American Property Casualty Insurance Association: House Labor & Commerce Subcommittee Should Vote No on Raising Auto Insurance Costs for Virginia Residents

CHICAGO, Illinois, Feb. 11 -- The American Property Casualty Insurance Association issued the following news release:

The Virginia House Labor and Commerce Subcommittee #2 tomorrow is considering legislation that will raise auto insurance costs for individuals, families, and businesses. Senate Bills 1202, 1182, and 1195 are not necessary and would make major changes to existing Virginia insurance law - SB 1202 would lead to increased litigation, higher auto insurance costs, and a clogged court system; SB 1182 would double the auto required liability limits in Virginia which could have serious financial consequences for both consumers and businesses; and SB 1195 would completely rewrite Virginia's definition of "underinsured" when determining uninsured motorist (UIM) coverage.

"Virginians need economic relief, not higher auto insurance costs," said Nancy Egan, APCIA's assistant vice president and Virginia state government relations counsel. "Individuals, families, and businesses are struggling to financially recover from the pandemic. Lawmakers need to focus on ways to lower costs and safely reopen our state's economy.

"Major policy changes like the ones brought forth in SBs 1202, 1182, and 1195 require thoughtful research and data-driven discussions. With COVID-19 putting financial strains on consumers and businesses, why are the lawmakers pushing these bills now?

"APCIA and our members urge lawmakers to protect Virginians from increasing auto insurance costs and vote no on SBs 1182, 1202, and 1195."

Senate Bill 1202

SB 1202 would cause an insurer found to have acted in "bad faith" responsible for the entire amount awarded regardless of policy limits. The bill also provides little guidance for determining bad faith and could lead to long and complex litigation battles. SB 1202 is also unnecessary as the Bureau of Insurance has full regulatory authority to handle consumer complaints. A recent Milliman study for similar legislation in Florida found that creating a bad faith action for underinsured/uninsured motorists would increase attorney participation in these claims and would lead to an estimated 22.4 percent increase per vehicle in losses. Higher losses and increased litigation mean once again higher costs for consumers and businesses.

Senate Bill 1182

SB 1182 would double the required bodily injury coverage limits from $50,000 to $100,000 per accident and double the amount for property damage from $20,000 to $40,000. It is unnecessary to mandate higher minimum limits because drivers can simply purchase higher limits in the marketplace. If SB 1182 passes, Virginia's limits would be the highest in the country and may result in more uninsured drivers on Virginia roads. According to a 2018 study by the Virginia Department of Motor Vehicles, insurance premiums could increase 9.46 percent or up to $252 for some drivers if SB 1182 passes.

Senate Bill 1195

SB 1195 would disrupt uninsured motorist coverage by changing the definition of "underinsured." Underinsured motorist coverage for bodily injury (UIM-BI) provides reimbursement to the non-at-fault party who is hurt in a crash. If the negligent driver's liability insurance limit is too low to adequately compensate the victim, the UIM-BI coverage pays additional compensation. This bill changes Virginia's UIM law from an "offset" definition to an "excess" provision. The difference between the two provisions is essentially how an "underinsured" motorist is defined. This change could nearly double auto UIM insurance costs for individuals, families, and businesses.