Rep. Norm Thurston — Voting Record

Bill

Number

S.B. 223 First Substitute (2020GS)

Sponsor

Sen. Anderegg, J.

Final action

Governor Signed 3/28/2020

Outcome

Became law — signed by Gov. Gary R. Herbert

Summary

What it does

• This bill:
• amends provisions regarding cancellation of a commercial lines insurance policy for nonpayment of premium; and
• makes technical and conforming changes.

Every vote on this bill

Bill text

INSURANCE RENEWAL AMENDMENTS
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Jacob L. Anderegg
House Sponsor: 
James A. Dunnigan
LONG TITLE
General Description:
This bill amends the Insurance Code regarding the cancellation of insurance policies.
Highlighted Provisions:
This bill:
▸ amends provisions regarding cancellation of a commercial lines insurance policy for
nonpayment of premium; and
▸ makes technical and conforming changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
This bill provides a special effective date.
Utah Code Sections Affected:
AMENDS:
31A-21-303
, as last amended by Laws of Utah 2015, Chapter 385
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 
of a personal lines policy
 is effective no
sooner than 10 days after delivery or [
first class
] 
first-class
 mailing of a written notice to the
policyholder.
(iii) Cancellation for nonpayment of premium of a commercial lines policy is effective
no sooner than 10 days after delivery or first-class mailing of a written notice to:
(A) the policyholder;
(B) each assignee of the policyholder, if the assignee is named in the policy; and
(C) each loss payee or mortgagee or lienholder under property insurance of the
policyholder, if the loss payee, mortgagee, or lienholder is named in the policy.
(iv) An insurer shall deliver or send by first-class mail a copy of the notice of
cancellation for nonpayment of premium described in Subsection (2)(c)(iii) to an agent of
record of the policyholder on or before the day on which the insurer provides the 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
] 
on the day
on which
 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
] 
day on which
 a written notice of cancellation 
is
delivered to the insured
.
(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
] 
before an
 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 before the [
policy expiration
] 
day on which the policy expires
 or
completes an
 anniversary [
date
]
, the insurer delivers or sends by first-class mail
 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 before the [
due date of
] 
day on which
 the
renewal premium 
is due
, 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;
(C) that failure to pay the renewal premium 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
] 
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
] 
(A) If the policy is a personal lines policy, during
 the period that
begins when 
an insurer delivers or sends by first-class mail
 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.
(B) If the policy is a commercial lines policy, during the period that begins when an
insurer delivers or sends by first-class mail the notice described in Subsection (2)(c)(iii) and
ends when the premium is paid, coverage exists and premiums are due.
(ii) 
(A)
 If after receiving the notice required by Subsection (4)(b)(ii)(D) a 
personal
lines
 policyholder fails to pay the renewal premium, the coverage is extinguished as of the date
the renewal premium is originally due.
(B) If after receiving the notice required under Subsection (2)(c)(iii), a commercial
lines policyholder fails to pay the renewal premium within the 10 days before the day on which
cancellation for nonpayment is effective, the coverage is extinguished as of the day on which
the renewal premium is originally due.
(iii) Delivery of the notice required by Subsection 
(2)(c)(iii), (2)(c)(iv), or
 (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
]
:
(A) the insurer
 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 
on which
 the renewal
payment is due[
.
]
; and
(B) the policy is a personal lines policy.
(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
] 
before the
day on which the previous policy expires
.
(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 day on which
the insurer delivers or sends by first-class mail
 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
] 
An insurer shall provide the
 notice described in Subsection (8)(a) [
shall be
provided
] to the lienholder by [
first class
] 
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
] 
the
notice
 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 
on which
 the payment is postmarked;
(ii) for a payment that is delivered using the method described in Subsection (12)(a)(ii),
on the date 
on which
 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 
on which
 the payment is made electronically.
Section 2. 
Effective date.
This bill takes effect on July 1, 2021.