Underinsured motorist coverage (UIM) is a vital safety net for people in accidents involving a motorist who either lacks motor vehicle insurance or does not have enough coverage to address the resulting damages. Virginia has always exercised safeguards for people in accidents with uninsured drivers. However, a recent Virginia law abolishes UIM credit, further enhancing compensation opportunities for individuals sustaining injuries in car accidents. Keep reading to learn more about Virginia’s new uninsured motorist laws and the steps you can take to mitigate your financial burden in an uninsured motorist accident.
What is Underinsured Motorist Coverage?
The Insurance Information Institute (III) estimates that more than 10 percent of Virginia drivers lack liability insurance. Other drivers might carry policies meeting minimum coverage requirements, which may only partially cover the damages they cause in serious accidents. So what happens if an underinsured driver injures you? If your policy includes underinsured motorist (UIM) coverage, you can file a claim with your insurer to seek compensation for your injuries. Simply put, UIM insurance coverage protects you if the at-fault driver lacks or carries insufficient coverage.
Uninsured motorist coverage is essential; it will safeguard your right to compensation in an accident involving an uninsured driver. While liability coverage protects you against claims up to your policy’s limit, uninsured motorist coverage is your financial safety net. In simpler terms, if a driver rear-ends you who carries the bare minimum insurance coverage mandated in Virginia, which until December 21st, 2024, is $20,000.00 per claimant for property damage and $30,000.00 per accident for accidents involving a person’s death, you can pursue your underinsured motorist policy to offset the costs associated with your injuries.
Is Underinsured Motorist Coverage Mandatory in Virginia?
Virginia is one of the few states allowing drivers to opt out of car insurance if they pay a $500 fee. This fee will enable drivers to operate an uninsured vehicle but does not provide a motorist with insurance coverage. Thus, Virginia does not require uninsured motorist coverage to drive a car. However, all personal automobile insurance policies require uninsured and underinsured motorist coverage. So, if you choose to purchase automobile insurance, you must also buy an uninsured motor vehicle policy.
How Did Virginia’s Underinsured Motorist Laws Change?
Compensation for car accidents typically comes from two sources: the at-fault driver insurance and the injured party’s insurance, primarily through UMI coverage. After an accident with an underinsured motorist in Virginia before July 1, 2023, insurers reduced the potential UMI payout based on an underinsured motorist’s liability coverage. So, for example, suppose you got in an accident that caused $150,000 in damages. Then, imagine you had underinsured motorist coverage of $100,000.00 but secured a $25,000.00 settlement from the driver responsible for your injuries. In this scenario, the maximum amount you could have recovered was $75,000.00.
However, the recent Virginia law abolishes UIM credit. As of July 1, 2023, an underinsured motorist’s liability coverage no longer impacts your potential payout. In the same scenario as above, insurance would allow you to recover the total $125,000 for your damages; in other words, $25,000 in liability coverage from the defendant’s policy and an additional $100,000 in underinsured coverage from your policy. Under the new UIM policy, an injured motorist will be entitled to recover the entire amount specified in their underinsured motorist coverage without any reduction based on the compensation received from the initial wrongdoer.
Underinsured motorist coverage is a crucial part of comprehensive protection in worst-case scenarios, so people should maximize their underinsured motorist coverage. However, it is also essential to understand that just because a coverage limit is $100,000, as in the example above, the case’s worth isn’t automatically $100,000. Each case is unique, and in each different scenario, the proven damages determine compensation. For this reason, it is a good idea to consult with a skilled car accident attorney. An experienced attorney understands Virginia’s UMI laws and can help you determine your damages and which policies apply.
What Rights Do I Have Under Virginia’s New UMI Law?
As of July 1, 2023, if you have a Virginia car insurance policy, your insurance company must notify you about your increased coverage when the other driver does not have enough insurance to cover damage, regardless of the at-fault driver’s insurance amount. This notice must also clearly tell the policyholder they can choose to say ‘no’ to this coverage change.
It’s also important to understand that if the insurance policy lists you as an insured person, you have the right, as long as you put it in writing, to lower the amount of coverage for situations where the at-fault driver doesn’t have enough insurance to cover injuries or property damage. This choice will affect everyone covered by the policy, which means insurers will reduce the coverage for underinsured drivers by the same amount as the liability coverage from the at-fault driver’s insurance.
What Is Stacking and Can I Do It?
As explained above, Virginia’s recent modifications permit combining or “stacking” policies. Stacking means that coverage limits are combined rather than subtracted. With this policy stacking in place, you can potentially recover the total value of your UIM policy in addition to the coverage provided by the at-fault driver’s liability policy.
The Law Firm of Carlton F. Bennett, PLLC Can Help
If you have questions about Virginia’s new UIM laws or were involved in an accident with an underinsured driver, an experienced, compassionate attorney at The Law Firm of Carlton F. Bennett, PLLC, can help. Nearly five decades of practice and the largest jury verdict in Norfolk speak to our tenacity and client dedication. As a firm, our team strives to go the extra mile, ensuring we remain Virginia’s premier car accident law firm. Now let us explain how we can go to bat for you. Contact us today and schedule a free consultation.