Enhanced Coverage Benefits for Car Injuries Phasing In Next Year

For the second time in as many years, the Virginia General Assembly has acted to increase insurance limits available for those suffering auto accident injuries – albeit on a slow fuse.

The change from this year will eventually enhance the benefits a named insured can claim under a policy in the event he or she is injured by a driver with no insurance, or perhaps with liability insurance that proves insufficient for the particular injury involved.  These are referred to as uninsured and underinsured motorist coverages, or “UM/UIM.”  The new law has a postponed effective date, not taking effect until July 1, 2023.  But it will be a substantial benefit to injured parties when next summer rolls around.

Until the change takes effect, the amount of UM/UIM coverage would be compared to the wrongdoer’s liability limit, and the injured person’s insurer would then be on the hook to the extent the UM/UIM limit were greater than the wrongdoer’s liability limit.  For this reason, in our blogs we have repeatedly emphasized to our clients the advisability of buying higher limits on their car insurance, to protect themselves not only from the risk that they themselves might cause a serious accident, but also from the risk that they might be injured by someone with minimal coverage or even no insurance at all.

The 2023 change will enhance the benefit available from UM/UIM coverage.  Instead of having the UM/UIM coverage act as a ceiling, and provide benefits only to the extent the wrongdoer was uninsured or underinsured, from now on the UM/UIM limit will be added on top of whatever liability coverages might be available to the injured party.

Imagine that, under the former law, a driver with the $50,000 minimum liability coverage ran a red light and caused $150,000 in harm to an innocent driver of another car.  If the injured driver had $100,000 of his own coverage, he could collect $50,000 from the wrongdoer’s liability policy, then another $50,000 from his own policy, for a total of $100,000 in total insurance.  But this would leave the injured party undercompensated by $50,000.

Under the new law, the injured party will be able to add all of the UM/UIM amount to the liability amount.  So in this example, the same injured party will be able to seek $50,000 from the wrongdoer’s liability carrier (the same as before), but also the full $100,000 from his own carrier, for a total of $150,000 in coverage, or $50,000 more than before.  In this particular example, the prior shortfall in coverage would be eliminated.

The new limits rules must be included in insurance policies issued in Virginia from July 1, 2023 forward.  So, the date when you get the enhanced benefit will depend upon the date when your own policy renews next year.

Even if you do nothing, at some point your policy will renew, and with that, your car insurance policy will come with the enhanced UM/UIM benefits – as long as you continue to heed our advice, and NOT eliminate this coverage from your policy in order to get a minimal savings on your premiums.  We continue to urge all our clients to assure that they have full UM/UIM coverage, and that they buy enough coverage to insure themselves not only from their own potential mistakes, but from the risk that they are injured through no fault of their own.