For an opposing point of view, see “Gov. Youngkin can protect Virginians from higher auto insurance costs by vetoing Senate Bill 256” by Robert Hartwig, director of the University of South Carolina’s Center for Risk and Uncertainty Management.
Governor Youngkin is currently considering whether to sign legislation to protect consumers from unfair insurance company settlement practices which passed the General Assembly on a bipartisan basis with more than half of Senate Republicans and one-third of House Republicans voting yes. Do not believe what the insurance companies are peddling.
In the 27 years I have represented people in personal injury cases, the most frequent reason that car accident victims fail to be fairly compensated for their medical bills, lost income and wages is because the person who hurt them does not have enough insurance because many drivers purchase bare-bones auto insurance policies.
The best way to protect yourself and your family is to make sure your own auto insurance policy has high insurance limits, which also ensures your uninsured motorist coverage (UM) and underinsured motorist coverage (UIM) will protect your family. Unfortunately, many people who do this do not get the benefit of the insurance they bought to protect themselves because of a 2017 decision by the Supreme Court of Virginia called Manu v. GEICO and insurance company behavior.
Mr. Manu was a passenger in a 2010 car accident caused by an unknown driver who fled. His driver only had $25,000 of insurance, but Mr. Manu had $27,000 of medical bills, $6,000 of lost wages and, of course, he was entitled to compensation for pain and suffering. His driver’s insurance company quickly paid him $25,000. He asked GEICO to pay him an additional amount under the uninsured motorist coverage ($12,500). GEICO refused and only offered him $6,000. In 2015, his case went to trial, and the jury gave a verdict of $68,000 plus prejudgment interest: more than double what GEICO had offered five years after he was hurt through no fault of his own.
Mr. Manu next sued GEICO, claiming it had acted in bad faith by refusing to settle with him for $25,000 in 2013 and sought attorney’s fees under Virginia’s existing bad faith statute. However, the Supreme Court of Virginia held that the statute did not apply to UM/UIM coverage, but only applied when your insurance failed to settle a case where you were the defendant and not the plaintiff.
Since Manu was decided, many of the largest insurance companies in Virginia have instituted a practice of refusing to settle UM/UIM claims until the week before trial. They do it because they can, and there is no law to stop them. That is why I introduced SB 256.
When an insurance company waits until the last minute to pay a claim, it means an injured person’s medical bills go unpaid, they do not get their lost wages quickly, family finances suffer, and sometimes credit gets ruined. Preparing a case for trial also costs victims. The attorney has to take depositions, pay court reporters and hire expert witnesses. Treating doctors always demand nonrefundable deposits up to $20,000 to reserve their time when they would normally be scheduling patients or surgeries. The expert deposits do not come out of lawyer’s pockets — the Virginia ethics code for lawyers require it to be paid out of the injured person’s portion of the settlement. Some people end up settling for less than they are entitled to because they are desperate, and the insurance company pockets the difference.
This session, I worked with the University of Virginia School of Law Public Policy Clinic to write and pass SB 256 to join 21 other states like Florida, Idaho or Oklahoma, who allow a judge to award an injured person additional damages and attorney’s fees to punish an insurance company if they intentionally drag out a case that they should settle. Unlike the proposed law on Governor Youngkin’s desk, some states even allow juries to award unlimited punitive damages against insurance companies.
Several insurance companies are now claiming that this law will force insurance premiums to rise by 17%. Think about that for a second — insurance companies are claiming that they will have to charge higher premiums because they will now have to promptly pay valid claims that they contracted to pay — meaning they are either lying about SB 256 causing increased insurance premiums, or they are admitting that they have been using a business model to make more money since 2017 by refusing to promptly pay valid claims, dragging their heels, and leveraging their own customers’ financial distress.
And everyone remembers when Virginia car insurance premiums went down by 17% in 2017 after the Manu case said they could not be sued for bad faith claim settlement practices, right? You don’t remember that, because it never happened.
Governor Youngkin needs to sign SB 256 so that Virginians can receive the benefit of the insurance they purchased.
Scott Surovell is Senate Majority Leader and the sponsor of SB 256. He is a Democrat from Fairfax County.