A Virginia bill, poised to advance to the governor, aims to give consumers recourse if auto insurers do not act in good faith when refusing or failing to pay a claim. 

Senate Bill 256 states that if an insurance company denies, refuses, or fails to pay property damage, medical expense benefit, or loss of income benefit claims filed by its policyholders under the provisions of their auto insurance, and a court finds the carrier not to be acting in good faith, they will be required to pay the policyholder double the judgment amount plus interest, attorney fees and expenses.

Jordan Hendler, Washington Metropolitan Auto Body Association executive director, said the bill is pro-consumer, which makes it pro-repairer. 

“It would help in mitigating gross devaluing of repair estimates,” Hendler said. 

Policyholders often don’t have a recourse for damages when insurers don’t pay the full cost to repair a vehicle, Hendler said. She said often insurers are only ordered to pay the policyholder what they were owed, per the contract. The cost of attorney fees is typically not covered. 

Hendler said shops have difficulty finding resolution through complaints with the Virginia Bureau of Insurance. 

“Really they [consumers] need more protection under the law than what they are getting with the DOI,” Hendler said. 

Litigation can be timely and costly and the average income can’t afford it, she said. 

“The insured is already inconvenienced in an unplanned life event on the second most expensive thing they own,” Hendler said. “In my opinion, this would help in having less frustration, less delay of claims, and more opportunity to have recourse if they are left with a poor response from their insurance company.” 

Last week the American Property Casualty Insurance Association released a statement in a last-ditch effort to encourage Gov. Glenn Youngkin to veto the bill. 

It claimed an independent actuarial firm, Milliman, found the bill would add a premium impact of $220 million to $550 million to motor vehicle plans in the state. It said that’s a 5.6% increase to 14.3% of auto premiums. 

“Senate Bill 256 would lead to higher auto insurance loss costs, increased litigation, and could increase the number of uninsured drivers on the road if coverage becomes less affordable,” said Nancy Egan, APCIA vice president of state government relations and counsel, in the release. “The bill would likely have a disproportionate impact on low-income Virginians who can least afford higher premiums. Governor Youngkin needs to protect Virginians from higher auto insurance costs by vetoing Senate Bill 256.”

Hendler said insurers always use a tactic that says premiums will be increased to lobby against restrictions. 

“If they were processing claims properly and in good faith, there would be no worry of bad faith claims against them,” Hendler said. “There are definitely bad actors that are out there.”

Hendler also praises the bill for using language that gives courts more leniency in determining if the consumer has been wronged. She said a case claiming bad faith has to prove malicious intent, which can be difficult. 

By using the words “not made in good faith,” the bill doesn’t require a policyholder to provide malicious intent, she said.

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