concurring:
"I 40 Though the legislature has strongly endorsed UIM coverage, this court cannot identify a legislative policy expressly articulated in the Utah Code to bar exhaustion clauses from limiting the availability of UIM coverage. I thus join the majority opinion. I write separately, however, to highlight the policy issues that exhaustion clauses create.
{41 A review of general policy considerations suggests that exhaustion elauses in the UIM context may contravene public policy as yet not expressly adopted in the statute. UIM insurance exists to protect insured Utahns who have been injured in an accident from being undercompensated for their injuries. By requiring drivers to carry UIM coverage, the legislature has already expressed a strong policy interest favoring such coverage. See Umax § 81A-22-802(1)(c). UIM coverage can be waived only by written consent after the insured has been informed of the purpose and applicability of UIM coverage, id. § (i), which further suggests that the legislature strongly favors UIM coverage. By limiting potential recovery of UIM claims, exhaustion clauses may very well frustrate the *990legislature's clear intent to protect Utahns from underinsured drivers.
T 42 The legislature has also expressed a strong policy interest in favor of speedy and inexpensive conflict resolution. An entire part of the Utah Code is dedicated to promoting efficient operation of the courts and encouraging the use of alternative dispute resolution for speedy and inexpensive settlement of civil disputes. Seq, eg., id. § 78B-6-203. Further, our legislature has endorsed speedy, inexpensive, and extra-judicial settlement of UIM claims by statutorily endorsing arbitration as an alternative to litigation. Id. § 81A-22-805(8)(a). Exhaustion clauses that deny recovery until settlements fully satisfy the underinsured's policy limits prolong the settlement process and encourage litigation.
€$43 Insureds may seek to settle below policy limits for many legitimate reasons. Settlement below policy limits may be preferred if insurance limits are too low to justify the expense of a trial. These same considerations suggest settlement below policy limits may result in a higher net recovery when compared to the costs of litigation. Additionally, a-claimant may have an immediate financial need to settle below policy limits. +By requiring claimants to resolve claims against the tortfeasor's insurer at the policy limits, exhaustion clauses can create extensive delay and harm those who have suffered serious injury and need to collect UIM benefits.
44 Many other states with UIM statutory schemes have voided exhaustion clauses. While the majority finds these cases unpersuasive, they nonetheless demonstrate a national trend towards invalidation of exhaustion clauses. Relatively few states ban exhaustion clauses outright. See, eg., Hill v. Am. Fomily Mut. Ins.: Co., 150 Idaho 619, 249 P.3d 812, 819-21 (2011) (holding "exhaustion clauses in UIM automobile policies to be void, unenforceable, and severable," then declining to "implement the constructive-exhaustion doctrine or to otherwise replace exhaustion clauses with any other judicially created (language"). Rather, most states that have addressed the validity of exhaustion clauses in the UIM context have adopted a judicially created constructive-eshaustion doctrine. See, eg., Country Mut. Ins. Co. v. Fork, 198 Ariz. 167, 7 P.3d 978, 977-78 (Ariz.Ct.App.2000); Rucker v. Nat'l Gen. Ins. Co. (In re Rucker), 442 NW2d 118, 117 (Iowa 1989); Bogan v. Progressive Cas. Ins. Co., 86 Ohio StB8d 22, 521 N.E.2d 447, 458 (1988), overruled in part on other grounds by Ferrando v. Auto-Owners Mut. Ins. Co., 98 Ohio St.3d 186, 781 N.E.2d 927 (2002); Horace Mann Ins. Co. v. Adkins, 215 W.Va. 297, 599 S.E.2d 720, 727 (2004). By treating any settlement with the tortfeasor's insurer as equivalent to receipt of the full liability limits, recovery of damages under UIM coverage is limited to damages that exceed the tortfeasor's liability limit The constructive-exhaustion doctrine thus balances the insured's interest in settlement with the insurer's interest in indemnification.
145 Most states invalidating exhaustion clauses (whether outright or through constructive exhaustion) have done so upon finding that exhaustion clauses contravene their states' public policy. The Supreme Court of Montana, for example, invalidated exhaustion clauses because they lessen the insured's total recovery by promoting litigation, "fail to recognize that the insured may have a legitimate and valid reason for accepting less than the tortfeasor's policy limits," and allow the tortfeasor's insurance carrier to "force the injured party to go to trial by offering less than the policy limits, thereby increasing costs, litigation, and delay." Augustine v. Simonson, 283 Mont. 259, 940 P.2d 116, 120 (1997). The Montana court concluded that invalidating exhaustion clauses harmonized with the intent of UIM coverage and with the public policy "to encourage settlement and avoid unnecessary litigation." Id. Similarly, the Supreme Court of Nevada invalidated exhaustion clauses "because they unnecessarily promote litigation costs, increase the number of trials, and unreasonably delay the recovery of [UIM] benefits" Mann v. Farmers Ins. Exch., 108 Nev. 648, 886 P.2d 620, 621 (1992), overruled in part on other grounds by White v. Cont'l Ins. Co., 119 Nev. 114, 65 P.3d 1090 (2003). The Supreme Court of Iowa also invalidated exhaustion *991clauses on public policy grounds, holding that invalidation of these clauses eases the burden of litigation, encourages prompt payment, and prevents needless complication in the settlement process. See In re Rucker, 442 N.W.2d at 115-16.
146 While I find these policy considerations persuasive, I recognize that, as we stated in State Farm Mutual Automobile Insurance Co. v. Green, where the legislature has expressly "allow[ed] consumers the option of refusing coverage altogether, it is difficult to see how a policy exclusion that simply attaches conditions to coverage could be unenforceable as against public policy." 2003 UT 48, 116, 89 P.3d 97. Barring further guidance from the legislature, I1 feel constrained to concur with the majority and uphold the validity of exhaustion clauses in the UIM context.
'I 47 It would be helpful for the legislature to revisit the UIM statute to provide further guidance in this area. Other states have incorporated constructive exhaustion into their UIM statutory schemes. For example, Illinois' UIM statute specifically allows exhaustion clauses but stipulates that "[al judgment or settlement of the bodily injury claim in an amount less than the limits of lability of the bodily injury coverages applicable to the claim shall not preclude the claimant from making [a UIM] claim against the [UIM] coverage." 215 Inu. Comp. Stat. 5/148a-2(7). A similar approach could be adopted in Utah's statute to resolve the troubling policy issues that exhaustion clauses raise.
Justice LEE authored the opinion of the Court, in which Chief Justice DURRANT, Associate Chief Justice NEHRING, Justice DURHAM, and Justice PARRISH joined.Justice DURHAM filed a concurring opinion, in which Chief Justice DURRANT, Associate Chief Justice NEHRING, and Justice PARRISH joined.