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7 LONG TITLE
8 General Description:
9 This bill amends provisions related to policy provisions limiting motor vehicle
10 insurance coverage limits under certain circumstances.
11 Highlighted Provisions:
12 This bill:
13 ▸ amends provisions related to motor vehicle insurance policy limitations based on
14 certain drivers operating while under the influence of drugs or alcohol; and
15 ▸ prohibits the policy limitation's applicability to certain individuals under the age of
16 21.
17 Money Appropriated in this Bill:
18 None
19 Other Special Clauses:
20 None
21 Utah Code Sections Affected:
22 AMENDS:
23 31A-22-303, as last amended by Laws of Utah 2010, Chapter 172
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25 Be it enacted by the Legislature of the state of Utah:
26 Section 1. Section 31A-22-303 is amended to read:
27 31A-22-303. Motor vehicle liability coverage.
28 (1) (a) In addition to complying with the requirements of Chapter 21, Insurance
29 Contracts in General, and Chapter 22, Part 2, Liability Insurance in General, a policy of motor
30 vehicle liability coverage under Subsection 31A-22-302(1)(a) shall:
31 (i) name the motor vehicle owner or operator in whose name the policy was purchased,
32 state that named insured's address, the coverage afforded, the premium charged, the policy
33 period, and the limits of liability;
34 (ii) (A) if it is an owner's policy, designate by appropriate reference all the motor
35 vehicles on which coverage is granted, insure the person named in the policy, insure any other
36 person using any named motor vehicle with the express or implied permission of the named
37 insured, and, except as provided in Section 31A-22-302.5, insure any person included in
38 Subsection (1)(a)(iii) against loss from the liability imposed by law for damages arising out of
39 the ownership, maintenance, or use of these motor vehicles within the United States and
40 Canada, subject to limits exclusive of interest and costs, for each motor vehicle, in amounts not
41 less than the minimum limits specified under Section 31A-22-304; or
42 (B) if it is an operator's policy, insure the person named as insured against loss from
43 the liability imposed upon him by law for damages arising out of the insured's use of any motor
44 vehicle not owned by him, within the same territorial limits and with the same limits of liability
45 as in an owner's policy under Subsection (1)(a)(ii)(A);
46 (iii) except as provided in Section 31A-22-302.5, insure persons related to the named
47 insured by blood, marriage, adoption, or guardianship who are residents of the named insured's
48 household, including those who usually make their home in the same household but
49 temporarily live elsewhere, to the same extent as the named insured;
50 (iv) where a claim is brought by the named insured or a person described in Subsection
51 (1)(a)(iii), the available coverage of the policy may not be reduced or stepped-down because:
52 (A) a permissive user driving a covered motor vehicle is at fault in causing an accident;
53 or
54 (B) the named insured or any of the persons described in this Subsection (1)(a)(iii)
55 driving a covered motor vehicle is at fault in causing an accident; and
56 (v) cover damages or injury resulting from a covered driver of a motor vehicle who is
57 stricken by an unforeseeable paralysis, seizure, or other unconscious condition and who is not
58 reasonably aware that paralysis, seizure, or other unconscious condition is about to occur to the
59 extent that a person of ordinary prudence would not attempt to continue driving.
60 (b) The driver's liability under Subsection (1)(a)(v) is limited to the insurance
61 coverage.
62 (c) (i) "Guardianship" under Subsection (1)(a)(iii) includes the relationship between a
63 foster parent and a minor who is in the legal custody of the Division of Child and Family
64 Services if:
65 (A) the minor resides in a foster home, as defined in Section 62A-2-101, with a foster
66 parent who is the named insured; and
67 (B) the foster parent has signed to be jointly and severally liable for compensatory
68 damages caused by the minor's operation of a motor vehicle in accordance with Section
69 53-3-211.
70 (ii) "Guardianship" as defined under this Subsection (1)(c) ceases to exist when a
71 minor described in Subsection (1)(c)(i)(A) is no longer a resident of the named insured's
72 household.
73 (2) (a) A policy containing motor vehicle liability coverage under Subsection
74 31A-22-302(1)(a) may:
75 (i) provide for the prorating of the insurance under that policy with other valid and
76 collectible insurance;
77 (ii) grant any lawful coverage in addition to the required motor vehicle liability
78 coverage;
79 (iii) if the policy is issued to a person other than a motor vehicle business, limit the
80 coverage afforded to a motor vehicle business or its officers, agents, or employees to the
81 minimum limits under Section 31A-22-304, and to those instances when there is no other valid
82 and collectible insurance with at least those limits, whether the other insurance is primary,
83 excess, or contingent; and
84 (iv) if issued to a motor vehicle business, restrict coverage afforded to anyone other
85 than the motor vehicle business or its officers, agents, or employees to the minimum limits
86 under Section 31A-22-304, and to those instances when there is no other valid and collectible
87 insurance with at least those limits, whether the other insurance is primary, excess, or
88 contingent.
89 (b) (i) The liability insurance coverage of a permissive user of a motor vehicle owned
90 by a motor vehicle business shall be primary coverage.
91 (ii) The liability insurance coverage of a motor vehicle business shall be secondary to
92 the liability insurance coverage of a permissive user as specified under Subsection (2)(b)(i).
93 (3) Motor vehicle liability coverage need not insure any liability:
94 (a) under any workers' compensation law under Title 34A, Utah Labor Code;
95 (b) resulting from bodily injury to or death of an employee of the named insured, other
96 than a domestic employee, while engaged in the employment of the insured, or while engaged
97 in the operation, maintenance, or repair of a designated vehicle; or
98 (c) resulting from damage to property owned by, rented to, bailed to, or transported by
99 the insured.
100 (4) An insurance carrier providing motor vehicle liability coverage has the right to
101 settle any claim covered by the policy, and if the settlement is made in good faith, the amount
102 of the settlement is deductible from the limits of liability specified under Section 31A-22-304.
103 (5) A policy containing motor vehicle liability coverage imposes on the insurer the
104 duty to defend, in good faith, any person insured under the policy against any claim or suit
105 seeking damages which would be payable under the policy.
106 (6) (a) If a policy containing motor vehicle liability coverage provides an insurer with
107 the defense of lack of cooperation on the part of the insured, that defense is not effective
108 against a third person making a claim against the insurer, unless there was collusion between
109 the third person and the insured.
110 (b) If the defense of lack of cooperation is not effective against the claimant, after
111 payment, the insurer is subrogated to the injured person's claim against the insured to the extent
112 of the payment and is entitled to reimbursement by the insured after the injured third person has
113 been made whole with respect to the claim against the insured.
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119 (7) (a) A policy of motor vehicle coverage may limit coverage to the policy minimum
120 limits under Section 31A-22-304 if the policy or a specifically reduced premium was extended
121 to the insured upon express written declaration executed by the insured that the insured motor
122 vehicle would not be operated by a person described in Subsection (7)(c) operating in a manner
123 described in Subsection (7)(b)(i).
124 (b) (i) A policy of motor vehicle liability coverage may limit coverage as described in
125 Subsection (7)(a) if the insured motor vehicle is operated by an individual described in
126 Subsection (7)(c) if the individual described in Subsection (7)(c) is guilty of:
127 (A) driving under the influence as described in Section 41-6a-502;
128 (B) impaired driving as described in Section 41-6a-502.5; or
129 (C) operating a vehicle with a measurable controlled substance in the individual's body
130 as described in Section 41-6a-517.
131 (ii) An individual's refusal to submit to a chemical test as described in Section
132 41-6a-520 is admissible evidence, but not conclusive, that the individual is guilty of an offense
133 described in Subsection (7)(b)(i).
134 (c) A reduction in coverage as described in Subsection (7)(a) applies to the following
135 individuals:
136 (i) the insured;
137 (ii) the spouse of the insured; or
138 (iii) if the individual has a separate policy as a secondary source of coverage, and:
139 (A) the individual is over the age of 21 and resides in the household of the insured; or
140 (B) the individual is a permissible user of the motor vehicle.
141 (d) A reduction in coverage as described in Subsection (7)(a) does not apply to an
142 individual under the age of 21 who is a relative of the insured and a resident of the insured's
143 household.
144 (8) (a) When a claim is brought exclusively by a named insured or a person described
145 in Subsection (1)(a)(iii) and asserted exclusively against a named insured or an individual
146 described in Subsection (1)(a)(iii), the claimant may elect to resolve the claim:
147 (i) by submitting the claim to binding arbitration; or
148 (ii) through litigation.
149 (b) Once the claimant has elected to commence litigation under Subsection (8)(a)(ii),
150 the claimant may not elect to resolve the claim through binding arbitration under this section
151 without the written consent of both parties and the defendant's liability insurer.
152 (c) (i) Unless otherwise agreed on in writing by the parties, a claim that is submitted to
153 binding arbitration under Subsection (8)(a)(i) shall be resolved by a panel of three arbitrators.
154 (ii) Unless otherwise agreed on in writing by the parties, each party shall select an
155 arbitrator. The arbitrators selected by the parties shall select a third arbitrator.
156 (d) Unless otherwise agreed on in writing by the parties, each party will pay the fees
157 and costs of the arbitrator that party selects. Both parties shall share equally the fees and costs
158 of the third arbitrator.
159 (e) Except as otherwise provided in this section, an arbitration procedure conducted
160 under this section shall be governed by Title 78B, Chapter 11, Utah Uniform Arbitration Act,
161 unless otherwise agreed on in writing by the parties.
162 (f) (i) Discovery shall be conducted in accordance with Rules 26b through 36, Utah
163 Rules of Civil Procedure.
164 (ii) All issues of discovery shall be resolved by the arbitration panel.
165 (g) A written decision of two of the three arbitrators shall constitute a final decision of
166 the arbitration panel.
167 (h) Prior to the rendering of the arbitration award:
168 (i) the existence of a liability insurance policy may be disclosed to the arbitration
169 panel; and
170 (ii) the amount of all applicable liability insurance policy limits may not be disclosed to
171 the arbitration panel.
172 (i) The amount of the arbitration award may not exceed the liability limits of all the
173 defendant's applicable liability insurance policies, including applicable liability umbrella
174 policies. If the initial arbitration award exceeds the liability limits of all applicable liability
175 insurance policies, the arbitration award shall be reduced to an amount equal to the liability
176 limits of all applicable liability insurance policies.
177 (j) The arbitration award is the final resolution of all claims between the parties unless
178 the award was procured by corruption, fraud, or other undue means.
179 (k) If the arbitration panel finds that the action was not brought, pursued, or defended
180 in good faith, the arbitration panel may award reasonable fees and costs against the party that
181 failed to bring, pursue, or defend the claim in good faith.
182 (l) Nothing in this section is intended to limit any claim under any other portion of an
183 applicable insurance policy.
184 (9) An at-fault driver or an insurer issuing a policy of insurance under this part that is
185 covering an at-fault driver may not reduce compensation to an injured party based on the
186 injured party not being covered by a policy of insurance that provides personal injury
187 protection coverage under Sections 31A-22-306 through 31A-22-309.