Rep. Norm Thurston — Voting Record

Bill

Number

H.B. 76 (2015GS)

Sponsor

Rep. Anderegg, J.

Final action

Governor Signed 3/31/2015

Outcome

Became law — signed by Gov. Gary R. Herbert

Summary

What it does

• This bill:
• amends the provision related to renewal of certain insurance policies;
• clarifies how deadlines are measured; and
• makes technical changes.

Every vote on this bill

Bill text

INSURANCE CANCELLATION AND NONRENEWAL
AMENDMENTS
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Jacob L. Anderegg
Senate Sponsor: 
Curtis S. Bramble
LONG TITLE
General Description:
This bill modifies the Insurance Code to address issues related to cancellation or
nonrenewal of insurance.
Highlighted Provisions:
This bill:
▸ amends the provision related to renewal of certain insurance policies;
▸ clarifies how deadlines are measured; and
▸ makes technical changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
31A-21-303
, as last amended by Laws of Utah 2010, Chapter 190
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
31A-21-303
 is amended to read:
31A-21-303.
Cancellation, issuance, renewal.
(1) (a) Except as otherwise provided in this section, other statutes, or by rule under
Subsection (1)(c), this section applies to all policies of insurance:
(i) except for:
(A) life insurance;
(B) accident and health insurance; and
(C) annuities; and
(ii) if the policies of insurance are issued on forms that are subject to filing under
Subsection 
31A-21-201
(1).
(b) A policy may provide terms more favorable to insureds than this section requires.
(c) The commissioner may by rule totally or partially exempt from this section classes
of insurance policies in which the insureds do not need protection against arbitrary or
unannounced termination.
(d) The rights provided by this section are in addition to and do not prejudice any other
rights the insureds may have at common law or under other statutes.
(2) (a) As used in this Subsection (2), "grounds" means:
(i) material misrepresentation;
(ii) substantial change in the risk assumed, unless the insurer should reasonably have
foreseen the change or contemplated the risk when entering into the contract;
(iii) substantial breaches of contractual duties, conditions, or warranties;
(iv) attainment of the age specified as the terminal age for coverage, in which case the
insurer may cancel by notice under Subsection (2)(c), accompanied by a tender of proportional
return of premium; or
(v) in the case of motor vehicle insurance, revocation or suspension of the driver's
license of:
(A) the named insured; or
(B) any other person who customarily drives the motor vehicle.
(b) (i) Except as provided in Subsection (2)(e) or unless the conditions of Subsection
(2)(b)(ii) are met, an insurance policy may not be canceled by the insurer before the earlier of:
(A) the expiration of the agreed term; or
(B) one year from the effective date of the policy or renewal.
(ii) Notwithstanding Subsection (2)(b)(i), an insurance policy may be canceled by the
insurer for:
(A) nonpayment of a premium when due; or
(B) on grounds defined in Subsection (2)(a).
(c) (i) The cancellation provided by Subsection (2)(b), except cancellation for
nonpayment of premium, is effective no sooner than 30 days after the delivery or first-class
mailing of a written notice to the policyholder.
(ii) Cancellation for nonpayment of premium is effective no sooner than 10 days after
delivery or first class mailing of a written notice to the policyholder.
(d) (i) Notice of cancellation for nonpayment of premium shall include a statement of
the reason for cancellation.
(ii) Subsection (7) applies to the notice required for grounds of cancellation other than
nonpayment of premium.
(e) (i) Subsections (2)(a) through (d) do not apply to any insurance contract that has not
been previously renewed if the contract has been in effect less than 60 days when the written
notice of cancellation is mailed or delivered.
(ii) A cancellation under this Subsection (2)(e) may not be effective until at least 10
days after the delivery to the insured of a written notice of cancellation.
(iii) If the notice required by this Subsection (2)(e) is sent by first-class mail, postage
prepaid, to the insured at the insured's last-known address, delivery is considered accomplished
after the passing, since the mailing date, of the mailing time specified in the Utah Rules of
Civil Procedure.
(iv) A policy cancellation subject to this Subsection (2)(e) is not subject to the
procedures described in Subsection (7).
(3) A policy may be issued for a term longer than one year or for an indefinite term if
the policy includes a clause providing for cancellation by the insurer by giving notice as
provided in Subsection (4)(b)(i) 30 days prior to any anniversary date.
(4) (a) Subject to Subsections (2), (3), and (4)(b), a policyholder has a right to have the
policy renewed:
(i) on the terms then being applied by the insurer to similar risks; and
(ii) (A) for an additional period of time equivalent to the expiring term if the agreed
term is one year or less; or
(B) for one year if the agreed term is longer than one year.
(b) Except as provided in Subsections (4)(c) and (5), the right to renewal under
Subsection (4)(a) is extinguished if:
(i) at least 30 days [
prior to
] 
before
 the policy expiration or anniversary date a notice of
intention not to renew the policy beyond the agreed expiration or anniversary date is delivered
or sent by first-class mail by the insurer to the policyholder at the policyholder's last-known
address;
(ii) not more than 45 nor less than 14 days [
prior to
] 
before
 the due date of the renewal
premium, the insurer delivers or sends by first-class mail a notice to the policyholder at the
policyholder's last-known address, clearly stating:
(A) the renewal premium;
(B) how the renewal premium may be paid
, including the due date for payment of the
renewal premium
; [
and
]
(C) that failure to pay the renewal premium [
by the due date
] extinguishes the
policyholder's right to renewal; 
and
(D) subject to Subsection (4)(e), that the extinguishment of the right to renew for
nonpayment of premium is effective no sooner than at least 10 days after delivery or first class
mailing of a written notice to the policyholder that the policyholder has failed to pay the
premium when due;
(iii) the policyholder has:
(A) accepted replacement coverage; or
(B) requested or agreed to nonrenewal; or
(iv) the policy is expressly designated as nonrenewable.
(c) Unless the conditions of Subsection (4)(b)(iii) or (iv) apply, an insurer may not fail
to renew an insurance policy as a result of a telephone call or other inquiry that:
(i) references a policy coverage; and
(ii) does not result in the insured requesting payment of a claim.
(d) Failure to renew under this Subsection (4) is subject to Subsection (5).
(e) (i) During the period that begins when the notice described in Subsection
(4)(b)(ii)(D) is delivered or mailed and ends when the premium is paid, coverage exists and
premiums are due.
(ii) If after receiving the notice required by Subsection (4)(b)(ii)(D) a policyholder fails
to pay the renewal premium, the coverage is extinguished as of the date the renewal premium is
originally due.
(iii) Delivery of the notice required by Subsection (4)(b)(ii)(D) includes electronic
delivery in accordance with Section 
31A-21-316
.
(iv) An insurer is not subject to Subsection (4)(b)(ii)(D) if it provides notice of the
extinguishment of the right to renew for failure to pay premium at least 15 days, but no longer
than 45 days, before the day the renewal payment is due.
(v) Subsection (4)(b)(ii)(D) does not apply to a policy that provides coverage for 30
days or less.
(5) Notwithstanding Subsection (4), an insurer may not fail to renew the following
personal lines insurance policies solely on the basis of:
(a) in the case of a motor vehicle insurance policy:
(i) a claim from the insured that:
(A) results from an accident in which:
(I) the insured is not at fault; and
(II) the driver of the motor vehicle that is covered by the motor vehicle insurance
policy is 21 years of age or older; and
(B) is the only claim meeting the condition of Subsection (5)(a)(i)(A) within a
36-month period;
(ii) a single traffic violation by an insured that:
(A) is a violation of a speed limit under Title 41, Chapter 6a, Traffic Code;
(B) is not in excess of 10 miles per hour over the speed limit;
(C) is not a traffic violation under:
(I) Section 
41-6a-601
;
(II) Section 
41-6a-604
; or
(III) Section 
41-6a-605
;
(D) is not a violation by an insured driver who is younger than 21 years of age; and
(E) is the only violation meeting the conditions of Subsections (5)(a)(ii)(A) through
(D) within a 36-month period; or
(iii) a claim for damage that:
(A) results solely from:
(I) wind;
(II) hail;
(III) lightning; or
(IV) an earthquake;
(B) is not preventable by the exercise of reasonable care; and
(C) is the only claim meeting the conditions of Subsections (5)(a)(iii)(A) and (B)
within a 36-month period; and
(b) in the case of a homeowner's insurance policy, a claim by the insured that is for
damage that:
(i) results solely from:
(A) wind;
(B) hail; or
(C) lightning;
(ii) is not preventable by the exercise of reasonable care; and
(iii) is the only claim meeting the conditions of Subsections (5)(b)(i) and (ii) within a
36-month period.
(6) (a) (i) Subject to Subsection (6)(b), if the insurer offers or purports to renew the
policy, but on less favorable terms or at higher rates, the new terms or rates take effect on the
renewal date if the insurer delivered or sent by first-class mail to the policyholder notice of the
new terms or rates at least 30 days prior to the expiration date of the prior policy.
(ii) If the insurer did not give the prior notification described in Subsection (6)(a)(i) to
the policyholder, the new terms or rates do not take effect until 30 days after the notice is
delivered or sent by first-class mail, in which case the policyholder may elect to cancel the
renewal policy at any time during the 30-day period.
(iii) Return premiums or additional premium charges shall be calculated
proportionately on the basis that the old rates apply.
(b) Subsection (6)(a) does not apply if the only change in terms that is adverse to the
policyholder is:
(i) a rate increase generally applicable to the class of business to which the policy
belongs;
(ii) a rate increase resulting from a classification change based on the altered nature or
extent of the risk insured against; or
(iii) a policy form change made to make the form consistent with Utah law.
(7) (a) If a notice of cancellation or nonrenewal under Subsection (2)(c) does not state
with reasonable precision the facts on which the insurer's decision is based, the insurer shall
send by first-class mail or deliver that information within 10 working days after receipt of a
written request by the policyholder.
(b) A notice under Subsection (2)(c) is not effective unless it contains information
about the policyholder's right to make the request.
(8) (a) An insurer that gives a notice of nonrenewal or cancellation of insurance on a
motor vehicle insurance policy issued in accordance with the requirements of Chapter 22, Part
3, Motor Vehicle Insurance, for nonpayment of a premium shall provide notice of nonrenewal
or cancellation to a lienholder if the insurer has been provided the name and mailing address of
the lienholder.
(b) The notice described in Subsection (8)(a) shall be provided to the lienholder by first
class mail or, if agreed by the parties, any electronic means of communication.
(c) A lienholder shall provide a current physical address of notification or an electronic
address of notification to an insurer that is required to make a notification under Subsection
(8)(a).
(9) If a risk-sharing plan under Section 
31A-2-214
 exists for the kind of coverage
provided by the insurance being cancelled or nonrenewed, a notice of cancellation or
nonrenewal required under Subsection (2)(c) or (4)(b)(i) may not be effective unless it contains
instructions to the policyholder for applying for insurance through the available risk-sharing
plan.
(10) There is no liability on the part of, and no cause of action against, any insurer, its
authorized representatives, agents, employees, or any other person furnishing to the insurer
information relating to the reasons for cancellation or nonrenewal or for any statement made or
information given by them in complying or enabling the insurer to comply with this section
unless actual malice is proved by clear and convincing evidence.
(11) This section does not alter any common law right of contract rescission for
material misrepresentation.
(12) If a person is required to pay a premium in accordance with this section:
(a) the person may make the payment using:
(i) the United States Postal Service;
(ii) a delivery service the commissioner describes or designates by rule made in
accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act; or
(iii) electronic means; and
(b) the payment is considered to be made:
(i) for a payment that is mailed using the method described in Subsection (12)(a)(i), on
the date the payment is postmarked;
(ii) for a payment that is delivered using the method described in Subsection (12)(a)(ii),
on the date the delivery service records or marks the payment as having been received by the
delivery service; or
(iii) for a payment that is made using the method described in Subsection (12)(a)(iii),
on the date the payment is made electronically.