Insurers should be aware of an attempt to amend Virginia’s insurance bad faith statutes to create a new bad faith exposure for carriers in the UM/UIM context in Virginia. This effort is in response to a recent Virginia Supreme Court ruling, Manu v. GEICO Casualty Company, No. 160852, 2017 Va. LEXIS 70 (Va. Apr. 27, 2017), in which the Court held that an uninsured motorist carrier had no obligation to the claimant-insured until after the claimant-insured obtained a judgment against the uninsured tortfeasor. Under this holding, it became settled law in Virginia that uninsured and underinsured motorist carriers have no duty to their insureds, including a duty to settle, until after the insured obtains a judgment against the uninsured or underinsured motorist tortfeasor.
The proposed amendments to Virginia’s bad faith statutes (SB 17 as detailed below) would impose a pre-judgment duty of good faith in responding to settlement demands in the UM/UIM context – the penalty for violation of which would include payment of the full judgment amount obtained (apparently including amounts in excess of limits), attorneys fees in pursuing the bad faith claim, and interest. This would obviously constitute a significant change in Virginia law.
Questions? Please contact John Mumford at email@example.com or 804.237.7411.
SB 17 Uninsured and underinsured motorist insurance policies; bad faith.
Chief patron: Petersen
A BILL to amend and reenact §§ 8.01-66.1 and 38.2-2206 of the Code of Virginia, relating to uninsured and underinsured motorist insurance policies; bad faith.
Summary as introduced:
Uninsured and underinsured motorist insurance policies; bad faith. Provides that if an insurance company denies, refuses, or fails to pay its insured, or refuses a reasonable settlement demand within the policy’s coverage limits for a claim for uninsured or underinsured motorist benefits within a reasonable time after being presented with a demand for such benefits and it is subsequently found that such denial, refusal, or failure was not in good faith, then the insurance company shall be liable to the insured for the full amount of the judgment and reasonable attorney fees, expenses, and interest.
11/20/17 Senate: Prefiled and ordered printed; offered 01/10/18 18100555D
11/20/17 Senate: Referred to Committee on Commerce and Labor