The topic of Car Accident Underinsured Motorist Coverage in Virginia is complex.
The pertinent statute is Va. Code § 38.2-2206.
This post is one of several dealing with uninsured and/or underinsured motorist claims. The others are calculating-coverage, finding coverage , settling ,litigation. For purposes of these blogs I use the term underinsured broadly to include uninsured claims unless that latter term is used expressly.
Car Accident Underinsured Motorist Coverage-General Principles-All Vehicles and All Sums
It begins in subsection A by saying that the policy, which includes commercial policies, must pay “…the insured all sums that he is legally entitled to recover as damages…” The term “all sums” becomes critical because what carriers do is try to apply certain set-offs. A set-off may be found in a clause within the policy entitled “Limits of Liability”. It also may be found in a policy provision entitled “Other Insurance”. Those types of set-offs, to the extent that they diminish the amount that the insured is legally entitled to, are invalid.
In a typical such clause, the policy may say that the uninsured motorist payments are reduced by any liability payments made to a plaintiff under the same policy. Such a set-off is invalid. Nationwide v. Hill, 247 Va. 78 (1994)
Definition of Insured
Under Va. Code § 38.2-2206, the insured is defined as the named insured or resident relative while in a motor vehicle or otherwise. That means that the plaintiff may be driving a vehicle not listed on the policy and still be covered by UM/UIM. Any attempt to restrict this coverage is void.
If the carrier tries to stand on such an exclusion then pursue a bad faith claim pursuant to Va. Code § 8.01-66.1.
Premiums
One question that people may ask in terms of making a UM/UIM claim is what effect that is going to have on their premiums. Assuming the crash was not their fault, then it should not have any effect on their premiums or on any safe driver insurance plan. Va. Code § 38.2-1905
Car Accident Underinsured Motorist Coverage-General Principles-Is it a UM or UIM Claim?
Va. Code § 38.2-2206.K only applies to UIM claims. It does not apply to UM claims. If the plaintiff’s claim is against an uninsured or unknown motorist, that is a UM claim. The plaintiff does not get the benefit of this Code section. Virginia Farm Bureau v. Gibson, 236 Va. 433 (1988)
Is Defendant Uninsured?
Keep in mind that there is no burden on the plaintiff to prove that there is no coverage in order to bring a UM claim. All you have to do is prove liability and damages.
When the DMV certifies that there is no liability insurance coverage, that creates a rebuttable presumption that the vehicle is uninsured. Va. Code § 38.2-2206.C. Where the tortfeasor was driving his mother’s uninsured vehicle on business for the employer, the vehicle was not an uninsured motor vehicle because the liability coverage from the employer was available. US Fidelity v. Byrum, 206 Va. 815 (1966)
Defendant may be uninsured for a number of reasons:
a. Coverage is less than the Virginia minimum. If the liability coverage is from anther state, you need to know what state law mandates. Virginia has a statutory minimum of liability coverage. That is, if you have coverage, it has to be at least that much. If you don’t have the statutory minimal coverage, then you are deemed to be uninsured. For instance if your policy is $10,000, then you’re deemed to be uninsured. That means that the plaintiff’s uninsured coverage would apply in toto. The result of that is that if the defendant’s policy is $10,000 and the uninsured motorist coverage is $25,000, the total recoverable is $35,000. See Virginia Code § 46.2-472 and 38.2-2206.B and Reliance Ins. Co. v. Darden, 217 Va. 694 (1977)
In Reliance, the issue was whether the “deemer clause” actually increased the coverage in Virginia. You need to read the policy language to see if the deemer clause actually increases the coverage to Virginia’s minimum allowed coverage. If it doesn’t, then you have a UM claim. If it does, then may have a UIM claim. This little quirk likely disappeared as of July 1, 2024 when all motorists were required to purchase liability coverage.
b. The defendant is unknown. A hit and run does not require actual physical contact. In these cases, there are two classes of insureds. The first class is the named insured, resident spouse and resident relatives injured by a hit and run vehicle anywhere and in any vehicle. The second class are those who are only covered when they are injured by a hit and run vehicle while in a covered auto.
In some instances, the at-fault motorist is never identified. That is referred to as a “John Doe” case. That motorist may not be identified because the motorist simply left the scene or it may have been a non-contact incident. The other vehicle then left the scene perhaps not even knowing that there was a resulting crash. These no-contact cases must be reported promptly to the insurer or to local law enforcement.
There is no obligation to identify that unknown motorist per Mangus v. Doe, 203 Va. 518, 520 (1962). The better practice is to do so. For all you know, that unknown motorist could have $10,000,000 in coverage. If the UM coverage is only $50,000, you may have trouble explaining your failure to pursue this.
SOL
If suit is filed, then John Doe is named as a defendant in the Complaint. You have two (2) years from the date of the crash to sue John Doe. You should serve both the Clerk of the Court and the uninsured motorist carrier. You have three (3) years from the commencement of your suit against John Doe to sue your actual defendant if that person can be identified. If the John Doe collision occurred out of state, then the plaintiff can sue John Doe in the Virginia county were the plaintiff resides. Va. Code § 8.01-263(10). However in UM and UIM cases where there is no John Doe, there is no statute of limitations as far as naming the UM or UIM carrier or to serve them. Glen Falls Insurance Co. v. Stephenson, 235 Va. 420 (1988) The only requirement is they be served before judgment.
John Doe and Others
The suit may be brought where the plaintiff resides or where the claim arose. 8.01-263(10). If you have an instance where driver and passenger have switched positions in the car, then what you may have to do is sue both defendants along with John Doe.
In an instance where you sue a “John Doe” and also sue an at-fault driver, if your verdict is only against John Doe, then the uninsured motorist carrier pays. If the verdict is against both John Doe and the known defendant, then the liability carrier pays. If however that verdict is over the liability limits, then the liability carrier pays its limits and the UIM carrier pays up to its limits. The UIM carrier however retains the right of subrogation, so in most cases, the liability carrier pays the entire amount. Harleysville v. Nationwide, 789 V.2d 272
c. The defendant simply has no insurance. Where the insuring company denies coverage or becomes insolvent, that triggers UM coverage but not UIM coverage.
d. There is no principal involved on whose behalf the operator is acting.
e. A vehicle operated on behalf of the Commonwealth met the definition of an uninsured motor vehicle. Virginia Farm Bureau v. Drewry, (King William Circuit Court, 2007)
Property Damage
The property damage deductible does not apply where the defendant is known but uninsured. However the deductible will apply to a property damage claim where the claim is a John Doe claim. Typically there is limited duration of coverage for car rental needs. The at-fault driver’s liability policy however is required to pay for rental for as long as it takes to pay for the total loss of the claimant’s vehicle or to fully repair the vehicle.
Property Damage to a Structure
In those instances where an uninsured vehicle hits a structure and causes property damage, there may be coverage there under the owner’s UM car accident coverage.
Car Accident Underinsured Motorist Coverage-General Principles-Self-Insured Entities
A self-insured entity may claim that their policy was not issued or renewed after July 1, 2023. Technically a self-insured certificate does not renew. It was issued when it was issued. Therefore they could argue that they’re governed by the old law. That seems however to be contrary to the intent of the law. Therefore a good argument can be made that the self-insured entity is governed by the new law.
Whenever you are dealing with a self-insured defendant there are several things to consider: (1) To the extent that a vehicle owner is self-insured, their entire coverage may be available in spite of any statutory language allowing them to limit their coverage. See the case of VACORP v. Young, 298 Va. 490 (2020). (2) A self-insured entity however does have certain benefits/protections. It is not required to have the same UM/UIM coverage as its liability coverage. (3) Catron v State Farm, 255 Va. 31 (!988) says the self-insured is first in line to get the credit of the liability policy. (4). Va. Code 46.2-368.B says coverage shall not exceed the requirements of 46.2-472. (5) The coverage is secondary to other collectible coverage. (6) Va. Code § 46.2-368 requires self-insurers to provide protection against the uninsured or underinsured motorist to the extent required by Va. Code § 38.2-2206. Self-insurers cannot pick and choose the parts of that Code section that apply. Therefore a rental car company cannot say that the option of resolution under Va. Code § 38.2-2206(k) is unavailable to it. Resolution under this Code section however is entirely voluntary. (7) The bottom line is that self-insured vehicles will almost never owe UIM benefits.
