certification from the United States District Court for the
District of Utah The Honorable Jill N. Parrish No.
Attorneys: Brian S. Coutts, Scott D. Brown, Tyler Brown,
Midvale, for appellants
E. Kennedy, Michael D. Zimmerman, Troy L. Booher, Nicholas E.
Dudoich, Paul M. Belnap, Salt Lake City, for appellee
Associate Chief Justice Lee authored the opinion of the
Court, in which Chief Justice Durrant, and Justice Durham
joined. Justice Himonas filed a dissenting opinion, in which
Justice Pearce joined.
Associate Chief Justice
1 This case is before us on a certified question from the
federal district court. We are asked to examine the terms of
Utah Code section 31A-22-305.3. The question presented is
whether this provision requires that all vehicles covered
under the liability provisions of an automobile insurance
policy must also be covered under the underinsured motorist
provisions of that policy, and with equal coverage limits. We
conclude that it does, unless a named insured waives the
coverage by signing an acknowledgment form meeting certain
2 On July 11, 2012, Derek Dircks and Michael Riley suffered
injuries in a car accident caused by another driver. Both
Dircks and Riley were employees of Mid-State Consultants,
Inc. They were in Riley's personal vehicle on an
assignment for Mid-State at the time of the accident.
3 To cover his resulting medical bills, Dircks and his wife
sought and received liability benefits under the third-party
driver's automobile insurance policy, as well as
underinsured motorist benefits under Riley's policy. But
the amounts received were insufficient to cover the bills. So
Dircks sought additional underinsured motorist benefits under
Mid-State's commercial insurance policy with Travelers
Indemnity Company of America. The policy included $1 million
of liability coverage for persons driving in either a
Mid-State fleet vehicle listed in the insurance policy or a
vehicle owned by a Mid-State employee when used for Mid-State
policy also included $1 million of underinsured motorist
coverage. And it purported to limit this coverage to persons
driving in Mid-State fleet vehicles.
4 Travelers denied Dircks' claim on the ground that
Mid-State's policy did not provide underinsured motorist
coverage for Riley's vehicle. Dircks subsequently filed
suit. After the parties filed cross-motions for summary
judgment, the federal district court certified to us the
question of whether state law requires that all vehicles for
which Mid-State had purchased liability coverage be covered
to the same extent under Mid-State's underinsured
5 The Utah code requires "every resident owner of a
motor vehicle" to "maintain owner's or
operator's security in effect at any time that the motor
vehicle is operated on a highway or on a quasi-public road or
parking area within the state." Utah Code §
41-12a-301(2)(a). Proof of such security may be provided by a
"certificate of insurance under Section 41-12a-402 or
41-12a-403." Id. § 41-12a-401(1)(a). By
statute, "[e]very policy of insurance or combination of
policies purchased to satisfy the owner's or
operator's security requirement" must include four
specific types of insurance: "(a) motor vehicle
liability coverage under Sections 31A-22-303 and 31A-22-304;
(b) uninsured motorist coverage under Section 31A-22-305,
unless affirmatively waived under Subsection 31A-22-305(5);
(c) underinsured motorist coverage under Section
31A-22-305.3, unless affirmatively waived under Subsection
31A-22-305.3(3); and (d) except as provided in Subsection (2)
and subject to Subsection (4), personal injury protection
under Sections 31A-22-306 through 31A-22-309."
Id. § 31A-22-302(1).
6 This case concerns the required terms and scope of
underinsured motorist coverage in a policy purchased to
satisfy a vehicle owner's insurance requirements. The key
operative provision is Utah Code section 31A-22-305.3.
Section 305.3 states that "[u]nderinsured motorist
coverage under Subsection 31A-22-302(1)(c) provides coverage
for a covered person who is legally entitled to
recover damages from an owner or operator of an underinsured
motor vehicle because of bodily injury, sickness, disease, or
death." Id. § 31A-22-305.3(2)(a) (emphasis
added). Covered person, in turn, is defined to
include "any person occupying or using a motor vehicle
referred to in the policy." Id. §
31A-22-305(1)(d); id. § 31A-22-305.3(1)(a). And
section 305.3 mandates that "the limits of underinsured
motorist coverage shall be equal to the lesser of the limits
of the named insured's motor vehicle liability coverage
or the maximum underinsured motorist coverage limits
available by the insurer under the named insured's motor
vehicle policy" unless the named insured signs an
acknowledgment electing "coverage in a lesser
amount." Id. § 31A-22-305.3(3)(b).
7 The parties offer differing views of the implications of
these provisions. Dircks interprets them to mandate
parallelism between underinsured motorist coverage and
liability coverage within the same policy-both in terms of
the persons and vehicles covered and the liability limits.
And Dircks claims that he is entitled to underinsured
coverage in the underlying case because Mid-State never
signed an acknowledgment limiting its underinsured motorist
8 Travelers offers two grounds for rejecting Dircks'
approach. First it says that section 305.3 does not apply to
vehicles that Mid-State had no statutory obligation to insure
(like those not owned by Mid-State). And second Travelers
asserts that the Mid-State policy properly excludes the
unowned vehicles in question from coverage for underinsured
9 We reject both of Travelers' arguments and generally
agree with Dircks' conception of the statutory scheme.
10 Travelers first seeks to avoid any application of section
305.3 to vehicles not owned by Mid-State. It notes that this
provision is addressed to "[u]nderinsured motorist
coverage under Subsection 31A-22-302(1)(c)."
Utah Code § 31A-22-305.3(2)(a) (emphasis added). And it
indicates that section 302, in turn, speaks of insurance
"purchased to satisfy the owner's or operator's
security requirement of Section 41-12a-301."
Id. § 31A-22-302(1).
11 Travelers emphasizes that Mid-State did not own
Riley's vehicle. And it insists that it accordingly had
no obligation to insure that vehicle under section 302. In
Travelers' view, it follows that section 305.3 does not
apply to the underinsured motorist provisions of the
Mid-State policy because those provisions were not
"purchased to satisfy" a statutory "security
requirement" under section 302.
12 We disagree. Travelers' threshold point is correct.
Mid-State had no legal duty to purchase any insurance for
unowned vehicles.But it does not follow that section 305.3
does not apply to the insurance policy in question. Section
305.3 applies to any "policy . . . purchased to
satisfy the owner's or operator's security
requirement." Id. § 31A-22- 302(1)
(emphasis added). And the applicability of section 305.3
accordingly turns entirely on the scope of the term
policy in section 302. For Travelers to succeed, we
must read the term narrowly to encompass only the specific
insurance coverage in a policy that is purchased to
satisfy the security obligation. But there is nothing in the
text that indicates the statute applies only to those
portions of a policy.
13 A "policy" is "[a] document containing a
contract of insurance." Policy, Black's Law
Dictionary (9th ed. 2009). And the insurance document at
issue in this case is clearly identified as a single policy.
It is labeled with a single policy number
There is even a section in the document that allows the
insurance provider to list "supplemental policies,
" which are each "a separate policy
containing its complete provisions." (Emphasis added).
But that section was left entirely blank.
14 That indicates that the Travelers policy in question was a
"policy . . . purchased to satisfy the owner's or
operator's security requirement." Utah Code §
31A-22-302(1). And that conclusion defeats Travelers'
first argument. For that reason we conclude that section
305.3 applies to the entire insurance document understood as
a "policy" even if some of the provisions in the
policy were not themselves purchased to satisfy the
insured's statutory security requirement.
15 In so holding we also reject the dissent's contrary
arguments. First, we see nothing "senseless" about
the statutory scheme as interpreted herein. See
infra ¶ 40. This statutory framework promotes
transparency. It does so by requiring insurers to offer
either two separate insurance policies (one that
satisfies the insurance requirements and an additional policy
for excess insurance) or a single policy that
includes an acknowledgement that excess coverage within the
policy does not get the full benefits of the insurance code.
That provides clarity for policyholders. And it protects
consumers from being misled or confused by insurance
companies-who stand in a position of great power because
consumers have no choice but to come to them to purchase a
policy to satisfy the requirements articulated in section
16 Perhaps it is true that "sophisticated
consumers" are those most likely to be protected by the
statute as structured. See infra ¶ 51. But we
see no reason to deem such consumers to fall beyond the
legislature's reach. Even sophisticated consumers are at
the mercy of insurance providers. And these consumers-like