SB 256 — Motor vehicle insurance; remedies for bad faith for refusal of claims.

RECONVENED SESSION REENROLLED VIRGINIA ACTS OF ASSEMBLY --–– 2024 RECONVENED SESSION CHAPTER 781R An Act to amend and reenact §§ 8.01-66.1, as it shall become effective, and 38.2-2206 of the Code of Virginia, relating to remedies for bad faith refusal of motor vehicle insurance claims.

E N [S 256] Approved AprilR 17,O 20241. Be it enacted by the General Assembly of Virginia:

1.

L § 8.01-66.1.

E A.

Whenever any insurance company licensed in this Commonwealth to write insurance as defined in § 38.2-124 denies, refuses or fails to pay to its insured a property damage claim of $3,500 or lessDess in provisionsexcess of athe policydeductible, ofif motorany, vehicleor insurancemedical issuedexpense bybenefit suchor companyloss toof theincome insuredbenefit andclaim itunder isr the subsequently found by the judge of a court of proper jurisdiction that such denial, refusal or failure to pay was not made in good faith, the company shall be liable to the insured in an amount double the amount otherwise due and payable under the provisions of the insured's policy of motor vehicle insurance of the judgment, plus interest from 30 days after the date the claim was submitted in writing to the insurer or its authorized agent, together with reasonable attorney's attorney fees and expenses.

The provisions of this subsection shall be construed to include an insurance company's refusalrefusSl or failure to pay medical expenses to persons covered under the terms of any medical payments coveragecove2age extendedless underand athe policyrefusal ofwas motornot vehiclemade insurance,in good faith.ce, when the amount of the claim therefor is $3,500$36500 or lessB. and the refusal was not made in good faith.

B.

If the judge finds that such denial, refusal or failure to pay was not made in good faith, the company, in addition to the liability assumed by the company under the provisions of the insured's policy of motor vehicle liability insurance, shall be liable to the third party claimant in an amount double the amount of the judgment awarded the third party claimant, together with reasonable attorney's attorney fees and expenses.

Notwithstanding the provisions of subsections A and B, whenever any person who has furnished proof of financial responsibility in lieu of obtaining a policy or policies of motor vehicle liability insurance pursuant to the provisions of Title 46.2 or any person who is required and has failed to furnish such proof pursuant to the provisions of Title 46.2 denies, refuses, or fails to pay to a claimant a claim of $3,500 or less made by such claimant as a result of a motor vehicle accident, and if the trial judge of a court of proper jurisdiction finds that such denial, refusal, or failure to pay was not made in good faith, such person shall be liable to the claimant in an amount double the amount otherwise due and payable of the judgment, together with reasonable attorney fees and expenses.

Whenever a court of proper jurisdiction finds that an insurance company licensed in this Commonwealth to write insurance as defined in § 38.2-124 denies, refuses or fails to pay to its insured a claim of more than $3,500 in excess of the deductible, if any, under the provisions of a policy of motor vehicle insurance issued by such company to the insured and it is subsequently found by the judge of aaor court of proper jurisdiction that such denial, refusal or failure to pay was not made in good faith, the company shall be liable to the insured in the amount otherwise due and payable under the provisions of the insured's policy of motor vehicle insurance, plus interest on the amount due at double the rate provided in § 6.2-301 from the date that the claim was submitted to the insurer or its authorized agent, together with reasonable attorney's fees and expenses.

The provisions of this subsection shall be construed to include an insurance company's refusal or failureextended under a policy of motor vehicle insurance when the refusal was not made in good faith.rage Whenever any insurance company licensed in the Commonwealth to paywrite medicalmotor expensesvehicle insurance as of 6 defined in § 38.2-124 (i) denies, refuses, fails to personspay, coveredor fails to make a timely and reasonable settlement offer to its insured under the termsprovisions of any medicaluninsured paymentsor coverageunderinsured extendedmotorist underbenefits coverage in a policy of motor vehicle insurance whenapplicable to the refusalinsured after the insured has become legally entitled to recover or (ii) after all applicable liability policy limits and underlying uninsured and underinsured motorists benefits have been tendered or paid, rejects a reasonable settlement demand made by the insured within the policy's coverage limits for uninsured or underinsured motorist benefits or fails to respond within a reasonable time after being presented with such demand after the insured has become legally entitled to recover, and it is subsequently found by a court of proper jurisdiction that such denial, refusal, or failure to timely pay or failure to make a timely and reasonable settlement offer, rejection of a reasonable settlement demand, or failure to timely accept a reasonable settlement demand was not made in good faith.faith, in addition to the amount due and owing by the insurance company to its insured on the judgment against the tortfeasor, the insurance company shall also be liable to the insured in an amount up to double the amount of the judgment obtained against the underinsured motorist, uninsured motorist, immune motorist, unknown owner or operator, or released defendant in the underlying personal injury or wrongful death action, not to exceed $500,000, together with reasonable attorney fees for bringing a claim under this subsection, and all costs and expenses incurred by the insured to secure a judgment against the tortfeasor, and interest from 30 days after the date of such denial or failure or the date the reasonable settlement demand was submitted in writing.

Whenever any insurance company licensed in the Commonwealth to write motor vehicle insurance as defined in § 38.2-124 (i) denies, refuses, fails to pay, or fails to make a timely and reasonable settlement offer to its insured under the provisions of any uninsured or underinsured motorist benefits coverage in of 6 a policy of motor vehicle insurance applicable to the insured after the insured has become legally entitled to recover or (ii) after all applicable liability policy limits and underlying uninsured and underinsured motorists benefits have been tendered or paid, rejects a reasonable settlement demand made by the insured within the policy's coverage limits for uninsured or underinsured motorist benefits or fails to respond within a reasonable time after being presented with such demand after the insured has become legally entitled to recover, and it is subsequently found by a court of proper jurisdiction that such denial, refusal, or failure to timely pay or failure to make a timely and reasonable settlement offer, rejection of a reasonable settlement demand, or failure to timely accept a reasonable settlement demand was not made in good faith, in addition to the amount due and owing by the insurance company to its insured on the judgment against the tortfeasor, the insurance company shall also be liable to the insured in an amount up to double the amount of the judgment obtained against the underinsured motorist, uninsured motorist, immune motorist, unknown owner or operator, or released defendant in the underlying personal injury or wrongful death action, not to exceed $500,000, together with reasonable attorney fees for bringing a claim under this subsection, and all costs and expenses incurred by the insured to secure a judgment against the tortfeasor, and interest from 30 days after the date of such denial or failure or the date the reasonable settlement demand was submitted in writing.

The endorsement or provisions shall also provide for at least $20,000 coverage for damage or destruction of the property of the insured in any one accident but may provide an exclusion of the first $200 of the loss or damage where the loss or damage is a result of any one accident involving an of 6 unidentifiable owner or operator of an uninsured motor vehicle.

For the purposes of this section, "legally entitled to recover" has the same meaning as providedprovRded in § 8.01-66.1.

B.E "Bodily injury" includes death resulting from bodily injury.

1."Insured" as used in subsections A, D, G, and H, means the named insured and, while resident of the same household, the spouse of the named insured, and relatives, wards or foster children of eitNer, while in a motor vehicle or otherwise, and any person who uses the motor vehicle to which the policy applies, with the expressed or implied consent of the named insured, and a guest in the motor vehicle to which the policy applies or the personal representative of any of the above.

AsO used"Uninsured motor vehicle" means a motor vehicle for which (i) there is no bodily injury liability such insurance but the insurer writing the insurance denies coverage for any reason whatsoever,Lhere is including failure or refusal of the insured to cooperate with the insurer, (iii) there is no bond or deposit of money or securities in thislieu section:of such insurance, (iv) the owner of the motor vehicle has not qEalified as a self-insurer under the provisions of § 46.2-368, or (v) the owner or operator of the motor vehicle is immune from liability for negligence under the laws of the Commonwealth or the United States, in which case the provisions of subsection F shall apply and the action shall continue against the insurer.

"Bodily injury" includes death resulting from bodily injury.

of 6 "Insured" as used in subsections A, D, G, and H, means the named insured and, while resident of the same household, the spouse of the named insured, and relatives, wards or foster children of either, while in a motor vehicle or otherwise, and any person who uses the motor vehicle to which the policy applies, with the expressed or implied consent of the named insured, and a guest in the motor vehicle to which the policy applies or the personal representative of any of the above.

"Uninsured motor vehicle" means a motor vehicle for which (i) there is no bodily injury liability insurance and property damage liability insurance in the amounts specified by § 46.2-472, (ii) there is such insurance but the insurer writing the insurance denies coverage for any reason whatsoever, including failure or refusal of the insured to cooperate with the insurer, (iii) there is no bond or deposit of money or securities in lieu of such insurance, (iv) the owner of the motor vehicle has not qualified as a self-insurer under the provisions of § 46.2-368, or (v) the owner or operator of the motor vehicle is immune from liability for negligence under the laws of the Commonwealth or the United States, in which case the provisions of subsection F shall apply and the action shall continue against the insurer.

A motor vehicle is "underinsured" when, and to the extent that, the total amount of bodily injury and property damage coverage applicable to the operation or use of the motor vehicle and available forforry and payment for such bodily injury or property damage, including all bonds or deposits of money or securities made pursuant to Article 15 (§ 46.2-435 et seq.) of Chapter 3 of Title 46.2, is less than the total amount of damages sustained up to the total amount of underinsured motorist coverage afforded any person injured as a result of the operation or use of the vehicle.

S "Available for payment" means the amount of liability insurance coverage applicable to the claimc2aim of the injured person for bodily injury or property damage reduced by the payment of any other claimscla6ms arisingari2. out of the same occurrence.

2.

The policy covering a motor vehicle not involved in the accident under which the injured person is anWhere insuredthere otheris more than aone namedinsurer insured.providing coverage under one of the payment priorities set forth, their liability shall be proportioned as to their respective available uninsured or underinsured motorist coverages.

Where there is more than one insurer providing coverage under one of the payment priorities set forth, their liability shall be proportioned as to their respective available uninsured or underinsured motorist coverages.

If an injured person is entitled to underinsured motorist coverage under one or more policies wherein a named insured has elected to reduce the underinsured motorist limits by the available bodily injury liability insurance or property damage liability insurance coverage available for payment, any amount available for payment shall be credited against such policies in payment priority pursuant to subdivision 2 a only, and where there is more than one such policy entitled to such credit, the credit shall be apportioned pro-rata pursuant to the policies' respective available underinsured motoristmotoristedit coverages.

There shall be a rebuttable presumption that a motor vehicle is uninsured if the Commissioner of the Department of Motor Vehicles certifies that, from the records of the Department of Motor Vehicles, it appears that (i) there is no bodily injury liability insurance and property damage liability insurance in thehas amountsbeen specifiedgiven byor §cash 46.2-472or coveringsecurities thedelivered ownerin orlieu operator of the motorinsurance; vehicle;

(ii) no bond has been given or cash or securities delivered in lieu of the insurance;

If the owner or operator of any motor vehicle that causes bodily injury or property damage to the insured is unknown, and if the damage or injury results from an accident where there has been no contact between that motor vehicle and the motor vehicle occupied by the insured, or where there has been no contact with the person of the insured if the insured was not occupying a motor vehicle, then for the insured to recover under the endorsement required by subsection A, the accident shall be reported promptly to either (i) the insurer or (ii) a law-enforcement officer having jurisdiction in the county or city in which the accident occurred.

If it is not reasonably practicable to make the reportreportthe of 6 promptly, the report shall be made as soon as reasonably practicable under the circumstances.

of 6 F.

Policies of insurance whose primary purpose is to provide coverage in excess of other valid and collectible insurance or qualified self-insurance may include uninsured motorist coverage as provided in of 6 subsection A.

Insurers issuing or providing liability policies that are of an excess or umbrella type or which provide liability coverage incidental to a policy and not related to a specifically insuredinsurRd motor vehicle, shall not be required to offer, provide or make available to those policies uninsured orEr underinsuredundK. motor vehicle coverage as defined in subsection A.

K.An injured person, or in the case of death or disability his personal representative, may settle a claim with (i) a liability insurer, including any insurer providing liability coverage through an excess or umbrella insurance policy or contract and (ii) the liability insurer's insured for the availablN limits of the liability insurer's coverage.

AnUpon injuredsettlement person,with orthe inliability insurer, the caseinjured ofparty death or disabilitypersonal hisrepresentative personalshall representative,proceed mayto settleexecute a claimfull withrelease (i)in afavor liabilityof insurer,the includingunderinsured anymotorist's insurer providing liability coverageinsurer throughand anits excessinsured or umbrella insurance policy or contract and (ii)finalize the liabilityproposed insurer'ssettlement insuredwithout forprejudice theto availableany limitsunderinsuOed ofmotorist thebenefits liabilityor insurer'sclaim. coverage.

UponAny settlementsuch withrelease thethat liabilitystates insurer,that theit injuredis partybeing orexecuted personalpursuant representativeto shallor proceedconsistent tounderinsured executemotorist, aregardless fullof releasethe inidentities favor of the underinsuredreleased motorist'sparties liabilityset insurerforth andin itsthe insuredrelease, and finalizeany terms contained in the proposedrelease settlementthat withoutare prejudiceinconsistent towith, anyor underinsuredin motoristviolation benefitsof, orthis claim.section are null and void.

AnyUpon suchpayment releaseof thatthe statesliability thatinsurer's itavailable islimits beingto executedthe pursuantinjured toperson or consistentpersonal ofreprEsentative 6or withhis thisattorney, subsectionthe liability insurer shall notthereafter operatehave tono releasefurther anyduties partiesto otherits thaninsured, including the liabilityduty insurerto anddefend underinsuredits motorist,insured regardlessif ofan theaction identitieshas ofbeen theor releasedis partiesbrought setagainst forththe inliability theinsurer's release,insured, and anythe termsinsurer containedproviding inapplicable theunderinsured releasemotorist thatcoverage areshall inconsistenthave with,no orright inof violationsubrogation of,or thisclaim sectionagainst arethe nullunderinsured andmotorist. void.

UponHowever, paymentif of the liabilityunderinsured insurer'smotorist availableunreasonably limitsfails to thecooperate injured person or personal representative or his attorney,personal therepresentative, liabilityhe insurermay shallagain thereafterbe havesubjected no further duties to itsa insured,claim includingfor thesubrogation dutyby totheed defend its insured if an action has been or is brought against the liability insurer's insured, and the insurer providing applicable underinsured motorist coveragebenefits shallinsurer havepursuant noto right§ of8.01-66.1:1. subrogation or claim against the underinsured motorist.

However, if the underinsured motorist unreasonably fails to cooperate with the underinsured motorist benefits insurer in the defense of any lawsuit brought by the injured person or his personal representative, he may again be subjected to a claim for subrogation by the underinsured motorist benefits insurer pursuant to § 8.01-66.1:1.