PART III. COVERAGES AND RIGHTS

 

Cross References

 

  Arbitration; binding arbitration, see §§431:10C-213 and213.5.

 

Law Journals and Reviews

 

  Tort and Insurance "Reform" in a Common Law Court.  14 UH L. Rev. 55.

 

§431:10C-301  Required motor vehicle policycoverage.  (a)  An insurance policy covering a motor vehicle shall provide:

(1)  Coverage specified in section 431:10C-304; and

(2)  Insurance to pay on behalf of the owner or anyoperator of the insured motor vehicle using the motor vehicle with a reasonablebelief that the person is entitled to operate the motor vehicle, sums which theowner or operator may legally be obligated to pay for injury, death, or damageto property of others, except property owned by, being transported by, or inthe charge of the insured, which arise out of the ownership, operation,maintenance, or use of the motor vehicle; provided that in the case of aU-drive motor vehicle, insurance to pay on behalf of the renter or any operatorof the insured motor vehicle using the motor vehicle with the expresspermission of the renter or lessee, sums which the renter or operator may belegally obligated to pay for damage or destruction of property of others(except property owned by, being transported by, or in the charge of the renteror operator) arising out of the operation or use of the motor vehicle unlessthe motor vehicle is reported stolen by the owner within three days ofnotification of the incident; provided that the insurer and owner of a U-drivevehicle shall have the right of subrogation against the renter and operator forbreach of the rental contract between owner and renter; and provided furtherthat, in the event that any motor vehicle offered for rental or lease isinvolved in an accident, the lessor shall provide all information it has orobtains relevant to the accident to all other involved parties upon theirrequest, including but not limited to information about the lessee, and thedriver of the vehicle if other than the lessee.

(b)  A motor vehicle insurance policy shallinclude:

(1)  Liability coverage of not less than $20,000 perperson, with an aggregate limit of $40,000 per accident, for all damagesarising out of accidental harm sustained as a result of any one accident andarising out of ownership, maintenance, use, loading, or unloading of a motorvehicle;

(2)  Liability coverage of not less than $10,000 forall damages arising out of damage to or destruction of property including motorvehicles and including the loss of use thereof, but not including propertyowned by, being transported by, or in the charge of the insured, as a result ofany one accident arising out of ownership, maintenance, use, loading, orunloading, of the insured vehicle;

(3)  With respect to any motor vehicle registered orprincipally garaged in this State, liability coverage provided therein orsupplemental thereto, in limits for bodily injury or death set forth inparagraph (1), under provisions filed with and approved by the commissioner,for the protection of persons insured thereunder who are legally entitled torecover damages from owners or operators of uninsured motor vehicles because ofbodily injury, sickness, or disease, including death, resulting therefrom;provided that the coverage required under this paragraph shall not beapplicable where any named insured in the policy shall reject the coverage inwriting; and

(4)  Coverage for loss resulting from bodily injury ordeath suffered by any person legally entitled to recover damages from owners oroperators of underinsured motor vehicles.  An insurer may offer theunderinsured motorist coverage required by this paragraph in the same manner asuninsured motorist coverage; provided that the offer of both shall:

(A)  Be conspicuously displayed so as to bereadily noticeable by the insured;

(B)  Set forth the premium for the coverageadjacent to the offer in a manner that the premium is clearly identifiable withthe offer and may be easily subtracted from the total premium to determine thepremium payment due in the event the insured elects not to purchase the option;and

(C)  Provide for written rejection of thecoverage by requiring the insured to affix the insured's signature in alocation adjacent to or directly below the offer.

(c)  The stacking or aggregating of uninsured motoristcoverage or underinsured motorist coverage is prohibited, except as provided insubsection (d).

(d)  An insurer shall offer the insured theopportunity to purchase uninsured motorist coverage and underinsured motoristcoverage by offering the following options with each motor vehicle insurancepolicy:

(1)  The option to stack uninsured motorist coverageand underinsured motorist coverage; and

(2)  The option to select uninsured motorist coverageand underinsured motorist coverage, whichever is applicable, up to but notgreater than the bodily injury liability coverage limits in the insured'spolicy.

These offers are to be made when a motorvehicle insurance policy is first applied for or issued.  For any existingpolicies, an insurer shall offer such coverage at the first renewal afterJanuary 1, 1993.  Once an insured has been provided the opportunity to purchaseor reject the coverages in writing under the options, no further offer isrequired to be included with any renewal or replacement policy issued to theinsured.

(e)  If uninsured motorist coverage orunderinsured motorist coverage is rejected, pursuant to section 431:10C-301(b):

(1)  The offers required by section 431:10C-301(d) arenot required to be made;

(2)  No further offers or notice of the availabilityof uninsured motorist coverage and underinsured motorist coverage are requiredto be made in connection with any renewal or replacement policy; and

(3)  The written rejections required by section431:10C-301(b) shall be presumptive evidence of the insured's decision toreject the options. [L 1987, c 347, pt of §2; am L 1988, c 306, §1; am L 1992,c 123, §4, c 124, §9, and c 221, §1; am L 1993, c 205, §26; am L Sp 1993, c 4,§5; am L 1997, c 251, §38; am L 1998, c 275, §16]

 

Law Journals and Reviews

 

  Nobody I Know Should Have $35,000 B.I. Limits.  23 HBJ 89.

 

Case Notes

 

  Discussed, where insurer not legally obligated to payuninsured motorist benefits claimed where accident occurred in Thailand, a country outside of motor vehicle insurance policy's territorial limit.  134 F.Supp. 2d 1159.

  Pursuant to subsection (b)(3), insurance coverage foruninsured motorists is "optional coverage".  76 H. 304, 875 P.2d 921.

  Underinsured motorist coverage was subject to stacking.  77H. 362, 884 P.2d 1138.

  Defendant was not a permissive user of insured vehicle andwas therefore not a "covered person" under insurance contract.  78 H.249, 891 P.2d 1041.

  Named insured under an automobile liability insurance policy,who is injured by hit-and-run driver, can be entitled to uninsured motoristbenefits thereunder when the named insured is operating a motorcycle at thetime of the named insured's accident.  78 H. 325, 893 P.2d 176.

  Car rental agreement not contract for insurance and notsource of customer's entitlement to insurance coverage; customer statutorilyentitled to minimum motor vehicle insurance coverage required by this section. 82 H. 351, 922 P.2d 964.

  Car rental company, as self-insurer, not subject tosubsection (b)(3) and (4); thus, not required to provide uninsured orunderinsured motorist coverage to permissive users of its vehicles.  82 H. 466,923 P.2d 408.

  Mandatory uninsured motorist offer requirements of subsection(b)(3) apply to the minimum requirements of a "no-fault policy" asspecified in subsection (a).  82 H. 466, 923 P.2d 408.

  Insurer's offer to stack benefits legally insufficient whereoffer did not clearly convey that insureds could have obtained same amount ofcoverage at lower premium by selecting stacking option and failed to informinsureds that stacking was available for a relatively modest increase inpremium.  87 H. 307, 955 P.2d 100.

  Section requires that insurer obtain written rejection ofstacked coverage; insurer's offer of coverage inconsistent with requirement asoffer required insured to affirmatively select, rather than affirmativelyreject, stacking option.  87 H. 307, 955 P.2d 100.

  Though insurer was required under this section to offerstacking option at time of renewal of policy, insurer's failure to do so wasirrelevant where policy was not in effect at time of accident.  87 H. 307, 955P.2d 100.

  An underinsured motorist carrier's grounds for denyingunderinsured motorist benefits under a consent-to-settle provision in anunderinsured motorist policy must be reasonable, in good faith, and within thebounds of the intent underlying subsection (b)(4).  90 H. 302, 978 P.2d 740.

  Exhaustion clauses in underinsured motorist policiesrequiring insured to exhaust tortfeasor's insurance prior to applying forunderinsured motorist benefits are void as against public policy.  90 H. 302,978 P.2d 740.

  It is unreasonable for an underinsured motorist insurancecarrier to precondition its refusal to consent to settle upon the failure ofthe insured to achieve a settlement exhausting the tortfeasor's policy limits. 90 H. 302, 978 P.2d 740.

  When an insured makes a material change to an existing policyafter a valid rejection of coverage, the resulting policy is not a renewal orreplacement policy within the meaning of subsection (d), and a new offer ofcoverage is required; whether a material change was made is a fact specificdetermination based on the totality of the circumstances that includesconsideration of the public policies underlying Hawaii's motor vehicleinsurance code.  93 H. 210, 998 P.2d 490.

  Trial court correctly ruled that insured was not entitled touninsured motorist benefits where insured's injuries resulting from being shotfrom an adjacent parked car did not arise from the operation, maintenance, oruse of a motor vehicle.  103 H. 263, 81 P.3d 1178.

  Insurer's refusal to consent to settle in order to protectits subrogation rights, in light of its investigation of factors that wouldrender subrogation more or less favorable to insurer, was reasonable; however,having withheld its consent, insurer had to put itself in the position ofinsured's subrogee by paying insured the amount of the settlement offer.  111H. 160, 140 P.3d 393.

  Under the Hawaii motor vehicle insurance statutory scheme, norequirement exists that an injured party exhaust the liability policies of alljoint tortfeasors before making a claim against his or her uninsured motoristpolicy.  88 H. 77 (App.), 961 P.2d 1171.

  Denial of coverage did not violate subsection (b)(4) wherepolicy did not provide coverage for non-named insureds who are injured whilenot occupying a covered automobile but clearly provided UIM coverage to personswho are injured while occupying a covered automobile.  88 H. 122 (App.), 962P.2d 1004.

  Where injured employee was a permissive user of the companyvehicle of the named insured, was using the truck during the course ofemployee's employment to get to and from the jobsite where employee was injuredand to store and transport the equipment that employee was using as part ofemployee's duties at the time employee was injured, employee demonstrated"some connection with the insured vehicle", and was thus an insuredperson who was entitled to uninsured motorist coverage.  118 H. 123 (App.), 185P.3d 871.

  Construing the language of §431:10C-103 and this sectiongoverning uninsured motorist (UM) and underinsured motorist (UIM) insuranceaccording to their plain and commonly understood meaning and in pari materiawith §§663-10.9 and 663-11, UM and UIM policies must provide coverage for alldamages which an insured is legally entitled to recover from the owner oroperator of an uninsured or underinsured motor vehicle, which necessarilyencompasses damages for which the owner or operator of an uninsured orunderinsured motor vehicle is jointly and severally liable pursuant to§§663-10.9 and 663-11.  120 H. 329 (App.), 205 P.3d 594.

  To obtain underinsured motorist (UIM) coverage in Hawaii, theliability for damages must exceed the total amount of bodily injury liabilitylimits applicable at the time of the loss and the policy limits for uninsuredmotorist coverage and payments or settlements are not part of that analysis;thus, trial court correctly determined that the joint and several "damagesimposed by law" against the driver exceeded the cumulative limits ofdriver's bodily injury policies, driver met the statutory definition of an UIM,and the insurer therefore was obligated to pay victim UIM benefits tocompensate victim for the difference.  120 H. 329 (App.), 205 P.3d 594.

  Where the "other insurance" clause contained ininsurer's policy created a priority of coverage among multiple insurers, anddid not limit or reduce insurer's liability for uninsured motorist payments toinsured, the provision was valid and enforceable under Hawaii law, and thecircuit court did not err in denying insured's motion for partial summaryjudgment.  120 H. 329 (App.), 205 P.3d 594.

  Discussed:  77 H. 117, 883 P.2d 38; 86 H. 511, 950 P.2d 695.

  Mentioned:  807 F. Supp. 98.