Changes in Auto Insurance Law in Virginia

Auto policies issued or renewed after July 1, 2023, will provide additional underinsured motorist (UIM) coverage.

UIM coverage provides a driver or passenger with additional insurance coverage if they are injured in a collision when the person who caused the collision does not have enough liability insurance coverage to pay their damages.  UIM coverage has a limit, which is the maximum amount the policy will pay.  Just as the policy holder selects the limits of their liability coverage, the limits for UIM coverage are also chosen at the time of purchasing the policy.

Prior to July 2023, all automobile insurance policies issued in Virginia calculated UIM coverage such that the other party’s policy’s liability coverage limit would be subtracted from your UIM coverage limit to determine how much the UIM policy would pay.  This means you could only get UIM coverage if the limit of your UIM coverage was more than the limit of the liability coverage of the person who caused the collision.

For example, if the UIM limit on your policy was $250,000 and the other party’s liability limit was $50,000, you would subtract the other party’s $50,000 liability limit from your $250,000 UIM limit to get $200,000, and that would be the maximum amount the UIM would have to pay (provided the claim is worth that much).  Therefore, the maximum a person would be able to recover in this example would be $250,000 between both policies.

The new law changes UIM coverage so that the coverage for both parties is now added together, or “stacked,” and not subtracted.  In the above example, a person would get the full amount of the $250,000 UIM coverage, which could be added to the at fault party’s $50,000 liability limit for a total of $300,000.  Thus, stacking provides a huge benefit if you are injured in a car crash by providing more coverage for your medical expenses, lost wages, mental anguish, and pain.

For another example, if the UIM limits were $100,000 and the at-fault driver had $100,000 liability coverage then the total available coverage would be $100,000 under the old law; however, under the new law, the coverage would be $200,000, provided the claim is worth that much.

Starting July 1, your insurance company may offer you an incentive to opt out of this new law by asking you to reduce or eliminate your UIM coverage.  It is important to understand that this is not an incentive that is without consequences.  If you elect to reduce your premium and change your UIM coverage, your policy will not allow you to take advantage of this new “stacking” law that you may need if you are injured in a collision.

If you have any questions or concerns, it is best to consult with your insurance agent or an attorney.