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Shapiro & Appleton

Virginia Auto Insurance Basics

If you've been injured in a car accident, the procedures detailed in this article are what your lawyer should be following. If you're an attorney looking for general information on how to handle a car accident case and automobile insurance, you've arrived at the right place.

This article is a primer on how to determine insurance limitations, the coverage for medical payments, liability insurance, uninsured motorist coverage, underinsured motorist coverage, and special insurance issues. If you have any questions, fill out our quick contact form or give us a call at 1-800-752-0042.

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What's the limit?
One key task of a car injury attorney is to determine all available sources of insurance coverage and amounts of the limits. Let's go over the main types of coverage and some common issues involved in maximizing the client's recovery.

Medical Payments

Medical payments coverage (med pay) is a first-party coverage meaning that it is part of the client's own insurance contract.  Virginia Code §38.2-124(B), 38.2-2201.  Med pay in Virginia is an optional coverage.  Because med pay is such a good deal for the consumer and not as good a deal for the insurer, they don't try too hard to sell it to people.

Often the client will not even know if they have med pay.  Accordingly, you need to confirm the existence of, and the limits of, medical payments coverage directly with the client's carrier at the beginning of the case.  Med pay is typically sold in increments of $1,000, $5,000 or $10,000.  In Virginia you get to stack within a given policy the med pay limits for each vehicle on the policy.  Virginia Code §38.2-2201(C).  If your client has two cars on their State Farm family auto policy with limits of $1,000, there is actually $2,000 of available med pay coverage.

The med pay policy says that the carrier will pay up to the available coverage limits for reasonable medical bills incurred for necessary treatment as a result of an injury suffered by the insured in their vehicle or when they are an occupant in someone else's vehicle.  See Virginia Code §38.2-2201(A)(l).  It also covers passengers hurt in the insured's vehicle.  The coverage is without regard to fault, so it's only necessary to show that the medical bills and treatment were reasonable and incurred as a result of an accident in a car.  Proof of negligence is not needed.

The med pay carrier only must pay the actual amount paid by the client's health insurer on the bill.  See Virginia Code §38.2-2201(A)(3)(b).  There is a deadline for submission of the med pay claim and the coverage only applies to bills incurred for a set period of time after the wreck.

If the client is not in their own vehicle when they're hurt in an accident, you start your analysis of available med pay coverage with they vehicle that they are in.  If there is medical payments coverage on that vehicle, you have to collect from and exhaust that policy before you can come back to the client's own automobile policy.  If the vehicle that the client is in doesn't have med pay, then you get a letter from that carrier confirming the absence of med pay, and you can go to the client's own vehicle's med pay coverage, if any.

Please note that it is not ethical to take a percentage fee on uncontested med pay claims.  Although it may be permitted to take some kind of administrative fee, I believe the better practice is not to charge the client anything for collecting medical payments coverage, if it can be done without having to file suit.  Our office's experience has been that when the medical payments carrier is not properly paying that filing suit in the general district court will quickly get them straight in fairly resolving the medical payments claim.

LIABILITY INSURANCE

Liability insurance is the insurance for the defendant that covers their liability or fault in causing the accident and the resulting injuries.  See Virginia Code §38.2-2204.  As always, in Virginia, automobile insurance law, you start the analysis of coverage with the vehicle that the person was occupying at the time of the crash.  So, the vehicle that the defendant was driving at the time of the wreck is the primary or first liability insurance carrier.  This is true even if the defendant was driving someone else's vehicle (presumably with permission).

If there is enough liability coverage to satisfy the claim, then that's the end of the hunt for coverage.  However, if there is not enough liability coverage on the vehicle the defendant was operating, then you must look for other liability coverage.

The first place that you would look for excess liability coverage would be on the defendant's own car, if they were driving someone else's car.  So, for example, if a man is driving his mother's car at the time of the accident, the primary insurance would be that which his mother had on the vehicle.  If the man also had his own separate automobile insurance coverage on a different vehicle, then that coverage would be potentially available as excess liability coverage.  Further coverages for excess liability can be available such as an umbrella insurance policy.

Recently, Virginia has modified its law to force the liability insurance carrier to disclose the amount of the insurance limits if the plaintiff has more than $12,500 worth of economic losses.  See Virginia Code §8.01-417.  If you have losses of that amount, then you simply state in writing to the liability carrier that you want to know the amount of the liability coverage and they must disclose it to you.  Previously, you might have had to go into suit to get this information.

Sometimes the amount of the liability coverage may affect the settlement decision.  Where there is a real possibility of getting a verdict for significantly more than the carrier is offering and you know that you will be able to actually collect it, the client may be more willing to go to trial.

UNINSURED MOTORIST COVERAGE

Uninsured motorist coverage (UM) is part of the first-party insurance contract between your client and his insurance company.  See Virginia Code §38.2-2206.  UM may apply in several situations.  Sometimes it will turn out that the defendant did not have any automobile liability coverage at all.  The defendant may have voided their coverage by failing to cooperate with the insurer.  Another place UM applies is in a hit and run case against a John Doe unknown motorist.  Finally, if the defendant has certain immunity from liability, UM can apply.  In all these circumstances, the uninsured motorist coverage on the client's own policy stands in the shoes as if the defendant's. 

Normally the amount of the uninsured motorist coverage on a policy is in the same amount as the liability coverage.  The only time this is not true is if a waiver of such coverage has been given to the carrier (rare).  Thus, even if your client only carries minimum coverage in Virginia, then there is $25,000.00 of uninsured motorist coverage at a minimum.  Your client's own insurance carrier must disclose to you the amount of the available insurance coverage because it is a first party contract relationship. 

Additionally, there may be opportunities to stack additional UM coverage.  For example, to the extent that there is a relative by blood or marriage who lives with the client, then any separate automobile insurance coverage they have can be added to the amount of the UM available under the client's policy.  An additional kind of stacking of UM coverages applies where the client was an occupant of someone else's vehicle when they got hurt.  You can also add the UM available under that vehicle's policy to the client's own and any resident relatives to get the full amount of potentially available uninsured motorist coverage. 

For example, if your client is a woman who is injured in a car wreck where the vehicle she is occupying is her best friend's, then the following UM coverages might apply.  Assume that the at-fault driver was uninsured.  You would start with the at least $25,000.00 of UM insurance on the friend's vehicle which the client was occupying at the time of the accident.  Then you could add on to it the at least $25,000.00 that the client has on her own family automobile policy.  To the extent that her adult child living in her house also has a separate car insurance policy, then you get add the child's $25,000.00 of UM coverage to provide coverage for the claim.  That would mean that the client would have a minimum of $75,000.00 of potential coverage for her injury in this situation. 

Sometimes the client or their family member will be reluctant to allow a claim to be made under their uninsured motorist coverage for fear that it will have some negative effect on their insurance rates.  You can assure them that by law in Virginia the insurance company is not allowed to raise their insurance rates for an accident which was not their fault.

Another thing about determining amounts of available insurance coverage under all of these different types is that the amount of coverage doesn't set the value of the case, but rather the maximum amount that is going to obtained from the insurance company.  So in the situation described above, just because there's $75,000.00 of potential coverage doesn't mean that the case is necessarily worth $75,000.00.  The case is worth whatever the case is worth based upon the liability and the extent of the injuries.  If the case is worth more than $75,000.00 and there is only $75,000.00 of available insurance coverage, then likely that is the maximum that can ever be obtained for the client regardless of the value of the injury.  Only if the negligent party has significant assets will any recovery beyond insurance be possible.

The insurance coverage that matters is the insurance that was in place on the date of the accident.  It doesn't matter what changes were made the next policy year or even the next day.  The only policy limits which are available are those in effect as of the moment of the crash.

UNDERINSURED MOTORIST COVERAGE

Underinsured motorist coverage (UIM) in Virginia is the situation where the amount of the liability coverage is less than the amount of the available uninsured motorist coverage.  See Virginia Code §38.2-2206(B).  You start with the same analysis set forth above for liability coverage and for uninsured motorist coverage.  Then you compare the two.  If there is more liability coverage than UM coverage, then all you get is the liability coverage.  To the extent that they are the same, you still don't get the benefit of anything beyond the liability coverage.  It is only where the amount of all available UM coverage exceeds the amount of liability coverage will UIM kick in.  The underinsured motorist coverage available is the amount above the available liability coverage.

For example, if the at-fault driver is carrying $25,000.00 minimum coverage and your client is carrying $50,000.00 of coverage (per person per accident) then you could collect up to the total liability limits of $25,000.00 from the at-fault driver and their liability policy.  You would be entitled to collect up to a second $25,000.00 from your client's own carrier under the underinsured motorist coverage.  There are all sorts of interesting twists and turns in this area of law that are beyond the scope of this paper.  However, those cases cover issues like deciding how much UM coverage there is, how many claims arise from an accident, and in what order does the offset for the available liability carrier's coverage get used up by the UIM insurers.

One important warning in this area is that under Virginia law you cannot reach an agreement with a liability carrier until you have the permission of the UIM carrier or you will void out your right to get the UIM coverage.  So what has to happen is to simply get a tender offer letter from the liability carrier clarifying that they are offering their full limits.  Then you have to undertake a separate negotiation with the UIM carrier.  The UIM carrier has to waive their right to subrogate against the liability carrier's client meaning promise not to ask for any of their money back from the defendant.  Once you reach an agreement with the UIM carrier for how much more they are willing to pay beyond the liability limits, you may resolve both claims at the same time giving a full release to the at-fault party and both carriers.

If you don't reach an agreement with the UIM carrier and you have to go to trial, the liability carrier still has to provide the defense for the at-fault driver even though they aren't the ones holding up a resolution of the case.  Often the UIM carrier will strike a harder bargain knowing that they aren't going to even have to pay the cost of the defense.  Under those circumstances the liability carrier's attorney may help you to encourage the UIM carrier to pay a fair amount to get the case resolved.  Other times you simply have to go the distance because of the peculiarities of this aspect of Virginia insurance law.  There has been a proposed bill in the state legislature to correct this anomaly in the law and to have a better system like our sister states of Maryland and North Carolina in this regard.

Please note that if you go into suit against either a UM or UIM carrier, you must serve a copy of the suit papers on them in order for the obligation to pay any verdict to kick in.  The suit always remains in the name of the individual defendant, but the service is required to put the UM/UIM carrier on notice to take whatever steps they want to take to defend their interests.  Often this means that you will have two or more lawyers fighting against your case during the discovery process.

SPECIAL INSURANCE ISSUES

There are numerous ways in which the insurance aspects of the case become more complicated.  For example, if the defendant is an interstate trucker then the liability insurance is typically more plentiful but also more complex.  For example, there's usually separate insurance on the tractor (driver's cab) from the trailer.  The good news is that under the Federal Motor Carrier Safety Regulations there has to be at least $1 million of insurance coverage in those situations.

Another way in which the insurance situation can be more complicated, but more favorable to the client, is where the at-fault driver was working as the employee of another entity.  The employer as a second defendant may provide more insurance coverage or it may provide more potential assets that will allow for a greater recovery in a catastrophic case.  For example, if the driver is a delivery employee for a big company like Coca-Cola, there could be additional coverages and assets of the company that could be at risk for the defendants in a serious injury case involving brain damage or amputation of a limb.

Whenever you're doing the legal research related to a Virginia insurance question always remember that there are three places to look for the applicable law.  The first place is the actual insurance contract and what coverage is there.  The second place is the statute in Virginia controlling automobile insurance, because if the policy provides less coverage than that required by statute, the statute controls.  See Virginia Code §38.2-31, 38.2-2204 ("omnibus clause"). 

Finally, there is abundant case law on insurance coverage issues that interpret the interplay of these factors.  Remember that to the extent that there is a lingering disagreement between your client and the insurance company about coverage that a declaratory judgment action is always potentially available to clarify these issues.

Richard N. Shapiro
Personal Injury & Wrongful Death Lawyer Serving Va Beach, Norfolk, Chesapeake & all of Virginia
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