If you’re a Virginia driver and have signed up for car insurance here, you need to be aware of a big change coming to car insurance law. And this rule specifically relates to UM/UIM (or “uninsured” or “under-insured” motorist coverage). In our view, this is some of the most important car insurance that you can buy.
What is UM/UIM?
When you purchase car insurance, in addition to other types of coverage, you likely purchased UM/UIM. This type of coverage protects you if it turns out that the defendant (the person that caused your car crash and injuries) was either uninsured or didn’t have enough insurance.
So, UM/UIM protects you, not only against the negligent driving of another, but also the poor financial decisions of that person too. Stated another way, UM/UIM allows you to protect yourself financially, if you are involved in a car crash, and suffered serious injuries. UM/UIM allows you to know, with certainty, how much car insurance will be available should you need it.
Indeed, at Abrenio Law, we’ve always recommended that you purchase $1 million in UM/UIM (and not simply an umbrella policy) The reason being that the difference between at $25,000 UM/UIM policy and a $1 million policy is typically only a couple hundred dollars a year, and it could save you from financial ruin in the event of a serious car crash.
So, what’s going to change in July 2023?
As we are writing this blog, it’s December of 2022. Now, and until July 2023, when you sought to use your UM/UIM policy, the coverage only “kicked in” once you exceeded the defendant’s limits of liability insurance (the type of insurance a driver uses if a claim is made against them). So, essentially, now, your UM/UIM policy gets a “credit” for insurance the defendant purchased.
Let’s use an example to explain:
Imagine you have a case worth $150,000. Further, imagine the defendant has a $100,000 liability policy, and you also have a $100,000 UIM policy. Until July of 2023, the only amount of insurance available will be $100,000. That’s because your UIM policy doesn’t exceed the defendant’s liability policy, so your UIM doesn’t kick in. Essentially, your UIM gets a credit for the defendant’s coverage, despite you having paid for your UIM policy.
What’s going to happen in July 2023.
Thanks to the up-and-coming change in the law, your UIM insurer will no longer get a credit based upon the defendant’s liability coverage. Indeed, Virginia Code Section 38.2-2206(A)(effective July 1, 2023) states, in part:
The endorsement shall provide that underinsured motorist coverage shall be paid without any credit for the bodily injury and property damage coverage available for payment, unless any one named insured signs an election to reduce any underinsured motorist coverage payments by the bodily injury liability or property damage liability coverage available for payment by notifying the insurer as provided in subsection C of § 38.2-2202. This election by any one named insured shall be binding upon all insureds under such policy.
Va Code Section 38.2-2206 (A)(effective July 1, 2023)
Now let’s revisit the example above.
Because of this change in law, you will now have an avenue to be fully compensated for your $150,000 claim. Indeed, the defendant’s liability policy has $100,000 in coverage, and you can seek the additional $50,000 in coverage from your UIM policy.
Don’t “Opt-Out” of this new change!
As you can see above, this new change in law allows for an insured to “op-out” of this new rule. We can imagine scenarios where car insurance companies suggest that you opt-out of this new rule to “save some cash.” Indeed, that’s what car insurance companies do – they try to sell the type of insurance that best profits them and, in turn, typically least protects you.
So, don’t fall for it. Protect you and your family long term rather than thinking about how to save a few dollars short term!
Still have questions?
Make sure to check out our Personal Injury & Criminal Defense Practice Pages where we’ve answered many other questions you likely have. James Abrenio is a Fairfax-Based Personal Injury & Criminal Defense attorney who practices throughout Northern Virginia. You can learn more about James Abrenio, some of our Prior Results, and Read Our Reviews. Make sure to contact us at Ph. 703-570-4180 for your Free Consultation.