SB 74

Enrolled Copy  S.B. 74
1Motor Vehicle Civil Action Amendments
  2026 GENERAL SESSION
  STATE OF UTAH
  Chief Sponsor: Calvin R. Musselman
  House Sponsor: Anthony E. Loubet
2
3  LONG TITLE
4  General Description:
5      This bill amends the Insurance Code to establish requirements relating to policy-limit
6  demands and disclosures in third-party liability claims related to motor vehicle liability.
7  Highlighted Provisions:
8      This bill:
9      ▸ establishes requirements for the content of policy-limit demand letters from a claimant to
10  a liability insurance carrier;
11      ▸ establishes requirements for correspondence from a claimant or a claimant's legal counsel
12  to an unrepresented insured;
13      ▸ requires a liability insurance carrier to provide written disclosure to the insured regarding
14  defense and indemnification;
15      ▸ addresses the effect of a disclosure and the consequences of noncompliance; and
16      ▸ preserves existing rights and remedies.
17  Money Appropriated in this Bill:
18      None
19  Other Special Clauses:
20      None
21  Utah Code Sections Affected:
22  ENACTS:
23      31A-22-323, Utah Code Annotated 1953
24
25  Be it enacted by the Legislature of the state of Utah:
26Section 1. Section 31A-22-323 is enacted to read:
2731A-22-323 . Policy-limit demands, correspondence, and disclosure requirements
S.B. 74  Enrolled Copy
28   -- Third-party liability claims.
29   (1)(a) In a third-party liability claim arising under this part in which a claimant or
30claimant's legal counsel sends a demand letter to a liability insurance carrier
31demanding the insured's liability policy limits in exchange for a release of claims,
32such a demand letter shall:
33(i) include reasonably sufficient information to allow a reasonable liability insurance
34carrier to evaluate the claim, including a description of the incident, injuries,
35liability basis, and damages, copies of the medical records and bills supporting
36claimed medical damages, and information supporting any other elements of
37claimed economic damages; and
38(ii) provide the liability insurance carrier with no less than 30 days to accept or reject
39the policy-limit demand.
40(b) A claimant is not required to provide expert reports or attorney work product as part
41of the demand letter described in Subsection (1)(a).
42   (2)(a) If the liability insurance carrier that receives a claimant's demand letter described
43in Subsection (1) declines to tender the insured's liability policy limits following the
44receipt of the demand letter, and the claimant intends to file a cause of action against
45the insured, and the claimant or claimant's legal counsel elects to correspond directly
46with an unrepresented insured, the correspondence with the insured shall:
47(i) be in writing, with a copy of the correspondence delivered to the applicable
48liability insurance carrier;
49(ii) include:
50(A) a reference to this statutory section;
51(B) a plain-language explanation of the claimant's claims against the insured;
52(C) a description of the claimant's related injuries;
53(D) a copy of the demand letter described in Subsection (1) that was sent to the
54liability insurance carrier; and
55(E) if applicable, a copy of the liability insurance carrier's written response to the
56demand letter described in Subsection (1);
57(iii) comply with the Rules of Professional Conduct established by the Utah Supreme
58Court, including an indication that the interests of the claimant and the claimant's
59legal counsel are adverse to the insured; and
60(iv) indicate the legal action the claimant and claimant's legal counsel intend to
61pursue against the insured.
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Enrolled Copy  S.B. 74
62      (b) Unless necessary to preserve the claimant's legal rights, a claimant or the claimant's
63legal counsel may not file a cause of action against the insured until 45 days after that
64date on which the insured has received the correspondence described in Subsection
65(2)(a).
66      (c) If a claimant intends to pursue damages in the legal action described in Subsection
67(2)(a) that exceed the applicable liability insurance policy limit, the correspondence
68described in Subsection (2)(a):
69(i) shall identify the insured's right:
70(A) to review the entirety of the claimant's demand letter, claimed medical records
71and expenses, and other supporting documentation with the claimant's liability
72insurance carrier; and
73(B) to discuss the insured's rights and responsibilities with respect to any excess
74verdict, judgment, settlement, or award with the insured's liability insurance
75carrier, as well as with independent legal counsel; and
76(ii) if the correspondence references or suggests the possibility of placing a judgment
77lien against personal property of the insured following any judgment, shall include
78a plain-language explanation of the process for obtaining a judgment lien.
79  (3)(a) Within 30 days after the date on which the liability insurance carrier receives a
80      copy of the correspondence described in Subsection (2), the liability insurance carrier
81      shall provide the insured with a written disclosure stating whether the liability
82      insurance carrier agrees:
83(i) to defend the insured against the claim; and
84(ii) to indemnify the insured for any verdict, judgment, settlement, or award arising
85from the claim, including whether:
86(A) the indemnification is limited to the applicable policy limits; or
87(B) the indemnification will extend to a verdict, judgment, settlement, or award in
88excess of the applicable policy limit.
89      (b) If the liability insurance carrier's decision to indemnify the insured is limited to the
90applicable policy limits, the disclosure in Subsection (3)(a) shall:
91(i) provide a reasonable explanation as to the basis of the decision; and
92(ii) notify the insured of the insured's right to seek independent legal counsel
93regarding the insured's rights and responsibilities with respect to the decision
94whether to indemnify the insured.
95  (4)(a) A disclosure made under Subsection (3):
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 S.B. 74  Enrolled Copy
96(i) does not expand, reduce, or modify coverage under the insurance policy; and
97(ii) is intended solely to provide clarity to the insured regarding the liability insurance
98carrier's position.
99(b)(i) Compliance with the procedural provisions of this section does not preclude a
100finding that the liability insurance carrier breached the liability insurance carrier's
101duty of good faith if the liability insurance carrier's substantive decisions
102regarding settlement, defense, or indemnification were unreasonable under the
103circumstances.
104(ii) The reasonableness of a liability insurance carrier's conduct with regard to the
105decision to defend and indemnify the insured as described in Subsection (3) shall
106be evaluated based on all relevant circumstances existing at the time decisions
107were made.
108   (5) Nothing in this section alters, limits, or waives:
109(a) a liability insurance carrier's duty to act in good faith and deal fairly with the liability
110insurance carrier's insured;
111(b) any rights or remedies available to an insured arising from a liability insurance
112carrier's failure to accept a reasonable settlement offer within applicable policy limits;
113or
114(c) any defenses, claims, or causes of action available under common law or statute to
115any party.
116   (6)(a) A claimant's failure to comply with Subsection (1) or (2) does not bar the claimant
117from filing suit against the insured or pursuing any remedies available at law, but
118may be considered by a court in evaluating whether a settlement demand was
119reasonable for purposes of determining whether a liability insurance carrier breached
120the liability insurance carrier's duty of good faith.
121(b) A liability insurance carrier's failure to comply with the disclosure requirements of
122Subsection (3) does not create an independent cause of action, but may be considered
123as evidence of bad faith in any subsequent action by the insured against the liability
124insurance carrier.
125(c) Nothing in this section may be construed to create additional procedural prerequisites
126to an insured's right to pursue a bad faith claim against the liability insurance carrier.
127(d) This section supplements and does not replace existing common law and statutory
128duties and remedies relating to a liability insurance carrier's duty of good faith and
129fair dealing with the liability insurance carrier's insured.
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 Enrolled Copy  S.B. 74
130      (e) Nothing in this section creates a private cause of action.
131Section 2. Effective Date.
132  This bill takes effect on May 6, 2026.
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