Former Del. David Yancey wrote in a March 20 guest column that requiring Virginia insurance companies to act in good faith towards their insured drivers will be harmful to Virginia consumers (“Insurance costs would rise due to legislature’s action”). His assertions are wrong and based on flawed assumptions.
Uninsured or underinsured motorists (UM/UIM) coverage is the insurance that protects you when you are hit by a driver with little or no insurance. Thanks to a 2017 Supreme Court of Virginia case, under current Virginia law, your auto insurance company is not required to pay a dime of the coverage that you bought unless you first win a trial against the driver who hurt you. That is unfair.
As an attorney for accident victims, Ed Booth sees too many instances of delay even where fault and the victim’s damages are both clear. On top of the damages from the accident, such as medical bills and lost wages, these victims must sue and win a case against the at-fault drivers before they have a legal right to the UM/UIM benefits they have bought.
That is why state Sen. Scott Surovell carried Senate Bill 256 this session. The bill requires insurance companies to act in good faith towards their policyholders when they are injured by an uninsured or underinsured motorist, rather than first force accident victims to win a lawsuit against the at-fault driver. If your insurance company does not act in good faith they face liability and damages. In other words, the bill provides incentives for insurance companies to do the right thing, and consequences if they don’t.
Not surprisingly, the bill passed through the General Assembly with broad bipartisan support, and now awaits approval from Gov. Glenn Youngkin, but the insurance companies are predictably howling and raising specious arguments against the bill.
These insurance companies claim that SB256 makes new demands. To be clear, SB256 requires no new or additional payments at all, only good faith in dealing with the people who bought and paid for their coverage. There are no consequences without bad faith.
Yancey’s column claimed auto insurance rates will go up because of this bill. First, if insurance companies must raise rates to do the right thing and act in good faith, it means that they are currently making money by doing the opposite.
Second, the study cited in the column — the sole piece of evidence that SB256 will raise rates — was commissioned by the American Property Casualty Insurance Association. It contains incorrect assumptions that were factored into its analysis.
For example, using data from another state, it assumed an increased incentive for policyholders to retain a lawyer in UM/UIM cases. The opposite is true. In many cases, policyholders only obtain an attorney after they have trouble getting their insurer to pay.
The study also claims, without any basis in fact, that there is a greater incentive for insurance fraud. How could acting in good faith encourage fraud? By building these and other groundless expenses into its analysis, the study found — unsurprisingly — that insurers would suffer losses. And, of course, the only solution for these contrived losses is to pass the cost on to policyholders.
The governor should sign the bill so that Virginians can receive the benefit of the insurance they purchased.
Ed Booth is a personal injury lawyer licensed in Virginia and North Carolina. A graduate of the University of Richmond School of Law, he has been a lawyer since 2004, including serving as a senior assistant commonwealth’s attorney in Virginia Beach. Christopher Seiler and Gabriel Mahoney are students at the University of Virginia School of Law, where they helped develop SB256 as members of the State and Local Government Policy Clinic. The views they express are their own and not those of the university or School of Law.
