2006 Utah Code - 31A-22-305.3 — Underinsured motorist coverage.

     31A-22-305.3.   Underinsured motorist coverage.
     (1) As used in this section:
     (a) "Covered person" has the same meaning as defined in Section 31A-22-305.
     (b) (i) "Underinsured motor vehicle" includes a motor vehicle, the operation, maintenance, or use of which is covered under a liability policy at the time of an injury-causing occurrence, but which has insufficient liability coverage to compensate fully the injured party for all special and general damages.
     (ii) The term "underinsured motor vehicle" does not include:
     (A) a motor vehicle that is covered under the liability coverage of the same policy that also contains the underinsured motorist coverage;
     (B) an uninsured motor vehicle as defined in Subsection 31A-22-305(2); or
     (C) a motor vehicle owned or leased by:
     (I) the named insured;
     (II) the named insured's spouse; or
     (III) any dependent of the named insured.
     (2) (a) (i) Underinsured motorist coverage under Subsection 31A-22-302(1)(c) provides coverage for covered persons who are legally entitled to recover damages from owners or operators of underinsured motor vehicles because of bodily injury, sickness, disease, or death.
     (ii) A covered person occupying or using a motor vehicle owned, leased, or furnished to the covered person, the covered person's spouse, or covered person's resident relative may recover underinsured benefits only if the motor vehicle is:
     (A) described in the policy under which a claim is made; or
     (B) a newly acquired or replacement motor vehicle covered under the terms of the policy.
     (b) For new policies written on or after January 1, 2001, the limits of underinsured motorist coverage shall be equal to the lesser of the limits of the insured's motor vehicle liability coverage or the maximum underinsured motorist coverage limits available by the insurer under the insured's motor vehicle policy, unless the insured purchases coverage in a lesser amount by signing an acknowledgment form provided by the insurer that:
     (i) waives the higher coverage;
     (ii) reasonably explains the purpose of underinsured motorist coverage; and
     (iii) discloses the additional premiums required to purchase underinsured motorist coverage with limits equal to the lesser of the limits of the insured's motor vehicle liability coverage or the maximum underinsured motorist coverage limits available by the insurer under the insured's motor vehicle policy.
     (c) A self-insured, including a governmental entity, may elect to provide underinsured motorist coverage in an amount that is less than its maximum self-insured retention under Subsections (2)(b) and (2)(g) by issuing a declaratory memorandum or policy statement from the chief financial officer or chief risk officer that declares the:
     (i) self-insured entity's coverage level; and
     (ii) process for filing an underinsured motorist claim.
     (d) Underinsured motorist coverage may not be sold with limits that are less than:
     (i) $10,000 for one person in any one accident; and
     (ii) at least $20,000 for two or more persons in any one accident.
     (e) The acknowledgment under Subsection (2)(b) continues for that issuer of the underinsured motorist coverage until the insured, in writing, requests different underinsured

motorist coverage from the insurer.
     (f) (i) The named insured's underinsured motorist coverage, as described in Subsection (2)(a), is secondary to the liability coverage of an owner or operator of an underinsured motor vehicle, as described in Subsection (1).
     (ii) Underinsured motorist coverage may not be set off against the liability coverage of the owner or operator of an underinsured motor vehicle, but shall be added to, combined with, or stacked upon the liability coverage of the owner or operator of the underinsured motor vehicle to determine the limit of coverage available to the injured person.
     (g) (i) A named insured may reject underinsured motorist coverage by an express writing to the insurer that provides liability coverage under Subsection 31A-22-302(1)(a).
     (ii) This written rejection shall be on a form provided by the insurer that includes a reasonable explanation of the purpose of underinsured motorist coverage and when it would be applicable.
     (iii) This rejection continues for that issuer of the liability coverage until the insured in writing requests underinsured motorist coverage from that liability insurer.
     (h) (i) In conjunction with the first two renewal notices sent after January 1, 2001, for policies existing on that date, the insurer shall disclose in the same medium as the premium renewal notice, an explanation of:
     (A) the purpose of underinsured motorist coverage; and
     (B) the costs associated with increasing the coverage in amounts up to and including the maximum amount available by the insurer under the insured's motor vehicle policy.
     (ii) The disclosure required by this Subsection (2)(h) shall be sent to all insureds that carry underinsured motorist coverage limits in an amount less than the insured's motor vehicle liability policy limits or the maximum underinsured motorist coverage limits available by the insurer under the insured's motor vehicle policy.
     (3) (a) (i) Except as provided in this Subsection (3), a covered person injured in a motor vehicle described in a policy that includes underinsured motorist benefits may not elect to collect underinsured motorist coverage benefits from any other motor vehicle insurance policy.
     (ii) The limit of liability for underinsured motorist coverage for two or more motor vehicles may not be added together, combined, or stacked to determine the limit of insurance coverage available to an injured person for any one accident.
     (iii) Subsection (3)(a)(ii) applies to all persons except a covered person described under Subsections (3)(b)(i) and (ii).
     (b) (i) Except as provided in Subsection (3)(b)(ii), a covered person injured while occupying, using, or maintaining a motor vehicle that is not owned, leased, or furnished to the covered person, the covered person's spouse, or the covered person's resident parent or resident sibling, may also recover benefits under any one other policy under which they are a covered person.
     (ii) (A) A covered person may recover benefits from no more than two additional policies, one additional policy from each parent's household if the covered person is:
     (I) a dependent minor of parents who reside in separate households; and
     (II) injured while occupying or using a motor vehicle that is not owned, leased, or furnished to the covered person, the covered person's resident parent, or the covered person's resident sibling.
     (B) Each parent's policy under this Subsection (3)(b)(ii) is liable only for the percentage

of the damages that the limit of liability of each parent's policy of underinsured motorist coverage bears to the total of both parents' underinsured coverage applicable to the accident.
     (iii) A covered person's recovery under any available policies may not exceed the full amount of damages.
     (iv) Underinsured coverage on a motor vehicle occupied at the time of an accident shall be primary coverage, and the coverage elected by a person described under Subsections 31A-22-305(1)(a) and (b) shall be secondary coverage.
     (v) The primary and the secondary coverage may not be set off against the other.
     (vi) A covered person as described under Subsection (3)(b)(i) is entitled to the highest limits of underinsured motorist coverage under only one additional policy per household applicable to that covered person as a named insured, spouse, or relative.
     (vii) A covered injured person is not barred against making subsequent elections if recovery is unavailable under previous elections.
     (viii) (A) As used in this section, "interpolicy stacking" means recovering benefits for a single incident of loss under more than one insurance policy.
     (B) Except to the extent permitted by this Subsection (3), interpolicy stacking is prohibited for underinsured motorist coverage.
     (c) Underinsured motorist coverage:
     (i) is secondary to the benefits provided by Title 34A, Chapter 2, Workers' Compensation Act;
     (ii) may not be subrogated by the workers' compensation insurance carrier;
     (iii) may not be reduced by any benefits provided by workers' compensation insurance;
     (iv) may be reduced by health insurance subrogation only after the covered person has been made whole;
     (v) may not be collected for bodily injury or death sustained by a person:
     (A) while committing a violation of Section 41-1a-1314;
     (B) who, as a passenger in a vehicle, has knowledge that the vehicle is being operated in violation of Section 41-1a-1314; or
     (C) while committing a felony; and
     (vi) notwithstanding Subsection (3)(c)(v), may be recovered:
     (A) for a person under 18 years of age who is injured within the scope of Subsection (3)(c)(v) but limited to medical and funeral expenses; or
     (B) by a law enforcement officer as defined in Section 53-13-103, who is injured within the course and scope of the law enforcement officer's duties.
     (4) The inception of the loss under Subsection 31A-21-313(1) for underinsured motorist claims occurs upon the date of the last liability policy payment.
     (5) (a) Within five business days after notification in a manner specified by the department that all liability insurers have tendered their liability policy limits, the underinsured carrier shall either:
     (i) waive any subrogation claim the underinsured carrier may have against the person liable for the injuries caused in the accident; or
     (ii) pay the insured an amount equal to the policy limits tendered by the liability carrier.
     (b) If neither option is exercised under Subsection (5)(a), the subrogation claim is considered to be waived by the underinsured carrier.
     (6) Except as otherwise provided in this section, a covered person may seek, subject to

the terms and conditions of the policy, additional coverage under any policy:
     (a) that provides coverage for damages resulting from motor vehicle accidents; and
     (b) that is not required to conform to Section 31A-22-302.
     (7) (a) When a claim is brought by a named insured or a person described in Subsection 31A-22-305(1) and is asserted against the covered person's underinsured motorist carrier, the claimant may elect to resolve the claim:
     (i) by submitting the claim to binding arbitration; or
     (ii) through litigation.
     (b) Unless otherwise provided in the policy under which underinsured benefits are claimed, the election provided in Subsection (7)(a) is available to the claimant only.
     (c) Once the claimant has elected to commence litigation under Subsection (7)(a)(ii), the claimant may not elect to resolve the claim through binding arbitration under this section without the written consent of the underinsured motorist coverage carrier.
     (d) (i) Unless otherwise agreed to in writing by the parties, a claim that is submitted to binding arbitration under Subsection (7)(a)(i) shall be resolved by a single arbitrator.
     (ii) All parties shall agree on the single arbitrator selected under Subsection (7)(d)(i).
     (iii) If the parties are unable to agree on a single arbitrator as required under Subsection (7)(d)(ii), the parties shall select a panel of three arbitrators.
     (e) If the parties select a panel of three arbitrators under Subsection (7)(d)(iii):
     (i) each side shall select one arbitrator; and
     (ii) the arbitrators appointed under Subsection (7)(e)(i) shall select one additional arbitrator to be included in the panel.
     (f) Unless otherwise agreed to in writing:
     (i) each party shall pay an equal share of the fees and costs of the arbitrator selected under Subsection (7)(d)(i); or
     (ii) if an arbitration panel is selected under Subsection (7)(d)(iii):
     (A) each party shall pay the fees and costs of the arbitrator selected by that party; and
     (B) each party shall pay an equal share of the fees and costs of the arbitrator selected under Subsection (7)(e)(ii).
     (g) Except as otherwise provided in this section or unless otherwise agreed to in writing by the parties, an arbitration proceeding conducted under this section shall be governed by Title 78, Chapter 31a, Utah Uniform Arbitration Act.
     (h) The arbitration shall be conducted in accordance with Rules 26 through 37, 54, and 68 of the Utah Rules of Civil Procedure.
     (i) All issues of discovery shall be resolved by the arbitrator or the arbitration panel.
     (j) A written decision by a single arbitrator or by a majority of the arbitration panel shall constitute a final decision.
     (k) (i) The amount of an arbitration award may not exceed the underinsured motorist policy limits of all applicable underinsured motorist policies, including applicable underinsured motorist umbrella policies.
     (ii) If the initial arbitration award exceeds the underinsured motorist policy limits of all applicable underinsured motorist policies, the arbitration award shall be reduced to an amount equal to the combined underinsured motorist policy limits of all applicable underinsured motorist policies.
     (l) The arbitrator or arbitration panel may not decide the issues of coverage or

extra-contractual damages, including:
     (i) whether the claimant is a covered person;
     (ii) whether the policy extends coverage to the loss; or
     (iii) any allegations or claims asserting consequential damages or bad faith liability.
     (m) The arbitrator or arbitration panel may not conduct arbitration on a class-wide or class-representative basis.
     (n) If the arbitrator or arbitration panel finds that the action was not brought, pursued, or defended in good faith, the arbitrator or arbitration panel may award reasonable attorney fees and costs against the party that failed to bring, pursue, or defend the claim in good faith.
     (o) An arbitration award issued under this section shall be the final resolution of all claims not excluded by Subsection (7)(l) between the parties unless:
     (i) the award was procured by corruption, fraud, or other undue means; or
     (ii) either party, within 20 days after service of the arbitration award:
     (A) files a complaint requesting a trial de novo in the district court; and
     (B) serves the nonmoving party with a copy of the complaint requesting a trial de novo under Subsection (7)(o)(ii)(A).
     (p) (i) Upon filing a complaint for a trial de novo under Subsection (7)(o), the claim shall proceed through litigation pursuant to the Utah Rules of Civil Procedure and Utah Rules of Evidence in the district court.
     (ii) In accordance with Rule 38, Utah Rules of Civil Procedure, either party may request a jury trial with a complaint requesting a trial de novo under Subsection (7)(o)(ii)(A).
     (q) (i) If the claimant, as the moving party in a trial de novo requested under Subsection (7)(o), does not obtain a verdict that is at least $5,000 and is at least 20% greater than the arbitration award, the claimant is responsible for all of the nonmoving party's costs.
     (ii) If the underinsured motorist carrier, as the moving party in a trial de novo requested under Subsection (7)(o), does not obtain a verdict that is at least 20% less than the arbitration award, the underinsured motorist carrier is responsible for all of the nonmoving party's costs.
     (iii) Except as provided in Subsection (7)(q)(iv), the costs under this Subsection (7)(q) shall include:
     (A) any costs set forth in Rule 54(d), Utah Rules of Civil Procedure; and
     (B) the costs of expert witnesses and depositions.
     (iv) An award of costs under this Subsection (7)(q) may not exceed $2,500.
     (r) For purposes of determining whether a party's verdict is greater or less than the arbitration award under Subsection (7)(q), a court may not consider any recovery or other relief granted on a claim for damages if the claim for damages:
     (i) was not fully disclosed in writing prior to the arbitration proceeding; or
     (ii) was not disclosed in response to discovery contrary to the Utah Rules of Civil Procedure.
     (s) If a district court determines, upon a motion of the nonmoving party, that the moving party's use of the trial de novo process was filed in bad faith in accordance with Section 78-27-56, the district court may award reasonable attorney fees to the nonmoving party.
     (t) Nothing in this section is intended to limit any claim under any other portion of an applicable insurance policy.
     (u) If there are multiple underinsured motorist policies, as set forth in Subsection (3), the claimant may elect to arbitrate in one hearing the claims against all the underinsured motorist

carriers.

Enacted by Chapter 69, 2006 General Session