Virginia has passed legislation that requires auto insurers to pay policyholders double the judgment amount if a court finds it denied, refused, or failed to pay property damage, medical expense benefits, or loss of income benefit claims under policy provisions. 

Senate Bill 256 was enacted April 17 after the House and Senate approved recommendations given by Gov. Glenn Youngkin. 

It will go into effect July 1. 

The bill also requires insurers to pay interest on the judgment, along with attorney fees and expenses. 

Youngkin’s recommended changes require claimants to provide notice to insurers 45 days prior to “making such demand.” The claimant should give the insurer information and documentation for the insurer to assess. 

“There shall be no action for bad faith under this section if the insurer tenders to the claimant the lesser of the (i) applicable limits of the policy or (ii) monetary amount demanded by the claimant either prior to the insurer’s receipt of a settlement offer from the claimant or within 45 days of the insurer’s receipt of the notice of the claimant’s intent to make a claim and accompanying information and documentation,” the governor’s changes say. 

Jordan Hendler, Washington Metropolitan Auto Body Association executive director,  previously 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. 

The American Property Casualty Insurance Association released a statement in a last-ditch effort to encourage 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.”

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