Senate File 321 - Introduced SENATE FILE BY COMMITTEE ON JUDICIARY (SUCCESSOR TO SSB 1137) Passed Senate, Date Passed House, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to automobile or motor vehicle insurance coverage 2 of liability arising from uninsured, underinsured, or 3 hit=and=run motorists. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1752SV 83 6 av/nh/5 PAG LIN 1 1 Section 1. Section 516A.1, Code 2009, is amended to read 1 2 as follows: 1 3 516A.1 COVERAGE INCLUDED IN EVERY LIABILITY POLICY == 1 4 REJECTION BY INSURED. 1 5 1.NoAn automobile liability or motor vehicle liability 1 6 insurance policy insuring against liability for bodily injury 1 7 or death arising out of the ownership, maintenance, or use of 1 8 a motor vehicle shall not be delivered or issued for delivery 1 9 in this state with respect to any motor vehicle registered or 1 10 principally garaged in this state, unless coverage is provided 1 11 in such policy or supplemental thereto, for the protection of 1 12 persons insured under such policy who are legally entitled to 1 13 recover damages from the owner or operator of an uninsured 1 14 motor vehicle or a hit=and=run motor vehicle or an 1 15 underinsured motor vehicle because of bodily injury, sickness, 1 16 or disease, including death resulting therefrom, caused by 1 17 accident and arising out of the ownership, maintenance, or use 1 18 of such uninsured or underinsured motor vehicle, or arising 1 19 out of physical contact of such hit=and=run motor vehicle with 1 20 the person insured or with a motor vehicle which the person 1 21 insured is occupying at the time of the accident. Both the 1 22 uninsured motor vehicle or hit=and=run motor vehicle coverage, 1 23 and the underinsured motor vehicle coverage shall include 1 24 limits for bodily injury or death at least equal tothose 1 25 stated in section 321A.1, subsection 11the limits of 1 26 liability for the bodily injury portion of the insurance 1 27 policy. The form and provisions of such coverage shall be 1 28 examined and approved by the commissioner of insurance. 1 29 2.However, theThe named insured may reject all or a 1 30 portion ofsuchthe coverage required in subsection 1, or 1 31 reject the uninsured motor vehicle (hit=and=run motor vehicle) 1 32 coverage, or reject the underinsured motor vehicle coverage, 1 33 by written rejections signed by the named insured. If 1 34 rejection is made on a form or document furnished by an 1 35 insurance company or insurance producer,itthe rejection 2 1 shall be on a separate sheet of paper which contains only the 2 2 rejection and information directly related toitthe 2 3 rejection, including an explanation of the coverage being 2 4 rejected and the amount of the premium associated with the 2 5 coverage being rejected. Such coverage need not be provided 2 6 in or supplemental to a renewal policy if the named insured 2 7 has rejected the coverage in connection with a policy 2 8 previously issued to the named insured by the same insurer. 2 9 Sec. 2. Section 516A.2, Code 2009, is amended to read as 2 10 follows: 2 11 516A.2 CONSTRUCTION == MINIMUM COVERAGE ==STACKING2 12 STEP=DOWN PROVISIONS. 2 13 1.Except with respect to a policy containing both 2 14 underinsured motor vehicle coverage and uninsured or 2 15 hit=and=run motor vehicle coverage, nothingNothing contained 2 16 in this chapter shall be construed as requiring forms of 2 17 coverage provided pursuant hereto, whether alone or in 2 18 combination with similar coverage afforded under other 2 19 automobile liability or motor vehicle liability policies, to 2 20 afford limits in excess of those that would be afforded had 2 21 the insured thereunder been involved in an accident with a 2 22 motorist who was insured under a policy of liability insurance 2 23 with the minimum limits for bodily injury or death prescribed 2 24 in subsection 11 of section 321A.1. Such forms of coverage 2 25 may include terms, exclusions, limitations, conditions, and 2 26 offsets which are designed to avoidduplication of insurance 2 27 or other benefitsduplicate payment of damages. 2 28To the extent that Hernandez v. Farmers Insurance Company, 2 29 460 N.W.2d 842 (Iowa 1990), provided for interpolicy stacking 2 30 of uninsured or underinsured coverages in contravention of 2 31 specific contract or policy language, the general assembly 2 32 declares such decision abrogated and declares that the 2 33 enforcement of the antistacking provisions contained in a 2 34 motor vehicle insurance policy does not frustrate the 2 35 protection given to an insured under section 516A.1.3 12. Pursuant to chapter 17A, the commissioner of insurance 3 2 shall, by January 1, 1992, adopt rules to assure the 3 3 availability, within the state, of motor vehicle insurance 3 4 policies, riders, endorsements, or other similar forms of 3 5 coverage, the terms of which shall provide for the stacking of 3 6 uninsured and underinsured coverages with any similar coverage 3 7 which may be available to an insured.3 83. It is the intent of the general assembly that when more 3 9 than one motor vehicle insurance policy is purchased by or on 3 10 behalf of an injured insured and which provides uninsured, 3 11 underinsured, or hit=and=run motor vehicle coverage to an 3 12 insured injured in an accident, the injured insured is 3 13 entitled to recover up to an amount equal to the highest 3 14 single limit for uninsured, underinsured, or hit=and=run motor 3 15 vehicle coverage under any one of the above described motor 3 16 vehicle insurance policies insuring the injured person which 3 17 amount shall be paid by the insurers according to any priority 3 18 of coverage provisions contained in the policies insuring the 3 19 injured person.3 20 2. A policy to which this chapter applies shall not 3 21 include exclusions or step=down provisions that eliminate or 3 22 reduce uninsured or underinsured coverage for a person who 3 23 would otherwise be covered under the policy, for the reason 3 24 that the person is injured by, or while occupying a vehicle 3 25 being operated by, another person insured under the policy. 3 26 Sec. 3. Section 516A.4, Code 2009, is amended to read as 3 27 follows: 3 28 516A.4 INSURER MAKING PAYMENT == REIMBURSEMENT == 3 29 SETTLEMENT == SUBSTITUTE TENDER == GOOD FAITH. 3 30 1. In the event of payment to any person under the 3 31 coverage required by this chapter and subject to the terms and 3 32 conditions of such coverage, the insurer making such payment 3 33 shall, to the extent thereof, be entitled to the proceeds of 3 34 any settlement or judgment resulting from the exercise of any 3 35 rights of recovery of such person against any person or 4 1 organization legally responsible for the bodily injury for 4 2 which such payment is made, including the proceeds recoverable 4 3 from the assets of the insolvent insurer, to the extent that 4 4 the proceeds of the resulting settlement or judgment, when 4 5 combined with such payment made by the insurer, exceed such 4 6 person's damages. The person to whom said payment is made 4 7 under the insolvency protection required by this chapter shall 4 8 to the extent thereof, be deemed to have waived any right to 4 9 proceed to enforce such a judgment against the assets of the 4 10 judgment debtor who was insured by the insolvent insurer whose 4 11 insolvency resulted in said payment being made, other than 4 12 assets recovered or recoverable by such judgment debtor from 4 13 such insolvent insurer. 4 14 2. An insurer providing coverage under this chapter shall, 4 15 within thirty days after receipt of a written request for 4 16 permission to settle with any person or organization legally 4 17 responsible for bodily injury for which coverage is provided 4 18 under this chapter, either give consent to the settlement or 4 19 tender substitute payment of the settlement amount. Failure 4 20 of the insurer to give such consent or to tender substitute 4 21 payment shall constitute the insurer's consent to the 4 22 settlement and shall bar the insurer from claiming that the 4 23 settlement prejudiced the insurer's rights under the policy or 4 24 this section. 4 25 3. An insurer that pursues, through subrogation or 4 26 assignment, a claim against any person or organization legally 4 27 responsible for bodily injury for which the insurer has made 4 28 payments under this chapter, shall include in such claim all 4 29 damages of the subrogor or assignor of the claim, and shall 4 30 tender to the subrogor or assignor any amounts to which the 4 31 subrogor or assignor would have been entitled under subsection 4 32 1 if the subrogor or assignor had directly pursued the claim. 4 33 EXPLANATION 4 34 This bill relates to automobile or motor vehicle insurance 4 35 coverage of liability arising from uninsured, underinsured, or 5 1 hit=and=run motorists. 5 2 Code section 516A.1 is amended to require coverage for 5 3 uninsured, underinsured, and hit=and=run motor vehicle 5 4 liability that equals the limits of liability for the bodily 5 5 injury portion of the insurance policy instead of the 5 6 statutory amounts required for proof of financial 5 7 responsibility in Code section 321A.1(11). The named insured 5 8 may reject all or a portion of the required coverage. A form 5 9 furnished by the insurance company allowing an insured to 5 10 reject all or a portion of the required coverage must include 5 11 an explanation of the coverage being rejected and the amount 5 12 of the premium associated with the coverage being rejected. 5 13 Code section 516A.2(1) is amended to provide that such 5 14 coverage may include provisions that are designed to avoid 5 15 duplicate payment of damages. The remainder of Code sections 5 16 516A.2(1) and 516A.2(2) relating to stacking of uninsured and 5 17 underinsured coverages, and Code section 516A.2(3) relating to 5 18 coverage under multiple motor vehicle insurance policies of 5 19 one insured, are stricken. Code section 516A.2 is amended to 5 20 prohibit exclusions or step=down provisions in motor vehicle 5 21 insurance policies that eliminate or reduce uninsured or 5 22 underinsured coverage for a person who would otherwise be 5 23 covered under the policy, because the person is injured by, or 5 24 while in a vehicle being operated by, another person insured 5 25 under the policy. 5 26 Code section 516A.4(1) is amended to provide that an 5 27 insurer who has made payments under a policy to an injured 5 28 party is entitled to proceeds of a resulting settlement or 5 29 judgment against the person responsible for those damages only 5 30 to the extent that the proceeds combined with payment made by 5 31 the insurer exceed the injured party's damages. 5 32 Code section 516A.4(2) provides that an insurer has 30 days 5 33 after receipt of a request to settle against the responsible 5 34 party, to either consent to the settlement or to tender 5 35 substitute payment of the settlement amount, or such failure 6 1 will constitute consent and bar the insurer from claiming 6 2 prejudice as a result of the settlement. 6 3 Code section 516A.4(3) provides that when an insurer 6 4 pursues a claim, through subrogation or assignment, against 6 5 the party responsible for bodily injury for which the insurer 6 6 has made payments, the insurer shall include the damages of 6 7 the subrogor or assignor and tender the amount to the assignor 6 8 or subrogor that the person would have been entitled to if 6 9 that person had pursued the claim directly. 6 10 LSB 1752SV 83 6 11 av/nh/5.1