Starting July 1, 2023, Virginia is changing the calculation of an insured’s available underinsured motorist vehicle coverage.  The General Assembly has approved Senate Bill 754, which, in part, will allow insureds to have full access to their underinsured motorist coverage after an accident. This change will only apply to policies that go into effect on or after July 1, 2023.

While most people are familiar with liability coverage, Virginia automobile insurance policies typically include an additional component of coverage called underinsured motorist coverage. This is often referred to as “UIM” coverage.  UIM coverage is meant to protect injured individuals involved in car accidents where the person who caused the accident does not have enough liability insurance coverage to pay for the injured driver’s alleged damages.

Currently, Virginia insureds are subject to a “credit” or “offset” that is taken by UIM insurance carriers for any liability insurance coverage that is available. This credit results in a smaller amount of coverage available for the injured insured. For example, let’s say that Bob causes an accident with John. John was injured and now has medical bills to pay, but Bob only has $50,000 of liability coverage. This would mean that John’s UIM policy would be credited with that $50,000. So even if John was paying for $100,000 worth of UIM coverage, he could only access half of that. Ultimately, John could only get $100,000 instead of the $150,000 that John and Bob’s combined policies provide.

The change approved in Senate Bill 754 will remove this credit and offset system by requiring an insured’s UIM policy coverage “be paid without any credit for the bodily injury and property damage coverage available for payment, unless any named insured elects to reduce any underinsured motorist coverage payments by notifying the insurer.” This means that John could get the $50,000 from Bob’s liability policy and the full $100,000 from his own UIM policy.   For more information and specific changes to the associated Virginia Code Sections, see Virginia’s Legislative Information System: https://lis.virginia.gov/cgi-bin/legp604.exe?ses=221&typ=bil&val=SB754&submit=GO