Virginia Bill Could Lead to 19% Auto Insurance Rate Hike

The bill encourages litigation when an insured individual seeks coverage from their own carrier due to another driver’s inadequate coverage.

A recent independent study by an actuary showed similar bills have previously predicted a 19% increase in premiums. Image via Shutterstock.

In Virginia, Senate Bill 256 recently advanced through the Senate Committee on Commerce & Labor, threatening to propel auto insurance costs to new heights in Virginia.

Opponents of the bill, which encourages litigation when an insured individual seeks coverage from their own carrier due to another driver’s inadequate coverage, say it could introduce additional financial strain by fostering an environment ripe for litigation.

According to a 2022 independent actuarial study, similar legislative efforts have previously predicted a 19% surge in premiums for underinsured/uninsured motorist (UM/UIM) coverage in Virginia. However, Senate Bill 256 proposes even more extensive measures than its predecessors, hinting at potentially steeper increases in annual auto insurance premiums.

“This harmful bill could result in higher auto insurance costs for consumers at time when many can least afford it,” said Nancy Egan, vice president and state government relations counsel for the American Property Casualty Insurance Association (APCIA). “Over the past five years, inflation, supply chain issues and the increasing cost of medical care and auto repairs have resulted in a 36.2% increase in auto insurance rates. Senate Bill 256 could cause auto insurance costs to spike even higher.”

The situation is further complicated by legislative changes in 2021, which escalated the minimum insurance coverage requirements for Virginians. These adjustments are set to intensify in 2025, placing Virginia among the states with the highest insurance minimums.

“When the next increase in minimum limits takes effect in 2025, auto insurance costs will increase for many Virginians, especially those who purchase the lowest levels of coverage and can least afford any more price hikes. Senate Bill 256 could further exacerbate rising auto insurance costs,” added Egan.

Despite the bill's intentions, APCIA points out it may be redundant, given the existing provisions under Virginia's Unfair Claims Settlement Practices Law. The Virginia Bureau of Insurance, already vested with the authority to address consumer UM/UIM complaints and enforce actions against insurers, reported only seven instances of unfair claims violations over a five-year span.

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