Proposed Legislation May Lead to Big Changes in Insurance Defense Landscape

Proposed Legislation May Lead to Big Changes in Insurance Defense Landscape

Written by Danny Royce, Esq.

Several pieces of proposed legislation could create big changes in the landscape of Auto Virginia Liability Insurance Coverage, and could significantly impact the defense of our clients in claims arising from motor vehicle accidents.

There are three proposed pieces of legislation before the General Assembly of note and which are being monitored closely by KPM.     

            1)         SB 1182: Motor Vehicle Liability Insurance; Increases Coverage Amounts

This proposed legislation would increase motor vehicle liability insurance coverage amounts from $25,000 to $50,000 in cases of bodily injury or death of one individual, and from $50,000 to $100,000 in cases of bodily injury or death to multiple individuals as a result of one accident.  The bill would also require that self-insured operators of taxicabs maintain protection against uninsured and underinsured drivers with current limits of $25,000, $50,000, and $20,000 respectively.  This proposed legislation would apply to policies issued or renewed on or after January 1, 2022.

This bill advanced out of the Senate Commerce and Labor Committee passed the Senate on January 25, 2021 with a vote of 27 to 11.  The bill would amend and reenact §§46.2-419, 46.2-472, and 46.2-2057 of the Code of Virginia relating to liability coverage limits.  The text of the new bill can be found at

The current amount of liability coverage ($25,000) required by statute was first enacted in 1975, and has not been updated since that time.  This would represent a huge change for carriers, insureds and claimants.

            2)         SB 1195: Motor Vehicle Insurance; Underinsured Motor Vehicle, Uninsured Motorist Coverage.

This proposal would have a significant impact on stacking in underinsured claims.  This bill would change the current offset rule to a stacking rule as it relates to UIM coverage.  For example, as currently constituted, the underinsured motorist carrier receives a credit for any monies paid to the claimant on behalf of the tortfeasor.  Under the proposed bill, the coverages would stack and the UIM carrier would no longer be entitled to an offset.  This would mark a significant shift in how UIM claims are handled and would serve to increase the potential exposure of underinsured carriers.

This bill advanced out of committee in the Senate and passed on January 29, 2021 by a vote of 31-5.  The bill has made its way to the House and has been referred to the Committee on Labor and Commerce as of February 2, 2021.  The bill would amend and reenact §38.2-2206 of the Code of Virginia.  The full text of the proposed bill can be found at

            3)         SB 1202: Uninsured and Underinsured Motorist Insurance Policies; Bad faith.

Last, but certainly not least, is proposed legislation that provides that if an insurance company denies, refuses, or fails to pay its insured, or refuses a reasonable settlement demand within the policy’s coverage limits, for a claim for UM or UIM benefits within a reasonable time after being presented with such demand, and it is found that such denial, refusal, or failure was not in good faith, then the insurance company is liable to the insured for the full amount of judgment plus reasonable attorney fees, expenses, and interest.

This proposal marks a significant change, and for the first time would open UIM carriers to potential bad faith claims.  Currently, UIM carriers are well within their rights to force claimants to litigate a personal injury claim through trial and obtain a judgment.  The UIM carrier’s only obligation is to pay the judgment.  The carrier can require a claimant to take a case to trial for any reason whatsoever.

This bill advanced out of committee and passed the full Senate on January 22, 2021 by a vote of 29-9.  The bill is currently in the House and was referred to the Committee on Labor and Commerce on February 2, 2021.  This bill would amend and reenact §§8.01-66.1 and 38.2-2206 of the Code of Virginia.  The full text of the proposed legislation can be found here

It is important to note these bills have only passed the Senate at this time.  The legislation still needs to make its way through committee in the House and be voted on by the full House.  Based upon the overwhelming support for these bills in the Senate, there is strong reason to believe that the legislation could pass the house and ultimately become law.  We will continue to monitor these proposed bills as they make their way through the legislative process.  You can trust KPM to be knowledgeable in all areas of the law, and to continue to keep you updated on legislation that would significantly impact our clients. Please don’t hesitate to reach out to us with questions, concerns, or assistance with any of your needs.

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