H.F. 410 Section 1. Section 516A.1, Code 2011, is amended to read as 1 follows: 2 516A.1 Coverage included in every liability policy —— 3 rejection by insured. 4 1. No An automobile liability or motor vehicle liability 5 insurance policy insuring against liability for bodily injury 6 or death arising out of the ownership, maintenance, or use of 7 a motor vehicle shall not be delivered or issued for delivery 8 in this state with respect to any motor vehicle registered or 9 principally garaged in this state, unless coverage is provided 10 in such policy or supplemental thereto, for the protection of 11 persons insured under such policy who are legally entitled to 12 recover damages from the owner or operator of an uninsured 13 motor vehicle or a hit-and-run motor vehicle or an underinsured 14 motor vehicle because of bodily injury, sickness, or disease, 15 including death resulting therefrom, caused by accident and 16 arising out of the ownership, maintenance, or use of such 17 uninsured or underinsured motor vehicle, or arising out of 18 physical contact of with, or reasonable avoidance of physical 19 contact with, such hit-and-run motor vehicle with the person 20 insured or with a motor vehicle which the person insured is 21 occupying at the time of the accident. Both the uninsured 22 motor vehicle or hit-and-run motor vehicle coverage, and the 23 underinsured motor vehicle coverage shall include limits for 24 bodily injury or death at least equal to those stated in 25 section 321A.1, subsection 11 the limits of liability for the 26 bodily injury portion of the insurance policy . The form and 27 provisions of such coverage shall be examined and approved by 28 the commissioner of insurance. 29 2. However, the The named insured may reject all of such 30 the coverage required in subsection 1 , or reject the uninsured 31 motor vehicle (hit-and-run motor vehicle) coverage, or reject 32 the underinsured motor vehicle coverage, by written rejections 33 signed by the named insured. If rejection is made on a form 34 or document furnished by an insurance company or insurance 35 -1- LSB 2476YH (2) 84 av/nh 1/ 6

H.F. 410 producer, it the rejection shall be on a separate sheet 1 of paper which contains only the rejection and information 2 directly related to it the rejection, including an explanation 3 of the coverage being rejected and the amount of the premium 4 associated with the coverage being rejected . Such coverage 5 need not be provided in or supplemental to a renewal policy if 6 the named insured has rejected the coverage in connection with 7 a policy previously issued to the named insured by the same 8 insurer. 9 Sec. 2. Section 516A.2, Code 2011, is amended to read as 10 follows: 11 516A.2 Construction —— minimum coverage —— stacking step-down 12 provisions . 13 1. Except with respect to a policy containing both 14 underinsured motor vehicle coverage and uninsured or 15 hit-and-run motor vehicle coverage, nothing Nothing contained 16 in this chapter shall be construed as requiring forms of 17 coverage provided pursuant hereto, whether alone or in 18 combination with similar coverage afforded under other 19 automobile liability or motor vehicle liability policies, to 20 afford limits in excess of those that would be afforded had the 21 insured thereunder been involved in an accident with a motorist 22 who was insured under a policy of liability insurance with 23 the minimum limits for bodily injury or death prescribed in 24 subsection 11 of section 321A.1 . Such forms of coverage may 25 include terms, exclusions, limitations, conditions, and offsets 26 which are designed to avoid duplication of insurance or other 27 benefits duplicate payment of damages . 28 To the extent that Hernandez v. Farmers Insurance Company , 29 460 N.W.2d 842 (Iowa 1990), provided for interpolicy stacking 30 of uninsured or underinsured coverages in contravention of 31 specific contract or policy language, the general assembly 32 declares such decision abrogated and declares that the 33 enforcement of the antistacking provisions contained in a motor 34 vehicle insurance policy does not frustrate the protection 35 -2- LSB 2476YH (2) 84 av/nh 2/ 6

H.F. 410 given to an insured under section 516A.1 . 1 2. Pursuant to chapter 17A , the commissioner of insurance 2 shall, by January 1, 1992, adopt rules to assure the 3 availability, within the state, of motor vehicle insurance 4 policies, riders, endorsements, or other similar forms of 5 coverage, the terms of which shall provide for the stacking of 6 uninsured and underinsured coverages with any similar coverage 7 which may be available to an insured. 8 3. It is the intent of the general assembly that when more 9 than one motor vehicle insurance policy is purchased by or on 10 behalf of an injured insured and which provides uninsured, 11 underinsured, or hit-and-run motor vehicle coverage to an 12 insured injured in an accident, the injured insured is entitled 13 to recover up to an amount equal to the highest single limit 14 for uninsured, underinsured, or hit-and-run motor vehicle 15 coverage under any one of the above described motor vehicle 16 insurance policies insuring the injured person which amount 17 shall be paid by the insurers according to any priority of 18 coverage provisions contained in the policies insuring the 19 injured person. 20 2. A policy to which this chapter applies shall not include 21 exclusions or step-down provisions that eliminate or reduce 22 uninsured or underinsured coverage for a person who would 23 otherwise be covered under the policy, for the reason that 24 the person is injured by, or while occupying a vehicle being 25 operated by, another person insured under the policy. 26 Sec. 3. Section 516A.4, Code 2011, is amended to read as 27 follows: 28 516A.4 Insurer making payment —— reimbursement —— settlement 29 —— substitute tender —— good faith . 30 1. In the event of payment to any person under the 31 coverage required by this chapter and subject to the terms and 32 conditions of such coverage, the insurer making such payment 33 shall, to the extent thereof, be entitled to the proceeds of 34 any settlement or judgment resulting from the exercise of 35 -3- LSB 2476YH (2) 84 av/nh 3/ 6

H.F. 410 any rights of recovery of such person against any person or 1 organization legally responsible for the bodily injury for 2 which such payment is made, including the proceeds recoverable 3 from the assets of the insolvent insurer , to the extent that 4 the proceeds of the resulting settlement or judgment, when 5 combined with such payment made by the insurer, exceed such 6 person’s damages . The person to whom said payment is made 7 under the insolvency protection required by this chapter shall 8 to the extent thereof, be deemed to have waived any right to 9 proceed to enforce such a judgment against the assets of the 10 judgment debtor who was insured by the insolvent insurer whose 11 insolvency resulted in said payment being made, other than 12 assets recovered or recoverable by such judgment debtor from 13 such insolvent insurer. 14 2. An insurer providing coverage under this chapter shall, 15 within thirty days after receipt of a written request for 16 permission to settle with any person or organization legally 17 responsible for bodily injury for which coverage is provided 18 under this chapter, either give consent to the settlement or 19 tender substitute payment of the settlement amount. Failure 20 of the insurer to give such consent or to tender substitute 21 payment shall constitute the insurer’s consent to the 22 settlement and shall bar the insurer from claiming that the 23 settlement prejudiced the insurer’s rights under the policy or 24 this section. 25 3. An insurer that pursues, through subrogation or 26 assignment, a claim against any person or organization legally 27 responsible for bodily injury for which the insurer has made 28 payments under this chapter, shall include in such claim all 29 damages of the subrogor or assignor of the claim, and shall 30 tender to the subrogor or assignor any amounts to which the 31 subrogor or assignor would have been entitled under subsection 32 1 if the subrogor or assignor had directly pursued the claim. 33 4. An insurer shall act in good faith in response to a 34 claim for benefits under coverage required by this chapter. 35 -4- LSB 2476YH (2) 84 av/nh 4/ 6

H.F. 410 An insurer who fails to act in good faith in response to such 1 a claim for benefits shall be liable to the person owed such 2 benefits for all damages caused by such failure, including 3 interest, reasonable attorney fees and expenses, and punitive 4 damages if the required showing is made pursuant to chapter 5 668A. For the purposes of this subsection, “good faith” means 6 an informed judgment based on honesty and diligence, supported 7 by evidence that the insurer knew or should have known at the 8 time the insurer made a decision on the claim. The insurer 9 shall have the burden of proving that it acted in good faith. 10 EXPLANATION 11 This bill relates to automobile or motor vehicle insurance 12 coverage of liability arising from uninsured, underinsured, or 13 hit-and-run motorists. 14 Code section 516A.1 is amended to require coverage for 15 damages arising out of reasonable avoidance of physical contact 16 with a hit-and-run motor vehicle. Coverage for uninsured, 17 underinsured, and hit-and-run motor vehicle liability must 18 equal the limits of liability for the bodily injury portion 19 of the insurance policy instead of the statutory amounts 20 required for proof of financial responsibility in Code section 21 321A.1(11). A form furnished by the insurance company allowing 22 an insured to reject any or all of the required coverage must 23 include an explanation of the coverage being rejected and the 24 amount of premium associated with the coverage being rejected. 25 Code section 516A.2(1) is amended to provide that such 26 coverage may include provisions that are designed to avoid 27 duplicate payment of damages. The remainder of Code sections 28 516A.2(1) and 516A.2(2) relating to stacking of uninsured and 29 underinsured coverages, and Code section 516A.2(3) relating to 30 coverage under multiple motor vehicle insurance policies of 31 one insured, are stricken. Code section 516A.2 is amended to 32 prohibit exclusions or step-down provisions in motor vehicle 33 insurance policies that eliminate or reduce uninsured or 34 underinsured coverage for a person who would otherwise be 35 -5- LSB 2476YH (2) 84 av/nh 5/ 6

H.F. 410 covered under the policy, because the person is injured by, or 1 while in a vehicle being operated by, another person insured 2 under the policy. 3 Code section 516A.4(1) is amended to provide that an insurer 4 who has made payments under a policy to an injured party is 5 entitled to proceeds of a resulting settlement or judgment 6 against the person responsible for those damages only to the 7 extent that the proceeds combined with payment made by the 8 insurer exceed the injured party’s damages. 9 Code section 516A.4(2) provides that an insurer has 30 days 10 after receipt of a request for permission to settle against 11 the responsible party, to either consent to the settlement 12 or to tender substitute payment of the settlement amount, or 13 such failure will constitute consent and bar the insurer from 14 claiming prejudice as a result of the settlement. 15 Code section 516A.4(3) provides that when an insurer pursues 16 a claim, through subrogation or assignment, against the party 17 responsible for bodily injury for which the insurer has made 18 payments, the insurer shall include the damages of the subrogor 19 or assignor and tender the amount to the assignor or subrogor 20 that the person would have been entitled to if that person had 21 pursued the claim directly. 22 Code section 516A.4(4) requires an insurer to act in good 23 faith in response to a claim for uninsured, underinsured, or 24 hit-and-run benefits under Code chapter 516A and provides 25 that an insurer that does not act in good faith is liable 26 to the person owed such benefits for all damages caused by 27 that failure, including interest, reasonable attorney fees 28 and expenses, and punitive damages upon the showing required 29 under Code chapter 668A. For the purposes of this provision, 30 "good faith" means an informed judgment based on honesty and 31 diligence, supported by evidence that the insurer knew or 32 should have known at the time the insurer made a decision on 33 the claim. The insurer has the burden of proving that it acted 34 in good faith. 35 -6- LSB 2476YH (2) 84 av/nh 6/ 6