S.B. 197






Chief Sponsor: Gene Davis

House Sponsor: Brian S. King

             8      LONG TITLE
             9      General Description:
             10          This bill modifies the Insurance Code by amending provisions relating to unfair claim
             11      settlement practices on certain motor vehicle insurance policies.
             12      Highlighted Provisions:
             13          This bill:
             14          .    provides that a person injured by an unfair claim settlement practice may bring a
             15      private cause of action against an insurer or a person representing an insurer who
             16      engages in an unfair claim settlement practice if the unfair claim settlement practice
             17      was made in relation to certain motor vehicle insurance policies;
             18          .    provides that a court may award a person injured by an unfair claim settlement
             19      practice actual damages, costs, and attorney fees, and, if the court determines that
             20      the circumstances are appropriate, punitive damages; and
             21          .    makes technical corrections.
             22      Money Appropriated in this Bill:
             23          None
             24      Other Special Clauses:
             25          None
             26      Utah Code Sections Affected:
             27      AMENDS:

             28           31A-26-303 , as last amended by Laws of Utah 1987, Chapter 91
             29      ENACTS:
             30           31A-22-322 , Utah Code Annotated 1953
             32      Be it enacted by the Legislature of the state of Utah:
             33          Section 1. Section 31A-22-322 is enacted to read:
             34          31A-22-322. Private action for a motor vehicle insurance unfair claim settlement
             35      practice.
             36          (1) A person injured by an unfair claim settlement practice, as described in Section
             37      31A-26-303 , may bring a private cause of action against an insurer or a person representing an
             38      insurer who engages in the unfair claim settlement practice if the unfair claim settlement
             39      practice was made in relation to an insurance policy or combination of insurance policies
             40      purchased to satisfy the owner's or operator's security requirement of Section 41-12a-301 .
             41          (2) In an action under Subsection (1), a court may award a person injured by an unfair
             42      claim settlement practice:
             43          (a) actual damages;
             44          (b) costs and attorney fees; and
             45          (c) if the court determines that circumstances are appropriate, punitive damages.
             46          Section 2. Section 31A-26-303 is amended to read:
             47           31A-26-303. Unfair claim settlement practices.
             48          (1) No insurer or person representing an insurer may engage in any unfair claim
             49      settlement practice under Subsections (2), (3), and (4).
             50          (2) Each of the following acts is an unfair claim settlement practice:
             51          (a) knowingly misrepresenting material facts or the contents of insurance policy
             52      provisions at issue in connection with a claim under an insurance contract; however, this
             53      provision does not include the failure to disclose information;
             54          (b) attempting to use a policy application which was altered by the insurer without
             55      notice to, or knowledge, or consent of, the insured as the basis for settling or refusing to settle a
             56      claim; or
             57          (c) failing to settle a claim promptly under one portion of the insurance policy
             58      coverage, where liability and the amount of loss are reasonably clear, in order to influence

             59      settlements under other portions of the insurance policy coverage, but this Subsection (2)(c)
             60      applies only to claims made by persons in direct privity of contract with the insurer.
             61          (3) Each of the following is an unfair claim settlement practice if committed or
             62      performed with such frequency as to indicate a general business practice by an insurer or
             63      persons representing an insurer:
             64          (a) failing to acknowledge and act promptly upon communications about claims under
             65      insurance policies;
             66          (b) failing to adopt and implement reasonable standards for the prompt investigation
             67      and processing of claims under insurance policies;
             68          (c) compelling insureds to institute litigation to recover amounts due under an
             69      insurance policy by offering substantially less than the amounts ultimately recovered in actions
             70      brought by those insureds when the amounts claimed were reasonably near to the amounts
             71      recovered;
             72          (d) failing, after payment of a claim, to inform insureds or beneficiaries, upon request
             73      by them, of the coverage under which payment was made;
             74          (e) failing to promptly provide to the insured a reasonable explanation of the basis for
             75      denial of a claim or for the offer of a compromise settlement;
             76          (f) appealing from substantially all arbitration awards in favor of insureds for the
             77      purpose of compelling them to accept settlements or compromises for less than the amount
             78      awarded in arbitration;
             79          (g) delaying the investigation or payment of claims by requiring an insured, claimant,
             80      or the physician of either to submit a preliminary claim report and then requiring the
             81      subsequent submission of formal proof of loss forms which contain substantially the same
             82      information; or
             83          (h) not attempting in good faith to effectuate a prompt, fair, and equitable settlement of
             84      claims in which liability is reasonably clear.
             85          (4) The commissioner may define by rule, acts or general business practices which are
             86      unfair claim settlement practices, after a finding that those practices are misleading, deceptive,
             87      unfairly discriminatory, overreaching, or an unreasonable restraint on competition.
             88          (5) [This] Except as provided in Section 31A-22-322 , this section does not create any
             89      private cause of action.

Legislative Review Note
    as of 2-13-14 2:26 PM

Office of Legislative Research and General Counsel

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