On July 1, 2015, the Virginia legislature made a big change to the functionality of the underinsured motorist statute, which applies to policies issued or renewed on January 1, 2016 or later.  To fully understand the changes, it is helpful to compare the two.  The comparison is below:

Change to the UIM Statutes

OLD law (policies written December 31, 2015 or earlier):

• Liability carrier offers limits but still has the burden of paying for and defending the lawsuit; the UIM carrier gets to sit back and do nothing if they want (in my experience, if the UIM attorney is hourly, he is willing to do the bulk of the work; if he is staff counsel, he does none of it)
• The UIM carrier may subrogate against the underinsured/tortfeasor (often times, the UIM carrier refuses to waive subro prior to trial because they want the underinsured/tortfeasor to have incentive to cooperate)
• The plaintiff/claimant will not sign a release with the liability carrier b/c that destroys their rights against the UIM carrier so everything just hangs in limbo for the life of the case

NEW law (policies written January 1, 2016 or later):

In a case where liability limits get offered and there is UIM coverage:

• The burden of defending the suit now shifts to the underinsured motorist carrier 
• The UIM carrier is virtually prohibited from subrogating against the tortfeasor UNLESS the court finds that the tortfeasor fails to cooperate with the UIM carrier in the defense (i.e.  failure to attend a deposition or trial if subpoenaed 21 days in advance; failure to assist in responding to written discovery; failure to confer with defense counsel within 21 days of being served, or before to a deposition or trial; and failure to notify the UIM carrier of a change in address.) 
• The settlement between the liability carrier and the underinsured plaintiff/claimant must include a written release that contains specific written notice to the underinsured motorist/tortfeasor and be signed by the plaintiff/claimant AND by the underinsured motorist/tortfeasor. (NOTE: The requirement for the signature of the underinsured motorist is waived if the liability carrier sends a copy of the required notice to the underinsured motorist by certified mail, return receipt requested.)
• After obtaining this release and paying its limits, the liability carrier has no further duties to its insured, including the duty to defend the insured in any action.
• After the liability carrier has paid its limits, any action pending (or later filed) is still captioned as a suit against the underinsured motorist/tortfeasor, but any resulting verdict  is entered in the name of “Released Defendant,” and is enforceable only against the UIM carrier, up to the amount of its limits in excess of the liability coverage.