Relatively under-the-radar legislation, Senate Bill 256, should be yet another deleterious bill vetoed by Gov. Glenn Youngkin looking out for the people.
There is insufficient evidence to show the need for this proposed law that will increase the cost of living in Virginia and make Virginia less competitive with neighboring states.
The purpose of this bill is to make it easier for lawyers to sue insurance companies claiming they are acting in “bad faith.” It would increase the potential damages insurance companies would have to pay if found culpable, while simultaneously lowering the threshold for proving they are guilty.
Such rare cases of “bad faith” culpability should continue to be adjudicated and remedied by the State Corporation Commission, which already regulates insurance companies.
The adverse impacts of this law will hit first and foremost Virginia auto owners. According to estimates from independent actuarial firm Milliman, SB 256 could raise car insurance premiums by as much as 14% across the Commonwealth. This would come at a time when the cost of buying and owning a car are already elevated. The baseline price of a new vehicle now hovers close to $50,000 and given the amount of new technology – and the increasing adoption of electric vehicles – the costs of labor and parts and supplies for cars have increased significantly in recent years as well.
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Virginia already has a higher cost of living than many neighboring states with whom we compete for investment and jobs. One way this is felt is through higher car insurance premiums. According to recent estimates, the average cost of car insurance in Virginia is just under $2,000 per year. In North Carolina, the average policy is under $1,500 per year. In Tennessee, under $1,500. In South Carolina, it’s just over $1,500.
Car insurance in these states is significantly cheaper than in Virginia, even before the potential premium increase that would go into effect if SB 256 is signed into law. In addition, these states also have lower taxes, lower electricity costs and, in general, a lower cost of living overall. The impacts of this lower cost of living are reflected in the fact that these states have all seen net in-migration flows in recent years.
South Carolina had almost two people move into the state for every person that left in 2023. In 2022, booming, prospering Tennessee saw its highest net domestic migration in the state’s history. And North Carolina has seen a steady increase in its population growth over the last decade, particularly driven by young people. Meanwhile, Virginia’s population numbers have stagnated for a decade.
While not all movements of free people can be attributed to a higher cost of living, it certainly is a significant factor. Americans across the country have been squeezed by pandemic lockdowns and inflation over the past several years. And one way people and businesses have responded is by moving to states with a lower cost of living, less taxes and more freedom.
While Virginia remains a great place to live, work and raise a family, our elected officials must strive to keep the cost of living down. The governor has done his part, liberating Virginians from lockdowns and forced COVID vaccines on college students and signing over $5 billion in tax relief during his time in office. He has also shown a willingness to veto legislation that would increase taxes on sales and electricity bills and other cost increases for everyday individuals and small businesses.
Importantly, Youngkin is bound to understand the ramifications of SB 256 if it is signed into law. It will increase insurance premiums for Virginians and contribute to an overall increase in the cost of living in the commonwealth. It may also give other business-friendly states another attractive competitive advantage over Virginia. Vetoing SB 256 will protect Virginians from an unnecessary premium increase and reaffirm the commonwealth’s business-friendly environment.