Following the relatively unsuccessful changes to its underinsured motorist coverage laws in 2010, the Virginia General Assembly has passed major changes that will take effect starting in January 2016. The changes are intended to streamline claims made under the underinsured motorist benefits provision of Virginia motorist’s insurance policies. Underinsured motorist (UIM) coverage kicks in when the negligent driver does not have enough liability insurance to cover the damages they have caused in an automobile accident. In that case, the injured party can look to their own insurance policy to close the gap. Because Virginia only requires a minimum $25,000 in liability insurance, underinsured motorist coverage can play a crucial role in ensuring an injured party receives a fair settlement in their case.
Under the current law, injured party’s insurance company typically had little incentive or motivation to resolve UIM claims, even after the negligent driver’s insurance company had offered its full policy limits. This was generally because even after the negligent driver’s insurance had offered the full policy limits, the injured party could not accept payment and that negligent driver’s insurance would still be obligated to defend and represent the negligent driver. This allowed the insurance company providing the UIM coverage to piggyback on the work of the negligent driver’s insurance and basically force the underlying insurance company to bear most of the expenses of defending the case. So even when the negligent driver’s insurance had offered their full policy, they were still stuck covering most of the litigation expenses while the UIM insurance company could wait as long as possible to negotiate any type of settlement.
The changes passed by the General Assembly, and will apply to all policies issued or renewed after January 1, 2016, represent a seismic shift in this landscape. Under the new law, a liability carrier can pay its policy limits in a case with UIM exposure, and then be free of any duty to defend its insured. This shifts the entire duty to defend the case to the UIM insurance company. The law specifically provides that the injured party can actually accept the money from the liability insurer, and the duty shifts to the UIM insurer, so long as a specific statute-provided language is included in the release. So now rather than having to wait for the entire case to resolve, an injured party could potentially at least get some of the money they are entitled to before their case completely resolves. This strips away a key leverage point that UIM insurers have over injured parties – generally a UIM company could simply drag out the process believing that they could get the injured party to accept less because they need money as soon as possible.
Furthermore, the UIM carrier loses the right of subrogation, the right to get their money back, against the negligent driver, unless the driver is uncooperative in defending the case. This puts even more pressure on the UIM carrier as they typically would be able to go after the negligent driver personally to try and get back as much of their money as possible. Under the new law, that option would not be available at all unless the negligent driver either fails to show up at deposition or trial, fails to assist in written discovery, fails to meet with defense counsel, or fails to notify the UIM counsel of any change in address. This narrow definition of “uncooperative” will make it difficult for the UIM carrier to pursue subrogation against the negligent driver.
These changes in the underinsured motorist coverage law make it even more important to choose attorneys who are experienced in ensuring that all avenues of recovery are fully explored. The auto accident attorneys at Chaikin, Sherman, Cammarata & Siegel, P.C., have helped countless victims receive maximum compensation for injuries caused by negligent drivers. If you or someone you love have been injured as a result of someone else’s negligence, please do not hesitate to call us for a free consultation.