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:
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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. No An 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 to those
1 25 stated in section 321A.1, subsection 11 the 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, the The named insured may reject all or a
1 30 portion of such the 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, it the rejection
2 1 shall be on a separate sheet of paper which contains only the
2 2 rejection and information directly related to it the
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 == STACKING
2 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, nothing Nothing 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 avoid duplication of insurance
2 27 or other benefits duplicate payment of damages.
2 28 To 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 1 2. 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 8 3. 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.
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