The Virginia General Assembly has passed and the governor has signed into law House Bill 107, which introduces important changes to how underinsured motorist benefits are handled in the Commonwealth. The legislation, which amends sections 8.01-66.1:1 and 38.2-2206 of the Code of Virginia, focuses on clarifying procedures for settlements involving liability insurance and the subsequent pursuit of underinsured motorist coverage.
Under the new provisions, an injured person or their personal representative is permitted to settle claims with the at-fault driver’s liability insurer for the available policy limits. This settlement can include a full release of the at-fault party that does not interfere with the injured party’s right to seek additional compensation through underinsured motorist benefits. Any conflicting terms in such a release are invalidated by the law.
Once the liability insurer pays the policy limits, it is no longer obligated to defend the at-fault driver in further legal proceedings related to the incident. This change simplifies the process by allowing the liability insurer to conclude its involvement promptly after settlement.
A key aspect of the bill addresses subrogation rights for underinsured motorist insurers. These insurers generally lose the ability to pursue subrogation against the underinsured motorist unless the motorist has unreasonably failed to cooperate in defending any lawsuit brought against them. The law creates a rebuttable presumption that the underinsured motorist has failed to cooperate reasonably if they do not attend subpoenaed depositions or trials after receiving adequate notice, fail to assist with written discovery, do not meet with defense counsel for a reasonable time after receiving notice following service of the lawsuit on the underinsured motorist benefits insurer and prior to their deposition or trial, or neglect to inform their counsel of any address changes.
To encourage participation, the underinsured motorist benefits insurer must reimburse the motorist for reasonable expenses associated with cooperation, including travel costs when the motorist lives more than 100 miles away from the location of the deposition or trial. Additionally, if a court finds that the motorist cooperated appropriately or that any lack of cooperation was not unreasonable, it may order the underinsured motorist insurer to pay the motorist’s costs and attorney fees.
Settlements under the new framework must be documented in writing and signed by both the injured party and the motorist. The signed document includes a notice that the motorist must initial, which outlines the payment of liability limits, the advantages of the release, specific cooperation requirements such as appearing at depositions and trials, helping with discovery, consulting with defense counsel, and updating contact information, as well as the potential outcomes of failing to cooperate. These outcomes include the possibility that the claim against them continues, personal liability for judgments beyond insurance coverage, and the insurer’s right to seek subrogation.
Notice can also be delivered via certified mail as an alternative to in-person signing.
When pursuing underinsured motorist benefits after such a settlement, the legal action must be filed against the released defendant by name. The complaint needs to be served on the insurer providing underinsured motorist coverage, but service on the released defendant is not mandatory. Any verdict rendered is recorded in favor of the “Released Defendant,” and enforcement is limited to the underinsured motorist insurer up to the available benefits.
In situations involving claims for disability or wrongful death, court approval of the settlement is not required but is optional. If approval is not sought, any payments can be placed in a trust or deposited with the court until approval is obtained, and this arrangement does not affect the underinsured motorist claim.
Importantly, the law does not alter the fundamental requirements for underinsured motorist coverage in Virginia, such as the minimum coverage amounts, the form of policy endorsements, or the sequence in which benefits are paid out.
This legislation provides a more structured approach to managing claims where the at-fault driver’s insurance is insufficient. By defining clear rules for releases and cooperation, it supports the ability of injured Virginians to obtain fair compensation through multiple avenues of insurance. The emphasis on cooperation from the underinsured motorist ensures that legal processes can move forward efficiently, reducing delays that might otherwise arise from non-participation.
The bill was introduced early in the 2026 session, with prefiling on January 2 and formal introduction on January 14. It was referred to the House Committee on Labor and Commerce for review. Following deliberations, it advanced through the legislative process and was ultimately enrolled and approved as chapter law in the Acts of Assembly.
Proponents of the measure highlight its role in balancing the interests of accident victims, insurance providers, and responsible parties. The clarified procedures help prevent situations where a release might unintentionally limit access to underinsured motorist benefits, thereby offering better protection for those harmed by underinsured drivers. At the same time, the cooperation mandates promote a sense of accountability, ensuring that individuals whose negligence causes harm contribute to the defense of claims against them when possible.
In practice, this means that after a liability settlement, the injured party can proceed with a lawsuit against the released defendant specifically to access underinsured motorist funds, with the insurer notified but the original defendant not necessarily having to be served again. This streamlines court involvement and focuses resources on resolving the compensation issue.
The requirement for written notices and signed acknowledgments informs all parties of their roles upfront, which can lead to fewer disputes later in the process. By specifying timelines and conditions for the presumption of non-cooperation, the law provides predictability that benefits both claimants and insurers in planning their strategies.
Furthermore, the provision for covering cooperation expenses by the underinsured motorist insurer removes a potential barrier for the motorist to participate fully, such as costs associated with travel for legal proceedings. This aspect facilitates smoother litigation when needed to determine the full extent of damages.
Overall, House Bill 107 represents a comprehensive update to Virginia’s handling of underinsured motorist matters, aiming to make the system more effective and equitable for those navigating the aftermath of vehicle accidents involving insufficient insurance coverage. As the law takes effect, it is expected to influence how claims are processed across the state, providing a model for addressing similar issues in insurance disputes.
