New Virginia legislation that guides insurance policy coverage regarding uninsured/underinsured motorists went into effect on July 1, 2023.
Uninsured motorist coverage is carried on your car insurance policy and can pay for medical expenses and vehicle damages if you are involved in a hit-and-run or an accident caused by a driver without car insurance. An underinsured motorist is someone who has car insurance but the limits of their policy do not cover the total cost of injuries and damages that result from an accident they cause.
What was the old legislation?
Auto insurance policies purchased before July 1, 2023 calculate UIM coverage by subtracting the other driver’s policy limits from your UIM coverage amount. For example, if the other driver has a $25,000 policy limit and you have $100,000 in UIM coverage, you can use up to $75,000 of your UIM coverage to pay for any medical expenses and damages that accrue after exhausting the other driver’s policy limits .
How is the new legislation different?
According to section 38.2-2206 of the Code of Virginia, auto insurance policies purchased after July 1, 2023 will calculate UIM coverage using a “stacking” method. Using the previous example, if you are in an accident and the other driver’s policy limit is $25,000, you can recover up to the full amount of UIM coverage on your policy (in this example $100,000) once the liability coverage is exhasted. This allows for a total coverage of $125,000, assuming your claim is worth the full amount.
Buyer beware!
The new legislation benefits Virginia drivers who are injured in a car accident through no fault of their own. However, insurance companies may offer a slightly lower premium for people who sign a waiver rejecting their right to the new legislation. Policies that are instated with a signed waiver will have UIM coverage according to the subtraction method in the old legislation.
If you have been injured in an accident or have questions about the changes to UIM laws in Virginia, please call the law office of ReidGoodwin, PLC at 804-415-7800.