Drivers in the Commonwealth of Virginia enjoy some of the lowest auto insurance rates in the U.S. But its House of Delegates is considering giving the green light to a bill that could potentially raise insurance rates for drivers and give the trial bar an E-Z Pass to file more lawsuits.
Senate Bill 1117 would bring ambiguity to a law that already provides strong protections for consumers. Currently, the Commonwealth gives drivers the right to file a complaint with the Virginia Bureau of Insurance under the Unfair Claims and Standards Practices Act, and gives drivers the right to sue their insurance company for acting in “bad faith.”
Even Virginia Courts have traditionally interpreted “bad faith” to be an intentional or reckless denial of a claim by an insurer. A strong state law combined with strong legal precedent means companies can spend more time investigating fraudulent claims, which helps keep costs down for consumers.
But SB 1117 would loosen that bad faith standard and encourage frivolous bad faith lawsuits against auto insurance companies.
SB 1117 is a solution to a problem that simply does not exist, and all at the expense of consumers’ pocketbooks. For example, Florida has some of the highest auto insurance rates in the country because of excessive bad faith lawsuits. Insurance premiums could certainly increase in Virginia if companies have to spend time and money on frivolous lawsuits.
The only winners will be trial lawyers who stand to benefit from changing the law.
The Virginia House Labor and Commerce Committee should take its foot off the gas and pump the brakes on SB 1117.