Attorneys seeing auto insurance stacking benefits

A recent change by the Legislature to the statute on uninsured motorist coverage has opened the opportunity for increased recovery for people injured in auto accidents.

Following the passage of Senate Bill 754 in 2022, all auto insurance policies issued or renewed beginning in July 2023 permit policyholders to recover their own underinsured/uninsured motorist policy coverage in addition to liability coverage, regardless of whether the total UM/UIM exceeds the liability coverage.

In other words, the coverages are “stacked,” rather than having the other party’s liability coverage subtracted from the UIM coverage limit. Nearly two years after the change, personal injury attorneys are seeing the effects of the statute in their practices.

“The biggest takeaway that I have is that it’s good for consumers,” Ryan T. Walker, a personal injury attorney at Marks & Harrison’s Richmond office, said. “Consumers were buying uninsured and underinsured motorist coverage anyway, and some of them were never, ever, ever going to get the value out of what they were paying.”

Richmond personal injury attorney Robert C.T. Reed said that being able to “stack” coverage impacts recovery amounts.

“This change has given consumers far more access to their own insurance coverage,” Reed said. “We all have far more financial protection from unexpected injuries caused by underinsured drivers.”

Stacking explained

When auto insurance is purchased in Virginia, policyholders purchase two types of coverage: liability, which provides coverage to others injured if the policyholder is at-fault; and UM/UIM, which provides the policyholder coverage if injured by another.

Before the 2022 passage of SB 754, persons injured in a crash would receive a credit for the at-fault driver’s liability coverage before their own UM/UIM coverage kicks in.

Fairfax attorney Chidi I. James gave a hypothetical example where the at-fault driver carried a $50,000 liability policy, while the injured plaintiff carried a $50,000 UIM policy. “The UIM insurer would get full credit for the amount of liability money paid, and the injured person would receive $0 from their UIM policy,” James said.

Under the old law, clients often did not recover the amount of money needed to cover their injuries, an outcome that routinely led to “tough conversations,” according to Reed.

Patroned by Sen. Mark Obenshain, R-Harrisonburg, and passed with broad bipartisan support in both chambers of the General Assembly, SB 754 amended Va. Code § 38.2-2202 to state that all insurance policies issued or renewed after July 1, 2023 are required to provide underinsured motorist coverage in addition to any applicable liability coverage, with the policyholder getting the option to decline the change in the coverage.

Now, in a case like James’ example, the liability and UIM coverages can “stack,” increasing the potential insurance recovery to $100,000 for the injured party. “It’s allowed us a better opportunity to get the true and full value for our clients for what they’ve gone through,” Walker said.

Increased settlements

Nearly two years on from the legislation’s effective date, personal injury attorneys have reported an impact, most notably in recovery for their clients.

James pointed to another change in the law that increased the minimum liability insurance limits from $30,000 to $50,000 beginning Jan. 1. The change, James said, now gives Virginia drivers a potential $100,000 minimum in coverage.

It is important that people understand that UIM coverage protects them and it should never be declined.

— Chidi I. James, Fairfax

“This is a sea change in Virginia insurance liability law,” James said. Pursuant to Va. Code § 46.2-472, the minimum insurance protection for a Virginia motorist went from $25,000 to $100,000, in just three years.”

Reed said that “it is hard to say” what the impact of the stacking provision has been on the amount of litigation or trials that are undertaken.

“There is no doubt that there are less trials taking place than there used to be, but there are a lot of causes,” Reed said. Reed said significant changes include allowing people to settle with UIM insurance carriers and a 2024 law change that requires UIM insurers to negotiate with policyholders “in good faith.”

“The primary effect of the stacking law that took effect in July 2023 is to give people access to more insurance coverage that may provide compensation for serious injuries,” Reed said. Walker agreed that the stacking provision has not had a noticeable impact on the number of cases that go to trial.

“What it has changed is that there’s been a significant increase in settlement numbers because there’s no credit anymore,” Walker said.

Advising clients

Under the change in the statute, policyholders may waive the stacking provision, which lawyers pointed to as the top place to advise clients.

“The consumer does have a right to elect out of this new law and go back to the old law where there is a credit, but I tell clients I wouldn’t do that because if you need this coverage to protect yourself, it won’t be there,” Walker said. “At the end of the day, don’t shortchange yourself.”

The consumer does have a right to elect out of this new law and go back to the old law where there is a credit, but I tell clients I wouldn’t do that.

— Ryan T. Walker, Richmond

James added that it is “very important” that lawyers advise their clients to not decline the provision.

“Pursuant to Va. Code § 38.2-2206(A), the only way that a person would not get UIM coverage equal to the amount of their liability coverage, is if they decline that protection,” James said. “So, it is important that people understand that UIM coverage protects them and it should never be declined.”

Reed called uninsured and underinsured motorist coverage “the most important provision of most people’s auto policy.”

“It is the only way someone can protect themselves financially from other drivers running into them who may not carry any insurance or enough insurance,” Reed said. “No amount of safe driving can stop a distracted driver from running into you.”

Although Virginia law allows policyholders to opt out of stacking and to opt for less UM/UIM coverage than liability coverage, “lawyers should advise their clients never to elect less UM/UIM coverage when purchasing or renewing auto insurance,” Reed said.

Looking to the future, James also pointed to the jurisdictional limits of general district courts as a place for potential change.

“The next step in providing full justice to Virginia residents is to increase the jurisdictional limit of the general district courts from $50,000 to $100,000 to match the available minimum insurance limits,” James said.