Disclosing Insurance Policy Limits in Liability Claims – 5 years later

Author: Melinda H. South

It has been 5 years since the Virginia statute was enacted to require the disclosure of the motor vehicle insurance company policy limits of the tortfeasor (person who caused the harm) prior to filing a lawsuit. [1] This statute is very helpful to any one who has been involved in an automobile accident through no fault of their own. Only a handful of states have similar statutes. [2] The Virginia statute has specific requirements that must be met in order to obtain this information:

The request must conform to these requirements and include the following:
1. Request must be in writing and must ask the insurer for policies that may be applicable to the claim.
2. The date of accident.
3. The name and last known address of the tortfeasor.
4. A copy of the accident report (Police Crash Report; Form FR300P).
5. The claim number, if available.
6. Medical bills in the amount of at least $12,500.

The statute requires the insurer to respond within 30 days.

Allowing an injured person to obtain this information before having to file a lawsuit has had a huge impact on settlement negotiations. [3] This statute has helped “level the playing field.” Prior to this statute, insurance companies had an advantage in guarding this information. The injured party or their attorney would have to negotiate without knowing the total amount of insurance coverage until after a lawsuit was filed. Since many cases settle without a lawsuit being filed, there were many cases where the injured person’s attorney didn’t know what the limits were. [4] Now the company must release the information about all policies that may apply — including umbrella and excess policies – once the conditions in the statute have been met.

Unfortunately, the law is limited to those injured persons with medical bills in excess of $12,500. For those injured people with injuries requiring less treatment than that, they still must negotiate without knowing what the limits of the insurance policy are. Hopefully the law can be expanded in the future to cover all injured persons, regardless of the amount of their medical bills.

About the Author: Melinda H. South is an Richmond attorney with the personal injury law firm of Allen & Allen. Melinda works as a legal researcher and assists in the preparation of firm briefs and legal memoranda.

[1] See Virginia Code §8.01-417, at http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+8.01-417.

[2] See article, “Legislation would mandate insurance disclosure”, Charleston (W.Va.) Daily Mail, Mar. 1, 2012, at http://www.charlestondailymail.com/News/statehouse/201203010022, stating: “At least a dozen states have some kind of disclosure requirement, according to a chart comparing state laws compiled by the West Virginia Offices of the Insurance Commissioner. About half of them limit the scope of the law to automobile insurance, according to the chart. The bill here would apply to all insurance policies. Five of the 12 states require some proof that an injury has occurred, but West Virginia’s does not, according to the chart.”

[3]  After filing a lawsuit in Virginia Circuit Court, an injured person has been able to obtain the limits of the insurance policy of the person they claimed injured them by sending a discovery request (an “Interrogatory” or “Request for Production”) to the person they’ve sued, as permitted by the Rules of the Supreme Court of Virginia.  Rule 4:1 states: “(2) Insurance Agreements. A party may obtain discovery of the existence and contents of any insurance agreement under which any person (which includes any individual, corporation, partnership or other association) carrying on an insurance business may be liable to satisfy part or all of a judgment which may be entered in the action or to indemnify or reimburse for payments made to satisfy the judgment.” See the Rules at www.courts.state.va.us/courts/scv/rulesofcourt.pdf.

[4] One of the problems this created was delaying the resolution of claims.  Even if the person who caused the collision only has the minimum limit of $25,000 insurance coverage, the injured person’s claim may remain open until all the medical treatment had been provided.  If, for instance, there was a hospitalization for injuries, then the medical bills could exceed $25,000 in only a day or two in the hospital.  If that’s the limit of coverage available, and the injured person’s attorney can find this out, then the claim could be settled promptly instead of waiting for all treatment to be completed and then staring settlement negotiations.