It’s an all-too common scenario in Virginia. An innocent driver or pedestrian is involved in a motor vehicle accident, perhaps on Interstate 81 or on the streets of Roanoke, Virginia. Consequently, they suffer serious medical injuries, resulting in very high medical bills. But the at-fault driver has limited or no insurance liability coverage. Is there any other insurance coverage to provide compensation to the victim? Often, the answer is yes—the victim’s own uninsured and underinsured motorist coverage, or UIM. In this article, we explain the important of UIM coverage, how UIM coverage comes into play in a personal injury case, and some big changes coming to the legal landscape of UIM in Virginia.
What is UIM Insurance?
Uninsured motorist coverage and underinsured motorist coverage, commonly known as UIM, are insurance coverages that apply when at-fault driver—called the tortfeasor—has no insurance coverage or less insurance coverage than the damages sustained by the victim. The Commonwealth of Virginia requires that auto insurance policies provide UIM coverage.
Typically, and unless expressly waived by the insured, an auto insurance policy’s UIM coverage mirrors the liability coverage. For example, if an insurance policy has a liability limit of $100,000.00 per person/$200,000.00 per accident, the UIM coverage limit will also be $100,000.00 per person/$200,000.00 per accident.
However, Virginia law permits an insured to request that their UIM coverage limit be reduced to the minimum required by law, which is $25,000.00 per person/$50,000.00 per accident. This waiver must typically be in writing. Furthermore, if any named insured makes this waiver, than it is binding upon all named insureds. For example, if a husband and wife share an auto insurance policy, and the husband notifies their auto insurance provider that he is rejecting UIM coverage past the minimum limit required by law, this rejection would apply to any UIM coverage available to the wife if she became injured as a result of a motor vehicle accident.
It is important to note that, under current Virginia law, specifically Code § 38.2-2206(B) the UIM coverage limit is reduced by the liability limit of the at-fault driver. For example, suppose an at-fault driver has liability insurance coverage of $25,000.00, and settles with the victim for that amount. The victim has an auto insurance policy providing for $50,000.00 in UIM coverage. Because the victim has received $25,000.00 from the at-fault driver, the victim can receive (at most) only $25,000.00 in UIM coverage—their UIM coverage limit less than at-fault driver’s liability limit. Fortunately, this rule is changing to benefit motor vehicle accident victims, as explained in more detail below.
UIM coverage can be a significant source of funds to compensate a person injured by another driver. Therefore, it is important that anyone who suffers injuries as a result of a motor vehicle accident be aware of their own UIM coverage. The experienced attorneys at Fishwick & Associates can help you understand your legal options, identify all the applicable insurance policies, and navigate your claims.
How Does UIM Insurance Impact My Personal Injury Case?
In the typical personal injury case, the at-fault driver’s auto insurance provider will agree to pay the damages of the victim. The experienced attorneys at Fishwick & Associates work with our clients to obtain the maximum recovery. Sometimes, however, the at-fault driver has no insurance, or the at-fault driver’s insurance is only obligated to pay a small amount. That is where UIM coverage comes into play.
Once a settlement has been reached with the at-fault driver (through their auto insurance provider), Virginia law, specifically Code § 38.2-2206(K), permits a special type of agreement releasing the at-fault driver from liability without prejudice to any UIM benefits or claim. At that point, the UIM carrier—the motor vehicle accident victim’s own auto insurance provider—essentially steps into the shoes of the at-fault driver, just like the at-fault driver’s auto provider would under normal circumstances. The at-fault driver is, however, required to cooperate with the UIM carrier. Furthermore, both the victim and the at-fault driver must sign this settlement agreement. See Virginia Code § 38.2-2206(L).
But what happens if the at-fault driver and/or their auto insurance provider refuse to settle? Or what if the at-fault driver agrees to settle for policy limits, but the UIM carrier denies coverage or rejects the motor vehicle accident victim’s demand?
If the at-fault driver and/or their auto insurance provider refuse to settle, a lawsuit will likely be filed against the at-fault driver. Note that, in Virginia, insurance companies are not sued alongside their insureds, unlike in some other jurisdictions. Likewise, the UIM carrier will not be named in the lawsuit. However, Virginia law, specifically Code § 38.2-2206(F), requires the victim/plaintiff to serve a copy of the lawsuit upon the UIM carrier as though the UIM carrier were a party defendant. The UIM carrier will then have the right to participate in the lawsuit in the name of the at-fault driver or in its own name.
From that point on, the UIM carrier will in practice be a defendant to the lawsuit, having generally the same interest as the at-fault driver. After all, if the UIM carrier can show that the defendant driver was not at fault or otherwise liable, or that the plaintiff’s injuries are not severe, the UIM carrier will do so to reduce their own exposure. It is important to remember that, even though the UIM carrier is the victim’s insurance provider, they are out to defend their own interests first and foremost, not their insured’s.
Sometimes, the at-fault driver will agree to settle for policy limits, but the UIM carrier will nevertheless deny coverage or reject the motor vehicle accident victim’s demand. Fortunately, Virginia law, specifically Code § 38.2-2206(M), permits a lawsuit to be filed against the at-fault driver and served on the UIM carrier. If the lawsuit results in a jury verdict, than the judgment is entered in the name of “Released Defendant” and enforceable solely against the UIM carrier up to the UIM coverage limits.
The interaction of UIM insurance in personal injury cases can be complex. Fortunately, the personal injury attorneys at Fishwick & Associates have experience dealing with UIM carriers in litigation, and work with our clients to obtain the maximum recovery. To schedule your confidential consultation, complete our online contact form or call us at 540-345-5890.
How is Virginia UIM Law Changing in the Future?
As noted above, it is easy to be confused about how much UIM coverage is available under current Virginia law. Because the UIM coverage limit is modified by the at-fault driver’s liability limit, a victim who believes they have, for instance, $250,000.00 in UIM coverage, may be shocked to discover that they have little or no UIM coverage, depending on the at-fault driver’s auto insurance coverage.
Fortunately, the General Assembly has recognized and corrected this deep flaw in Virginia’s UIM law. Beginning on July 1, 2023, UIM coverage in the Commonwealth of Virginia must be paid out without any credit or offset for liability coverage.
So, let’s return to the example discussed above, and suppose an at-fault driver has liability insurance coverage of $25,000.00, and settles with the victim for that amount. The victim has an auto insurance policy providing for $50,000.00 in UIM coverage. After July 1, 2023, even though the victim has received $25,000.00 from the at-fault driver, the victim will be able to receive up to $50,000.00 in UIM coverage—their full UIM coverage limit.
There is, however, one important caveat. Auto insurance purchasers in Virginia will have the ability to opt out of this rule, similar to the process allowing an insured to reduce their UIM coverage limit b to the minimum required by law. And as with that process, if one named insured elects, in writing, to reduce any UIM payments by the applicable auto liability coverage limits, it is binding upon all other insureds covered by the UIM policy.
Unfortunately, this change will only apply to insurance policies issued, delivered, or renewed after July 1, 2023.
Fishwick & Associates: Fighting for Individuals Injured in Automobile Accidents
If you have been injured in an automobile accident in Virginia, Fishwick & Associates can help you understand your legal options, identify all the applicable insurance policies, including UIM coverage, and navigate your claims. Our sophisticated team of injury lawyers has extensive experience interpreting insurance policy language and can determine whether a declaratory judgment is right for you.
To schedule your confidential consultation, complete our online contact form or call us at 540-345-5890.
Virginia Code § 38.2-2202
Virginia Code § 38.2-2206
Virginia Senate Bill 754 (2022)
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.