Must underinsured motorist coverage mirror liability coverage in Utah auto policies? Dircks v. Travelers Explained

In Dircks v. Travelers, the Utah Supreme Court addressed a critical question about the scope of underinsured motorist coverage requirements under Utah Code section 31A-22-305.3. The case arose when an injured employee sought underinsured motorist benefits under his employer’s commercial auto policy that covered both company-owned and employee-owned vehicles used for business purposes.

Background and Facts

Derek Dircks was injured in a car accident while riding in a coworker’s personal vehicle during a business assignment for Mid-State Consultants. Mid-State’s commercial policy with Travelers provided $1 million in liability coverage for both company fleet vehicles and employee-owned vehicles used for company business. However, the policy limited underinsured motorist coverage to only company-owned fleet vehicles, excluding employee-owned vehicles from this protection.

Key Legal Issues

The federal district court certified the question of whether Utah Code section 31A-22-305.3 requires parallel coverage between liability and underinsured motorist provisions. Specifically, must all vehicles covered under liability provisions also receive underinsured motorist coverage with equal limits, or can insurers selectively exclude certain vehicles from underinsured motorist protection?

Court’s Analysis and Holding

The Utah Supreme Court ruled that section 31A-22-305.3 mandates parallelism between liability and underinsured motorist coverage. The court reasoned that the statute applies to any “policy” purchased to satisfy security requirements, not just specific coverage provisions within that policy. Since Mid-State’s policy was purchased as a single document with one policy number to satisfy statutory security requirements, the entire policy—including coverage for employee vehicles—must comply with section 31A-22-305.3’s requirements unless properly waived.

Practice Implications

This decision significantly impacts commercial auto insurance drafting and coverage disputes. Insurers and policyholders must ensure that underinsured motorist coverage mirrors liability coverage unless the named insured signs a proper acknowledgment form waiving equal coverage. The ruling also clarifies that the scope of coverage cannot be manipulated simply through creative policy labeling or document structuring.