casualty Certificate of Insurance Act."
             42          (2) (a) Except as provided in Subsection (2)(b), this part applies to a certificate of
             43      insurance issued on or after May 10, 2011, as evidence of insurance coverage on property,
             44      operations, or risks located in this state.
             45          (b) This part applies on and after July 1, 2012, to a certificate of insurance that is
             46      issued as evidence of insurance coverage on property, operations, or risks located in this state if
             47      the certificate of insurance is an exhibit to a contract executed before July 1, 2012.
             48          (c) This part applies, regardless of where located, to the following in relation to a
             49      certificate of insurance described in Subsection (2)(b):
             50          (i) a certificate holder;
             51          (ii) a policyholder;
             52          (iii) an insurer; or
             53          (iv) an insurance producer.
             54          Section 2. Section 31A-22-1702 is enacted to read:
             55          31A-22-1702. Definitions.
             56          Notwithstanding Section 31A-1-301 , as used in this part:
             57          (1) "Certificate holder" means a person who:

             58          (a) requests, obtains, or possesses a certificate of insurance; and
             59          (b) is not a policyholder.
             60          (2) "Certificate of insurance" means a document that is prepared for or issued to a
             61      person who is not a policyholder as evidence of insurance, regardless of how it is titled or
             62      described.
             63          (3) "Insurer" means:
             64          (a) an insurer as defined in Section 31A-1-301 ; and
             65          (b) any other person engaged in the business of making insurance or a surety contract.
             66          (4) "Person," in addition to the definition in Section 31A-1-301 , includes:
             67          (a) to the extent not prohibited by federal law:
             68          (i) the federal government; or
             69          (ii) an administrative unit of the federal government;
             70          (b) the state;
             71          (c) an administrative unit of the state;
             72          (d) a political subdivision of the state; or
             73          (e) an administrative unit of a political subdivision of the state.
             74          (5) "Policyholder" means a person who contracts with a property and casualty insurer
             75      for insurance coverage.
             76          Section 3. Section 31A-22-1703 is enacted to read:
             77          31A-22-1703. Filing of form.
             78          (1) Notwithstanding Section 31A-21-201 , a person may not:
             79          (a) prepare, issue, or request the issuance of a certificate of insurance unless the
             80      certificate of insurance form is filed with the commissioner; or
             81          (b) modify a filed certificate of insurance form unless filed with the commissioner.
             82          (2) The commissioner shall object to the use of, or prohibit the use of, a certificate of
             83      insurance form filed under this section if the certificate of insurance form:
             84          (a) is unfair, misleading, or deceptive;
             85          (b) violates public policy;

             86          (c) fails to comply with Section 31A-22-1704 ; or
             87          (d) violates any law, including a rule made by the commissioner in accordance with
             88      Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
             89          (3) A standard certificate of insurance form filed for use by a nationally recognized
             90      insurance rating organization that is licensed by the commissioner, is considered filed for use
             91      for purposes of this section or Section 31A-21-201 .
             92          Section 4. Section 31A-22-1704 is enacted to read:
             93          31A-22-1704. Scope of certificate of insurance -- Required statement.
             94          (1) A certificate of insurance is not an insurance policy and does not affirmatively or
             95      negatively amend, extend, or alter the coverage afforded by an insurance policy to which a
             96      certificate of insurance refers.
             97          (2) A certificate of insurance may not confer to a certificate holder a right that is not
             98      provided by an insurance policy to which the certificate of insurance refers.
             99          (3) (a) A certificate of insurance may not refer to a contract that is not an insurance
             100      policy, including a construction or service contract.
             101          (b) Notwithstanding any requirement, term, or condition of a document with respect to
             102      which a certificate of insurance may be issued or may pertain, the insurance coverage afforded
             103      by a referenced insurance policy is subject to the terms, exclusions, and conditions of the
             104      insurance policy itself.
             105          Section 5. Section 31A-22-1705 is enacted to read:
             106          31A-22-1705. False or misleading practices.
             107          (1) A person may not knowingly request or require the issuance of a certificate of
             108      insurance from an insurer, insurance producer, or policyholder that contains false or misleading
             109      information concerning an insurance policy to which the certificate of insurance refers.
             110          (2) A person may not knowingly prepare or issue a certificate of insurance that:
             111          (a) contains false or misleading information; or
             112          (b) purports to affirmatively or negatively alter, amend, or extend the coverage
             113      provided by an insurance policy to which the certificate of insurance refers.

             114          (3) (a) A person may not prepare, issue, or request an opinion letter or other document,
             115      either in addition to or in lieu of a certificate of insurance that is inconsistent with this part.
             116          (b) An insurer or insurance producer may prepare or issue an addendum to a certificate
             117      of insurance that clarifies or explains the coverage provided by an insurance policy if the
             118      addendum complies with this part.
             119          Section 6. Section 31A-22-1706 is enacted to read:
             120          31A-22-1706. Notice of cancellation, nonrenewal, or material change.
             121          (1) A certificate holder only has a right to a notice of cancellation, nonrenewal, a
             122      material change, or to a similar notice if the certificate holder has rights to the notice under the
             123      terms of the insurance policy to which the certificate of insurance refers, or under any rider, or
             124      endorsement to the insurance policy.
             125          (2) The terms and conditions of a notice described in Subsection (1), including the
             126      required timing of the notice, is governed by the insurance policy. A certificate of insurance
             127      may not alter a term or condition of the notice.
             128          Section 7. Section 31A-22-1707 is enacted to read:
             129          31A-22-1707. Enforcement -- Rulemaking.
             130          (1) A certificate of insurance or other document that is prepared, issued, or requested in
             131      violation of this part is void.
             132          (2) The commissioner may bring action in accordance with Section 31A-2-308 and
             133      Title 63G, Chapter 4, Administrative Procedures Act, for a violation of this part.
             134          (3) The commissioner may:
             135          (a) examine and investigate the activities of any person who the commissioner believes
             136      has been or is engaged in an act prohibited by this part;
             137          (b) enforce this part; and
             138          (c) impose a penalty or enforce a remedy authorized by this title for a violation of this
             139      part.
             140          (4) The commissioner may make rules in accordance with Title 63G, Chapter 3, Utah
             141      Administrative Rulemaking Act, that are necessary and proper to carry out this part.


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