Legal Notices

UIM Insurance Proposals Fail at 2009 Legislative Session

Two proposals, House Bill 2431 and Senate Bill 879, relating to UIM insurance coverage under Code § 38.2-2206 were rejected by the 2009 General Assembly. 

HB 2431 provided a mechanism for a liability insurer to settle a claim for personal injury or death by paying its policy limits and giving notice to the UIM carrier. If the UIM carrier consented within 60 days in writing to the liability insurer's limits offer, it waived its subrogation rights against the tortfeasor and liability insurer; if the UIM carrier refused to consent to that offer, it preserved its subrogation rights if it paid to the plaintiff the amount of the liability insurer's offer. Under specified circumstances, this measure released the liability insurer both from further liability to the plaintiff and from the duty to defend its insured, the tortfeasor. Both notice to the tortfeasor and Court approval were required. This bill was "tabled" in the House Courts of Justice Committee.

SB 879 was based on a South Carolina statute. It authorized a UIM carrier to take over the defense of a personal injury or death action if the liability insurer paid its applicable limit on behalf of its insured, the tortfeasor. The UIM insurer had 30 days after service to appear and defend in the name of the defendant. This bill was "stricken" at the request of a patron on the Senate Commerce and Labor Committee.

The General Assembly continues to grapple with the issue created, under existing Virginia law, (a) by the UIM carrier's duty to pay which arises only after an adjudication that the plaintiff is "legally entitled" to recover from the alleged UIM tortfeasor, and (b) by the subrogation rights preserved by the UIM carrier both by statute and in its policy.  These same or similar proposals will unquestionably be presented to the 2010 General Assembly.