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Trial bar scores three: Reforms would change Virginia auto liability picture

Car driving on freeway at sunset, motion blur

Trial lawyers scored early wins on three General Assembly proposals to change the rules for auto insurance in Virginia.

Under measures advanced in the Senate, minimum coverage limits would double from $25,000 to $50,000, underinsured coverage would stack instead of being offset by another’s liability coverage and UM/UIM carriers could be tagged for bad faith. All three measures face opposition from representatives of the insurance industry.

Increased limits

State Sen. Scott Surovell, D-Fairfax County, said a study projected only an 11% increase in premiums if Virginia required a minimum of $50,000 in auto liability coverage. He said the current $25,000 minimum hasn’t changed since 1975.

“Medical bills have gone up tremendously in the past 40 years and this will help more people get their medical bills paid for,” Surovell told senators Jan. 18.

Mark Dix of the Virginia Trial Lawyers Association urged approval for Surovell’s Senate Bill 1182: “The simple truth is that $25,000 in liability coverage is not enough today. It’s not enough for lost wages, for medical expenses – past, present and future. It’s also not enough coverage for the tortfeasors.” Dix said. “After $25,000, they’re on the hook for that.”

Insurers claimed the increase would hurt consumers.

“These harmful bills will likely lead to high auto insurance costs, increased litigation and will burden Virginia courts with more cases at a time when the courts are working hard to sort through a major backlog of cases due to COVID-19 restrictions,” said Nancy Egan with the American Property Casualty Insurance Association.

Despite the insurers’ opposition, the higher limits bill made it out of the Senate Commerce and Labor Committee and won approval of the full Senate on Jan. 25.


Insurers also balked at the idea that underinsured motorist coverage could be added to the coverage of an at-fault driver instead of just covering a gap between different limits. Sen. Mark Obenshain, R-Harrisonburg, argued the change would be a boon for a seriously injured crash victim when both drivers had only $25,000 in coverage:

“I’ve paid for a $25,000 underinsured motorist policy, but I get zero from them, because that first 25 that the other insurance company pays offsets against mine. What this bill simply says is that my $25,000 underinsurance motorist coverage will pay me, no matter what the other side pays, as long as I’m entitled to it.”

“If I have a $50,000 claim, I’ve paid for that $25,000 insurance worth of underinsurance motorist coverage, so it protects me – the guy who paid for it,” Obenshain added. “It’s the tortfeasor’s insurance that goes first. And only after that’s exhausted do you reach the insurance that you’ve paid for.”

Obenshain’s SB 1195 would change the offset rule to a stacking rule. VTLA president Elliott Buckner said it’s really a consumer protection bill. “This bill is intended to make sure that Virginians get what they believe they’re paying for.”

“They have no idea that this coverage that they purchased, that they paid for, may not available to them when they need it,” Buckner continued at a committee hearing.

The change would significantly increase the cost of insurance for Virginia drivers, contended Andrew Kirkner with the National Association of Mutual Insurance Companies.

“Underinsured motorist coverage really is intended to plug the gap between the amount of insurance that a not-at-fault driver has and the at-fault driver’s liability limits. The purpose of this coverage is not to make a driver whole, but instead to make sure the not-at-fault driver gets the full amount of insurance that they’ve obtained.”

Kirtner said Obenshain’s plan would change UIM coverage from gap coverage to excess coverage, meaning that underwriting, rating and premiums would be done differently.  

“The short version of that … is that this will significantly increase the premium for underinsured motorist coverage,” Kirkner said at a Commerce and Labor Committee meeting.

The bill cleared the committee Jan. 25 on a 12-1 vote.

Bad faith for UIM

The VTLA also backed a plan to create bad faith exposure for UM and UIM carriers that balk at settling claims after the underlying direct liability limits have been offered.

Trial lawyers have long struggled with such claims, Dix told senators on Jan. 18.

“Your own underinsurance motorist carrier has no reason, no incentive to negotiate in good faith when you seek access to your UIM coverage. Instead, they can force you to litigate a personal injury claim all the way through trial – and obtaining a judgment – for no reason or any reason that they see fit. And that is what we are seeing from UIM carriers presently: low-ball offers, no offers,” Dix said.

“This bill would place UIM carriers on the very same footing, the very same duties as every other insurance company,” he said.

Sponsor Sen. Chap Petersen, D-Fairfax, said he had to agree to a modest settlement for an elderly client with serious injuries when the UIM carrier insisted on a jury trial during the pandemic, even after the at-fault driver’s insurer had tendered its limits.

But representatives of the insurers, including lobbyist Clark Lewis of Richmond, said the change would be “a major extension of Virginia insurance law” that would increase rates for insurance companies. “We simply believe that the current system works,” Lewis said.

Senate Bill 1202 was approved by the full Senate 29-9 on Jan. 22.