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S.B. 49
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MOTOR VEHICLE LIABILITY COVERAGE
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AMENDMENTS
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2005 GENERAL SESSION
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STATE OF UTAH
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Sponsor: Dan R. Eastman
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LONG TITLE
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General Description:
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This bill modifies the Insurance Code by amending provisions related to motor vehicle
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liability coverage.
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Highlighted Provisions:
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This bill:
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. provides that motor vehicle liability coverage need not insure any liability that arises
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out of acts by the insured that are intended to cause damage or injury; and
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. makes technical changes.
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Monies Appropriated in this Bill:
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None
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Other Special Clauses:
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None
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Utah Code Sections Affected:
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AMENDS:
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31A-22-303, as last amended by Chapters 90 and 126, Laws of Utah 2004
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Be it enacted by the Legislature of the state of Utah:
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Section 1.
Section
31A-22-303
is amended to read:
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31A-22-303. Motor vehicle liability coverage.
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(1) (a) In addition to complying with the requirements of Chapter 21, Insurance
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Contracts in General, and Chapter 22, Part 2, Liability Insurance in General, a policy of motor
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vehicle liability coverage under Subsection
31A-22-302
(1)(a) shall:
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(i) name the motor vehicle owner or operator in whose name the policy was purchased,
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state that named insured's address, the coverage afforded, the premium charged, the policy
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period, and the limits of liability;
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(ii) (A) if it is an owner's policy, designate by appropriate reference all the motor
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vehicles on which coverage is granted, insure the person named in the policy, insure any other
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person using any named motor vehicle with the express or implied permission of the named
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insured, and, except as provided in Subsection (7), insure any person included in Subsection
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(1)(a)(iii) against loss from the liability imposed by law for damages arising out of the
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ownership, maintenance, or use of these motor vehicles within the United States and Canada,
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subject to limits exclusive of interest and costs, for each motor vehicle, in amounts not less
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than the minimum limits specified under Section
31A-22-304
; or
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(B) if it is an operator's policy, insure the person named as insured against loss from
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the liability imposed upon him by law for damages arising out of the insured's use of any motor
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vehicle not owned by him, within the same territorial limits and with the same limits of liability
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as in an owner's policy under Subsection (1)(a)(ii)(A);
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(iii) except as provided in Subsection (7), insure persons related to the named insured
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by blood, marriage, adoption, or guardianship who are residents of the named insured's
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household, including those who usually make their home in the same household but
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temporarily live elsewhere, to the same extent as the named insured and the available coverage
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of the policy may not be reduced to the persons described in this Subsection (1)(a)(iii) because:
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(A) a permissive user driving a covered motor vehicle is at fault in causing an accident;
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or
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(B) the named insured or any of the persons described in this Subsection (1)(a)(iii)
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driving a covered motor vehicle is at fault in causing an accident; and
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(iv) cover damages or injury resulting from a covered driver of a motor vehicle who is
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stricken by an unforeseeable paralysis, seizure, or other unconscious condition and who is not
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reasonably aware that paralysis, seizure, or other unconscious condition is about to occur to the
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extent that a person of ordinary prudence would not attempt to continue driving.
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(b) The driver's liability under Subsection (1)(a)(iv) is limited to the insurance
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coverage.
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(2) (a) A policy containing motor vehicle liability coverage under Subsection
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31A-22-302
(1)(a) may:
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(i) provide for the prorating of the insurance under that policy with other valid and
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collectible insurance;
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(ii) grant any lawful coverage in addition to the required motor vehicle liability
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coverage;
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(iii) if the policy is issued to a person other than a motor vehicle business, limit the
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coverage afforded to a motor vehicle business or its officers, agents, or employees to the
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minimum limits under Section
31A-22-304
, and to those instances when there is no other valid
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and collectible insurance with at least those limits, whether the other insurance is primary,
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excess, or contingent; and
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(iv) if issued to a motor vehicle business, restrict coverage afforded to anyone other
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than the motor vehicle business or its officers, agents, or employees to the minimum limits
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under Section
31A-22-304
, and to those instances when there is no other valid and collectible
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insurance with at least those limits, whether the other insurance is primary, excess, or
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contingent.
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(b) (i) The liability insurance coverage of a permissive user of a motor vehicle owned
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by a motor vehicle business shall be primary coverage.
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(ii) The liability insurance coverage of a motor vehicle business shall be secondary to
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the liability insurance coverage of a permissive user as specified under Subsection (2)(b)(i).
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(3) Motor vehicle liability coverage need not insure any liability:
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(a) under any workers' compensation law under Title 34A, Utah Labor Code;
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(b) resulting from bodily injury to or death of an employee of the named insured, other
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than a domestic employee, while engaged in the employment of the insured, or while engaged
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in the operation, maintenance, or repair of a designated vehicle; [or]
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(c) resulting from damage to property owned by, rented to, bailed to, or transported by
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the insured[.]; or
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(d) arising out of acts by the insured that are intended to cause damage or injury.
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(4) An insurance carrier providing motor vehicle liability coverage has the right to
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settle any claim covered by the policy, and if the settlement is made in good faith, the amount
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of the settlement is deductible from the limits of liability specified under Section
31A-22-304
.
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(5) A policy containing motor vehicle liability coverage imposes on the insurer the
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duty to defend, in good faith, any person insured under the policy against any claim or suit
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seeking damages which would be payable under the policy.
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(6) (a) If a policy containing motor vehicle liability coverage provides an insurer with
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the defense of lack of cooperation on the part of the insured, that defense is not effective
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against a third person making a claim against the insurer, unless there was collusion between
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the third person and the insured.
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(b) If the defense of lack of cooperation is not effective against the claimant, after
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payment, the insurer is subrogated to the injured person's claim against the insured to the extent
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of the payment and is entitled to reimbursement by the insured after the injured third person has
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been made whole with respect to the claim against the insured.
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(7) A policy of motor vehicle liability coverage under Subsection
31A-22-302
(1) may
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specifically exclude from coverage a person who is a resident of the named insured's
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household, including a person who usually makes his home in the same household but
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temporarily lives elsewhere, if:
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(a) at the time of the proposed exclusion, each person excluded from coverage satisfies
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the owner's or operator's security requirement of Section
41-12a-301
, independently of the
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named insured's proof of owner's or operator's security;
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(b) the named insured and the person excluded from coverage each provide written
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consent to the exclusion; and
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(c) the insurer includes the name of each person excluded from coverage in the
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evidence of insurance provided to an additional insured or loss payee.
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(8) A policy of motor vehicle liability coverage may limit coverage to the policy
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minimum limits under Section
31A-22-304
if the insured motor vehicle is operated by a person
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who has consumed any alcohol or any illegal drug or illegal substance if the policy or a
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specifically reduced premium was extended to the insured upon express written declaration
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executed by the insured that the insured motor vehicle would not be so operated.
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(9) (a) When a claim is brought exclusively by a named insured or a person described
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in Subsection (1)(a)(iii) and asserted exclusively against a named insured or an individual
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described in Subsection (1)(a)(iii), the claimant may elect to resolve the claim:
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(i) by submitting the claim to binding arbitration; or
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(ii) through litigation.
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(b) Once the claimant has elected to commence litigation under Subsection (9)(a)(ii),
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the claimant may not elect to resolve the claim through binding arbitration under this section
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without the written consent of both parties and the defendant's liability insurer.
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(c) (i) Unless otherwise agreed on in writing by the parties, a claim that is submitted to
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binding arbitration under Subsection (9)(a)(i) shall be resolved by a panel of three arbitrators.
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(ii) Unless otherwise agreed on in writing by the parties, each party shall select an
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arbitrator. The arbitrators selected by the parties shall select a third arbitrator.
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(d) Unless otherwise agreed on in writing by the parties, each party will pay the fees
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and costs of the arbitrator that party selects. Both parties shall share equally the fees and costs
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of the third arbitrator.
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(e) Except as otherwise provided in this section, an arbitration procedure conducted
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under this section shall be governed by Title 78, Chapter 31a, Utah Uniform Arbitration Act,
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unless otherwise agreed on in writing by the parties.
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(f) (i) Discovery shall be conducted in accordance with Rules 26b through 36, Utah
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Rules of Civil Procedure.
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(ii) All issues of discovery shall be resolved by the arbitration panel.
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(g) A written decision of two of the three arbitrators shall constitute a final decision of
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the arbitration panel.
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(h) Prior to the rendering of the arbitration award:
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(i) the existence of a liability insurance policy may be disclosed to the arbitration
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panel; and
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(ii) the amount of all applicable liability insurance policy limits may not be disclosed to
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the arbitration panel.
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(i) The amount of the arbitration award may not exceed the liability limits of all the
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defendant's applicable liability insurance policies, including applicable liability umbrella
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policies. If the initial arbitration award exceeds the liability limits of all applicable liability
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insurance policies, the arbitration award shall be reduced to an amount equal to the liability
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limits of all applicable liability insurance policies.
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(j) The arbitration award is the final resolution of all claims between the parties unless
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the award was procured by corruption, fraud, or other undue means.
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(k) If the arbitration panel finds that the action was not brought, pursued, or defended
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in good faith, the arbitration panel may award reasonable fees and costs against the party that
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failed to bring, pursue, or defend the claim in good faith.
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(l) Nothing in this section is intended to limit any claim under any other portion of an
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applicable insurance policy.
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(10) An at-fault driver or an insurer issuing a policy of insurance under this part that is
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covering an at-fault driver may not reduce compensation to an injured party based on the
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injured party not being covered by a policy of insurance that provides personal injury
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protection coverage under Sections
31A-22-306
through
31A-22-309
.
Legislative Review Note
as of 1-20-05 2:00 PM
Based on a limited legal review, this legislation has not been determined to have a high
probability of being held unconstitutional.