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Read that policy closely: Changes ahead for accident coverage


WHITE SULPHUR SPRINGS, W.Va. – New laws that increase the available coverage in auto insurance policies will mean more compensation to those injured in Virginia auto accidents.

But the devil is in the details, and lawyers will have to parse insurance policies closely, particularly effective dates, according to a recent report from the Virginia Trial Lawyers Association.

The 2021 General Assembly approved a plan for incremental increases in the minimum bodily insurance limits so that by 2025 auto policies must provide limits of $50,000 per person and $100,000 per occurrence, as well as $25,000 for property damage.

Three statutes were affected: Virginia Code §§ 46.2-419, -472 and -2057, according to Robert C.T.  Reed of Richmond. The first statute defines when a motor vehicle collision judgment is satisfied, the second defines minimum limits and the third provides an exception for taxicab services, Reed explained at a March 26 session of the VTLA Annual Meeting at The Greenbrier.

Policy dates are crucial, he said. Policies issued beginning Jan. 1, 2022, will be required to offer $30,000 per person, $60,000 per occurrence and $20,000 property damage.

The full increases kick in for policies issued on or after Jan. 1, 2025, he said.

“You’re going to be looking at the dates when policies start, for both liability and UIM coverage,” Reed said.

In the years when coverage increases, lawyers may find that some applicable policies have original limits and some have the newly increased limits.

The taxicab industry negotiated a “carve out” so that self-insured taxicab companies will still only be required to provide $25,000 per person or $50,000 per occurrence, Reed said.

Demands can exceed limits

Things get even more complicated with the increase in the jurisdictional limits for personal injury claims in general district court. The ceiling rises to $50,000 on July 1.

“This will create a variety of choices for practitioners in pending matters including whether to file motions to increase current ad damnums or to transfer cases from Circuit Court into General District Court. Additionally, once the insurance limits increase in 2022, there will exist a novel situation in which the minimum insurance limits do not meet or exceed the General District Court jurisdictional limit for the first time ever,” Reed wrote in his report.

“That’s going to affect a lot of cases. That’s never been the case before,” he told the gathering. “You’re going to be thinking strategically about the current cases you have on your docket,” he continued.

In a perfect world, the dynamic would put additional pressure on insurance companies to negotiate in good faith and try to resolve claims within policy limits. But the right of appeal comes into play.

“The automatic right to appeal available to all parties in General District Court makes it nearly certain that a liability insurer will appeal an excess General District Court verdict against its insured unless a settlement is reached instead,” Reed said.

“Practitioners may find that the pressure of an excess verdict is only acutely applied when cases are filed directly in Circuit Court rather than seeking a short-cut through General District Court,” he continued.

Out-of-state drivers

The increase in injury limits will result in more uninsured motorists on Virginia roads, Reed explained. The definition of “uninsured” in Code § 38.2-2206 includes drivers who have auto coverage, but not in the amount required by § 46.2-472.

“Motorists from other states who are insured with policies issued after Jan. 1, 2022, carrying standard minimum limits of $25,000 per person and $50,000 per occurrence or less, will be technically ‘uninsured’ under Virginia law,” Reed wrote.

Claimants involved in collisions with such motorists will generally be entitled to the full value of the liability policy as well as the full value of all available uninsured motorist coverage without any setoff that would normally be afforded for an underinsured motorist claim, Reed said.

Drivers from Maryland and North Carolina and other states could generate cases in which the ordinary limits would be doubled.

“So, that’s going to be really kind of awesome,” Reed said.

A group of insurance bills introduced at the 2021 Assembly produced a situation where VTLA lobbyists were able to leverage “this incredible result,” Reed said.

“50/100 for minimum limits, as you can tell, puts us at the top of the country in the respect we have for our injured people and what they’re entitled to in terms of full and fair justice,” Reed said.