By a four-to-one margin, the Virginia Senate has approved raising the state’s automobile liability insurance minimum limit from $25,000 to $35,000. If the proposal becomes law, it would be the first change in the state’s auto liability minimum since 1975.
The measure was approved by a committee and then by the full Senate despite opposition from insurance companies and a 2018 recommendation to keep the status quo. Virginia trial lawyers pushed for the increase, initially suggesting the minimum be raised to $100,000.
As approved by the Senate, the minimum limits would increase to $35,000 per person, $70,000 per accident and $40,000 for property damage. Current law sets the minimums at $25,000/$50,000/$20,000.
The House of Delegates gets to examine the proposal after Feb. 12, when the legislative bodies switch their dockets.
Some claims underpaid
The auto insurance minimum sets the maximum recovery when a low-income driver causes an accident and no other insurance is available. Plaintiffs’ lawyers say today’s medical costs make the $25,000 minimum unrealistic.
The minimum is also the cap for a minimally insured driver injured by someone driving without insurance.
Carrie Ann Alford of Richmond – a victim of a rear-ender caused by an uninsured driver – said she stopped counting her medical bills at $30,000 because the only available insurance was her minimum-limit $25,000 policy.
Her recovery after attorney’s fees and medical liens was only about $16,000, about half of her out-of-pocket costs, she told members of the Senate Transportation Committee Jan. 30.
“I will get no payment for pain and suffering. I will not be fully compensated for what I paid out,” she said. She still struggles with brain and neck injuries, she told legislators.
Increasing the minimum would hurt the poor, insurers said. Virginia is near the top already, said insurance industry lobbyist Chris LaGow. Only six states have higher minimum limits, he told senators.
He minimized the significance of the minimum limit. Only about 14% of Virginia drivers buy minimum-limit policies, he said, and nearly all property damage claims are settled below the current $20,000 minimum, he said. Ninety percent of bodily injury claims are settled under $25,000, he told the Senate committee. He said raising the minimums would force drivers out of the marketplace with higher premiums.
“It’s only going to hurt the most vulnerable among us,” he said. “They are going to become uninsured motorists.”
Premium burden questioned
Some statistics can work two ways, the committee clash illustrated.
LaGow said a study showed that, for an average 45-year-old man, raising the minimum to $50,000 would increase the premium by 12%.
“So I get a 100% increase in my coverage for only 12%. That sounds like a pretty good deal,” responded Sen. Mark Obenshain, R-Harrisonburg.
“Not to those who don’t have any money, Senator,” LaGow shot back.
Obenshain moved to amend the reform bill to make the minimum $35,000 instead of $100,000 and the Transportation Committee approved that version on a 10-5 vote.
Supporters of change had to contend with a report from stakeholders convened two years ago by the state Department of Motor Vehicles at the behest of legislators. The group concluded Virginia has a “robust insurance market” that succeeds in providing access to insurance coverage.
The stakeholders recommended that Virginia maintain its 25/50/20 auto liability insurance minimum limits.
“When we ask for a study and it tells us we don’t need to do something, then we shouldn’t ought to do it,” said Sen. David W. Marsden, R-Burke. He spoke on the Senate floor Feb. 5.
“This looks to me like one of those attorney protection laws,” said Sen. John A. Cosgrove, R-Chesapeake.
“Nobody’s making money off these claims. It’s a matter of having a minimal amount of recovery for people oftentimes in catastrophic accidents,” countered Sen. Chap Petersen, D-Fairfax.
The Senate on Feb. 5 approved the higher minimums by a vote of 31-8, with Sen. Bryce Reeves, an insurance agent, abstaining.
The change would be effective six months later than most new laws. If passed by the House and signed by the governor without change, the higher minimums would take effect Jan. 1, 2021.