Why are my car insurance rates going up?

If your Virginia car insurance policy is renewing after July 1, 2023, you may have noticed an increase in your premium.

Trust me, this is a good thing!

A new underinsured motorist law went into effect that is going to help Virginia drivers, regardless of what state they are driving in,

New Underinsured Motorist Law

For policies issued on and after July 1 2023, there is a major change to how underinsured motorist coverage applies. The default on your automobile insurance policy will be that underinsured motorist coverage will be in addition to any amount of bodily injury liability coverage that may be available for your injuries.

Example: the person who caused the crash has $50,000 in liability coverage. You have $30,000 in underinsured motorist coverage. This adds to a total of up to $80,000 available in insurance coverage for your injuries.

Thanks to other changes to Virginia’s underinsured motorist statute in recent years, an injured person can accept the $50,000 from the liability carrier and proceed against their own insurance company for the remaining $30,000 in insurance coverage.

Old Underinsured Motorist Law

It’s important to remember what the old law is since it applies to car insurance policies issued prior to July 1, 2023 — meaning you can have a crash after July 1, 2023 but an “old” policy in effect and the “old” law will apply.

Under the old law, underinsured motorist coverage acted like gap insurance.

Example 1: the person who caused the crash has $30,000 in liability coverage. You have $50,000 in underinsured motorist coverage. There is a total of $50,000 in coverage available — $30,000 from the at fault person and $20,000 from your own carrier.

If your underinsured motorist coverage was the less than or equal to the amount available from the at fault driver’s insurance company, then there would be nothing available under your own policy.

Example 2: The person who caused the crash has $50,000 in liability coverage. You have $50,000 in underinsured motorist coverage. There is a total of $50,000 in coverage available — $50,000 from the liability insurance company. Your underinsured motorist carrier gets a “credit” or offset for the $50,000 paid from the liability carrier and nothing is available from your own policy.

Example 3: The person who caused the crash has $50,000 in liability coverage. You have $30,000 in underinsured motorist coverage. There is a total of $50,000 in coverage available — $50,000 from the liability insurance company. Your underinsured motorist carrier gets a “credit” or offset for the $50,000 paid from the liability carrier and nothing is available from your own policy.

So why are my rates going up?

The great part about the new law is that there is more insurance coverage available to injured car crash victims. Virginia’s minimum auto liability coverage is $30,000 and the minimum auto underinsured motorist coverage is $30,000. Under the old law, if you and the at fault party each have minimum limits policies, then the at fault carrier will pay no more than $30,000 and the underinsured carrier will pay nothing. Under the new law each carrier may have to pay $30,000 — effectively doubling the total amount paid.

In addition, changes in recent years to Virginia’s underinsured motorist settlement procedures allow you to settle a claim with the at fault driver’s insurance company and proceed to make a claim (or file a lawsuit!) only against your own underinsured motorist carrier. This means that insurance companies will now be paying out more money in the form of underinsured motorist claims and spending more money defending underinsured motorist claims.

But remember, this means injured victims like you are getting more of the compensation you deserve.