Guest Blog: Important Change in Virginia UIM Law!
This blog post was written by Nathan Bordegaray, an attorney here at Marcari, Russotto, Spencer & Balaban.
Here’s a little bit about Nathan:
- Nathan attended law school at the University of Arizona. As a law student, he was the productions editor for the Arizona Journal of International and Comparative Law and a recipient of the Outstanding Performance in Legal Writing Award.
- Nathan began his legal career representing large insurance carriers as an associate at an insurance defense firm and as a staff attorney for GEICO. This provided Nathan with unique insight into how insurance companies operate and evaluate personal injury claims. Nathan further obtained valuable trial experience trying 19 jury trials to verdict.
- Nathan is proud to have represented many Spanish-speaking clients.
- Nathan lives in Virginia Beach with his wife and two children. In his free time, Nathan enjoys fishing, hiking, and watching Spanish soccer.
For more information on all of the attorneys here at Marcari, Russotto, Spencer & Balaban, click here!
Important Change in Virginia Underinsured Motorist (UIM) Law to Benefit People Injured in Car Accidents in 2023
The new law goes into effect for automobile insurance policies issued or renewed after July 1st, 2023. Under this new law, underinsured motorist (UIM) policies will be paid without any credit or offset for the bodily injury liability and property damage coverage available for payment, unless a named insured elects to reduce UIM coverage payments by notifying the insurer.
This is a major change in law that will benefit innocent people injured in car accidents.
How Underinsured Motorist (UIM) Coverage Currently Works
For bodily injury under the current system, an innocent (not-at-fault) person injured in a car accident is underinsured when: (1) the value of that person’s bodily injury claim exceeds the available bodily injury liability limits of the at-fault-driver’s policy, and (2) the amount of UIM coverage available to the injured person exceeds the at-fault-driver’s bodily injury liability limits.
In addition, the UIM policy gets an offset for the at-fault-driver’s liability limits.
To show how this works, let’s imagine that innocent motorist John was injured in a car accident caused by at-fault motorist Jane. Jane has $30,000 in bodily injury liability limits (the current Virginia state minimum) and John has $50,000 in UIM coverage. John incurs $40,000 in medical bills due to his injuries. John would be underinsured because his damages ($40,000) exceed the liability limits of the at-fault driver ($30,000).
John would file a UIM claim with his own insurance carrier and would ask for his $50,000 policy limits. Here, the UIM carrier would get a $30,000 credit or offset for the bodily injury liability limits and would have $20,000 exposed. If the UIM carrier agreed that John’s injury claim was worth $50,000, the UIM carrier would pay the $20,000 it had exposed.
Between the liability and UIM carrier John would receive $50,000 total. Now, let’s flip the numbers and give Jane $50,000 in bodily injury liability coverage and John $30,000 in UIM coverage. In this scenario, John could not make a UIM claim because his UIM limits were less than the $50,000 bodily injury liability limits. The UIM carrier would get a $50,000 credit or offset and would thereby have none of its $30,000 UIM policy exposed. Notice in both examples the maximum total coverage available to John between bodily injury liability and UIM would be $50,000.
How UIM Coverage Will Work for Policies Issued or Renewed After July 1, 2023
For insurance policies issued or renewed after July 1st, 2023, the standard Virginia insurance policy will include no offset or credit for UIM policies.
However, a named insured can opt out of having a non-offset policy, and effectively purchase a UIM policy that follows the old (current) system with offsets, by notifying the insurance carrier in writing. Since opting out requires an additional step on the insured’s part, it is foreseeable that most people purchasing insurance after July 1st, 2023 will not opt out. Likewise, it is foreseeable that after July 1st, 2023 most UIM policies issued in Virginia will be non-offset policies.
For the non-offset UIM policies issued after July 1st, 2023, the innocent injured person will be underinsured if the value of that person’s injury claim simply exceeds the available bodily injury liability limits. Taking our example of Jane having $30,000 in bodily injury liability coverage and John having $50,000 in UIM coverage, there would now be a total of $80,000 in available coverage to John as his UIM carrier would not get a credit for the $30,000 bodily injury liability policy.
Taking our example where John has $30,000 in UIM coverage and Jane has $50,000 in bodily injury liability coverage, John can now make a UIM claim because his $30,000 UIM policy is not wiped out by a $50,000 offset.
To give a more extreme example, let’s imagine that John has $500,000 in UIM coverage and Jane has $1,000,000 in bodily injury liability coverage. Under the new system, John now has $1,500,000 in total available coverage as the UIM carrier does not get a $1,000,000 offset for Jane’s policy. Under the current system, John would not be able to use any of his $500,000 in UIM due to Jane’s carrier getting the $1,000,000 offset.
How UIM Coverage Will Work for Policies Issued After January 1, 2025
Under Virginia SB 1182, which was signed into law in 2021, the state minimum bodily injury limits are to increase to $50,000 per person, $100,000 per occurrence, for policies issued or renewed after January 1, 2025.
The combined effect of increased limits and non-offset UIM policies will be that innocent injured drivers with state minimum limits will have significantly more insurance coverage available to pay for their injuries.
In the present, if two drivers with Virginia state minimum policies got into an accident, there would only be $30,000 in combined coverage available (assuming no med pay) to pay for the injuries of the not-at-fault driver. The at fault driver would have a $30,000 bodily injury liability policy, and the innocent driver would have a $30,000 UIM policy. The UIM policy would have no exposure, however, as it would get a $30,000 offset.
For policies issued after January 1st, 2025, there would now be $100,000 in total insurance coverage available (also assuming no med pay) to pay for the innocent driver’s injuries. The at-fault driver would have a $50,000 bodily injury policy, and the innocent driver would have a $50,000 UIM policy that got no credit or offset.
This will greatly help innocent injured motorists going forward. It is not uncommon, especially when a person has fractures and must go to the emergency room, that the emergency bill alone can exceed $30,000. Sadly, it is currently not uncommon for an injured person’s medical bills to greatly exceed the total amount of available liability and UIM coverage.
Thankfully, this situation will improve after January 1st, 2025.
“People ask why I like being a lawyer. I get the opportunity to help somebody every day. What could be better than that?” – Don Marcari.
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