Excess Plaintiff's Verdict: Effect on the Defendant

In our example, Joe has $25,000 in liability coverage and plaintiff, Priscilla Pristine, has $100,000 in UM/UIM coverage with State Farm, the UIM carrier. Assume the jury returns a verdict against Joe for $300,000. What happens under the new UIM law?

Answer: The plaintiff already settled with Joe’s liability insurer for $25,000. Upon judgement, State Farm, the plaintiff’s UIM carrier, pays the plaintiff $75,000 in UIM benefits [$100,000 - $25,000 = $75,000 UIM]. Under new section (M) of §38.2-2206, the clerk of court enters judgement in the name of “Released Defendant” enforceable against the UIM carrier, State Farm, up to its policy limits, here $75,000. Joe, the defendant, called the “Released Party / Defendant” owes nothing. If Joe reasonably cooperated with State Farm, the UIM carrier, State Farm can not subrogate against Joe – meaning State Farm can not go after Joe to get its $75,000.00 back. The new law, subsections (K) and (M) of Virginia Code §38.2-2206, have released Joe completely from paying the excess verdict above his $25,000.00 policy limits.

Question: What if Joe defendant is a millionaire with easily reachable assets with only $25,000 in liability coverage with Geico? Can the plaintiff collect the excess verdict of $200,000 from Joe?

Answer: No. But, had the plaintiff’s lawyer known that Joe had reachable asses, it would have been wise not to settle with Geico, Joe’s liability carrier, and proceed to trial. Note: the last sentence of new subsection (K) of VA code §38.2-2206 provides, “This section provides an alternative means by which the parties may resolve claims and does not eliminate or restrict any other available means.”

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