Brief Description: Waiving certain underinsured motorist property damage coverage.

Sponsors: Representatives Roach and Kirby.

Hearing Date: 2/15/05

Staff: Jon Hedegard (786-7127).

Background:

Definition of underinsured motor vehicle.
An "underinsured motor vehicle" is defined as a vehicle in which the party legally responsible (by virtue of ownership, maintenance, or use) for the bodily injury or property damage has either no insurance coverage or insufficient coverage to cover the full amount of the damage costs to which the injured party is legally entitled.

Requirements for automobile coverage.
Automobile insurance must include coverage for damages resulting from underinsured motor vehicles. An insurer must provide protection for insureds who are legally entitled to recover damages for bodily injury, death, or property damage from owners or operators of underinsured motor vehicles, hit-and-run motor vehicles, and phantom vehicles.

Generally, the amount of coverage must be in the same amount as the insured's third party liability coverage unless the insured or their spouse rejects all or part of the coverage. A rejection must be in writing. The rejection requirement applies only to original issuance of policies and not to renewal or replacement policies.

Exemptions from the coverage offering.
The coverage requirement does not apply to operating a motorcycle or motor-driven cycle. The coverage requirement also does not apply to general liability policies or other policies acting as excess to the insurance directly applicable to the vehicle insured.

Summary of Bill:

A written rejection is not required when a named insured or spouse chooses a coverage amount less than the third party liability coverage for property damage.

Appropriation: None.

Fiscal Note: Not requested.

Effective Date: The bill takes effect 90 days after adjournment of session in which bill is passed.