The Virginia General Assembly passed a bill that will require auto insurers to pay double if a court finds they arbitrarily did not pay a claim to a policyholder, set to go in effect July 1.
The bill applies to any insurer that denies, refuses or fails to pay to its insured a property damage, medical expense benefit or loss of income benefit claim in bad faith, as found by a court, and also requires the insurer to pay interest, as well as the claimant's attorney fees and expenses.
Supporters of the bill call it a win for customers who otherwise had no recourse when an insurer refused to pay claims, but opponents say it could drive up auto insurance costs.
The American Property Casualty Insurance Association (APCIA) said a study, conducted for it by actuarial firm Milliman, Inc., projects an increase in auto insurance premiums ranging from 5.6% to 14.3%, which it said could translate to an additional annual cost of $220 million to $550 million for Virginia's motorists.
“Senate Bill 256 would likely exacerbate the financial burden on Virginians, especially affecting low-income individuals who can least afford to pay higher premiums,” said Nancy Egan, APCIA’s vice president of state government relations and counsel, who urged Gov. Glenn Youngkin to veto the bill.
