31A-23a-410 - Insurer's liability if insured pays premium to a licensee or group policyholder.
31A-23a-410. Insurer's liability if insured pays premium to a licensee or grouppolicyholder.
(1) Subject to Subsections (2) and (5), as between the insurer and the insured, the insureris considered to have received the premium and is liable to the insured for losses covered by theinsurance and for any unearned premiums upon cancellation of the insurance if an insurer,including a surplus lines insurer:
(a) assumes a risk; and
(b) the premium for that insurance is received by:
(i) a licensee who placed the insurance;
(ii) a group policyholder;
(iii) an employer who deducts part or all of the premium from an employee's wages orsalary; or
(iv) an employer who pays all or part of the premium for an employee.
(2) Subsection (1) does not apply if:
(a) the insured pays a licensee, knowing the licensee does not intend to submit thepremium to the insurer; or
(b) the insured has premium withheld from the insured's wages or salary knowing theemployer does not intend to submit it to the insurer.
(3) (a) In the case of an employer who has received the premium by deducting all or partof it from the wages or salaries of the certificate holders, the insurer may terminate its liability bygiving notice of coverage termination to:
(i) the certificate holders;
(ii) the policyholder; and
(iii) the producer, if any, for the policy.
(b) The insurer may not send the notice required by Subsection (3)(a) to a certificateholder before 20 days after the day on which premium is due and unpaid.
(c) The liability of the insurer for the losses covered by the insurance terminates at thelater of:
(i) the last day of the coverage period for which premium has been withheld by theemployer;
(ii) 10 days after the date the insurer mails notice to the certificate holder that coveragehas terminated; or
(iii) if the insurer fails to provide notice as required by this Subsection (3), 45 days fromthe last date for which premium is received.
(4) Despite an employer's collection of premium under Subsection (1), the responsibilityof an insurer to continue to cover the losses covered by the insurance to group policy certificateholders terminates upon the effective date of notice from the policyholder that:
(a) coverage of a similar kind and quality has been obtained from another insurer; or
(b) the policyholder is electing to voluntarily terminate the certificate holder's coverageand has given the employees notice of the termination.
(5) If the insurer is obligated to pay a claim pursuant to this section, the licensee oremployer who received the premium and failed to forward it is obligated to the insurer for theentire unpaid premium due under the policy together with reasonable expenses of suit andreasonable attorney fees.
(6) If, under an employee health insurance plan, an employee builds up credit for future
coverage because the employee has not used the policy protection, or in some other way, theinsurer is obligated to the employee for that future coverage earned while the policy was in fulleffect.
(7) (a) Notwithstanding that an insurer is liable for losses as provided in this section, thissection applies only to apportion the liability for the losses described in this section.
(b) This section does not:
(i) extend a policy or coverage beyond its date of termination; or
(ii) alter or amend a provision of a policy.
Amended by Chapter 349, 2009 General Session