Proposed legislation is expected to double the Virginia General District Court jurisdictional limit and minimum auto liability policies from $25,000 to $50,000.

The Virginia legislature is currently considering changes to the law that will significantly change the nature of personal injury litigation in the General District Court.  Senate Bill 1108 proposes to increase the jurisdictional limit of the General District Court (“GDC”) from $25,000 to $50,000.  Senate Bill 1182 proposes to increase the minimum coverage for automobile bodily injury liability in Virginia from $25,000 to $50,000 (to be effective for policies issued on or after Jan. 1, 2022).  Senate Bill 1195, proposes to eliminate the offset that UIM carriers currently receive from liability coverage.  These proposed changes would naturally increase the cost of insurance in Virginia, but would also have significant consequences for litigating in the GDC.

For those who aren’t familiar with Virginia’s lower court, the GDC has some unique features that are attractive for both Plaintiffs and Defendants in small, uncomplicated cases.  First, litigation is fast and cheap, because there is no discovery (other than document subpoenas), no depositions, and no juries.  Plaintiffs can admit medical records and bills through affidavit,¹ so there is no need for medical expert testimony.  Cases can and usually do go to trial within a few months of filing.  Second, the statutory cap on damages makes outcomes predictable and reduces the risk to insurance companies to go to trial.  And, of course, the $25,000 jurisdictional limit lines up nicely with Virginia’s statutory minimum for liability insurance coverage, which means that UIM exposure in GDC cases is rare.  It also means that insurance carriers can easily appeal an adverse decision, because they can certify the existence of full insurance coverage in lieu of paying an appeal bond².

Assuming that the minimum liability policy in Virginia remains at $25,000, the most obvious impact of the proposed legislation (combined with the proposed removal of any offset for UIM carriers in SB 1195) would be the introduction of UIM exposure in every GDC case where the defendant has a minimum policy.  In those cases, there would be significant pressure on the liability carrier to “tender and walk” under Virginia’s UIM statute, which allows the liability carrier to offer its policy limit in exchange for a full release and force the UIM carrier to take responsibility for the legal defense³. The reason for the increased pressure is the prospect of a judgment above $25,000: if that were to happen, the liability carrier could no longer appeal the decision without posting an appeal bond because it would not be able to certify that it has sufficient coverage to satisfy the judgment⁴.

Of course, if the minimum Virginia policies are also doubled, as contemplated by SB 1182, this would address the mismatch problem for Virginia drivers.  However, that would not help DC drivers with $25,000 minimum policies, or Maryland drivers with $30,000 minimum policies.  In fact, the only states that currently require $50,000 minimum coverage are Alaska and Maine.⁵

Even ignoring the mismatch problem, the larger, more complicated injuries that would become litigated in GDC would dramatically increase the cost and risk of trial for defendants.  It could even become viable to hire medical experts to challenge plaintiffs’ previously uncontested medical records.  This could lead to Plaintiffs opting for their own live medical testimony.  Not only would this greatly increase the cost to litigating in GDC, but it would strain the limits of GDC civil procedure, which was not designed to handle complex cases with medical experts (no discovery or expert designation requirements, no mechanism for requiring a Plaintiff to undergo medical examination, and no mechanism for de bene esse testimony of doctors).

The numerous impacts of this proposed doubling of the statutory cap, intentional or not, would inure to the benefit of plaintiffs, not only in doubling the potential damage awards, but by increasing the risk to liability carriers, increasing litigation costs, and dramatically increasing the value of even minor injuries where there is insufficient coverage to satisfy a judgment.  While these bills have not yet become law, and they are subject to revision as they pass through committees in both chambers of the legislature, we expect them to pass in close to their present form.  We will be monitoring these bills and will provide updates as they evolve and potentially become law.

[1] Va. Code §§ 8.01-413.01 and 16.1-88.2.

[2] Va. Code § 16.1-107(A).

[3] Va. Code § 38.2-2206(K).

[4] See Va. Code § 16.1-107(A).

[5] State Minimum Auto Insurance Rates Nationwide, AutoInsurance.org, www.autoinsurance.org/what-is-minimum-requirement-for-car-insurance-in-north-carolina/ (last updated Apr. 21, 2020)