In December 2020, we wrote a very popular article “How does the lack of bad faith laws in Virginia effect underinsured / uninsured motorist?” Bad faith in this context is when insurance companies deny or delay a legitimate claim without a valid reason or basis. Ultimately an insurance company wants to pay as little as legally possible when you file a claim (see our article on what not to say to insurance adjusters.) Virginia’s previous lack of bad faith laws for underinsured and uninsured motorist coverage gave the carrier the ability to do absolutely nothing or hold off paying fair compensation for as long as possible. But all that is about to change come July 1, 2024, with Virginia Code § 8.01-66.1. This amended statute essentially overturns the Virginia Supreme Court’s ruling in Manu v. GEICO Cas. Co., 293 Va. 371 (2017), which held that there is no bad faith against an insured’s own insurance carrier when an underinsured or uninsured claim is made.
We are happy to report that in the last few years, there have been significant and positive developments concerning bad faith laws in Virginia. These changes stem from increased advocacy and legislative efforts aimed at leveling the playing field for policyholders. After years of public pressure, the Virginia General Assembly passed Senate Bill 256 (SB 256) in 2023, which was signed into law by the Governor in January 2024. This law introduces bad faith specifications for Underinsured Motorist/ Uninsured Motorist coverage and goes into effect July 1, 2024, as Virginia Code § 8.01-66.1.
Key Provisions of Virginia Code § 8.01-66.1: Remedy for Arbitrary Refusal of Motor Vehicle Insurance claim.
Denial, Refusal, or Failure to Pay:
If an insurance company denies, refuses, or fails to pay its insured within a reasonable time and/ or denies a valid claim in bad faith, the insurance company can be liable to the insured for up to double the amount of damages awarded, not to exceed $500,000. If that should happen, policyholders now have a clear legal pathway to seek not just the owed benefits but also additional damages, attorney fees, and interest. This is particularly significant in personal injury cases where prompt and fair settlements are crucial for covering medical expenses and other damages.
Double Damages:
If bad faith is established, the insurance company can be liable for double the amount of the judgment, not to exceed $500,000. The injured party can also claim attorney fees, expenses, and interest. Knowing that bad faith actions could result in financial penalties, insurers are now incentivized to handle claims more fairly and promptly. Policyholders can expect more timely evaluations and settlements of their claims, reducing the stress and financial burden on individuals.
Enforcement
Virginia Code § 8.01-66.1 requires the injured party making a claim to their own insurance company for underinsured or uninsured motorist coverage to demand an amount within their policy limits. If that demanded amount is unreasonably denied or no response is given within a reasonable time frame, then the injured party needs to secure a judgment against the at-fault party. Then the injured party can bring a bad faith claim against their own insurance company. A court of proper jurisdiction will now have the ability to award further damages against the underinsured/uninsured insurance carrier.
Impact
As personal injury lawyers, we are dedicated to ensuring that our clients receive fair and adequate compensation for their injuries and losses after a motor vehicle accident. Virginia Code § 8.01-66.1 enhances protections for our clients by giving personal injury lawyers like us a legal framework to hold insurance companies accountable. The injured in Virginia are now more likely to receive timely and fair settlements without being subjected to unnecessary delays and denials by insurance companies.
If you have suffered an injury in an accident and are dealing with underinsured/ uninsured (UIM/UM) carriers, the team at Curcio Law is well-versed in personal injury cases and the nuances of the new bad faith law. Contact us today at 703-836-3366 to learn how we can help you receive the compensation you deserve.
