Virginia UIM Settlement Law 101

Your client Priscilla Pristine is injured in an auto crash on January 5, 2016 in Alexandria, Virginia, suffering a traumatic brain injury. The defendant, David, is insured with Allstate for $50,000. David’s policy renewed on January 4, 2016. Priscilla is insured with Progressive and has $100,000 in UM/UIM coverage. The Progressive policy renewed before the crash in 2016.

Allstate offers its policy limits of $50,000. With Priscilla’s permission, you accept Allstate’s offer by telephone call to the adjuster. You, as Priscilla’s attorney, receive a release in the mail. You follow the new UIM settlement procedure law which tells you to:

“Proceed to execute a full release and finalize the proposed settlement without prejudice to any underinsured (UIM) benefits”

Priscilla, your client, signs the liability release. You mail it to the Allstate adjuster. The Allstate adjuster calls the defendant, David, into his office to explain the new statutorily required “Notice to Released Party”. The notice provides that “upon payment” of the available liability policy limits by Allstate, the UIM carrier’s subrogation rights are eliminated provided David reasonably cooperates with Progressive, the UIM carrier, in its defense of the plaintiff’s UIM claim. The notice also tells David that after he and the plaintiff each sign the release and upon payment by Allstate of its $50,000 to the plaintiff, that no judgement can ever be entered against David by the plaintiff. The notice also tells David that he is “not required to consent to settlement in any manner” and Allstate will defend him if he doesn’t consent to the settlement. If he does consent to the settlement by signing the release, Allstate will no longer owe him any duties, including the duty to defend him with a Allstate lawyer. Most importantly, David is advised by the Allstate adjuster that he must reasonably cooperate with Progressive, the plaintiff’s UIM carrier, in its defense of the UIM claim. If David fails to cooperate, Progressive’s subrogation rights are revived.

Defendant David signs the release that Priscilla also signed. Allstate mails a $50,000 liability payment to you, the plaintiff’s attorney. Progressive, the UIM carrier’s subrogation rights and consent to settle rights are now eliminated along with Allstate, the liability carrier’s duty to defend.

Priscilla receives the liability carrier’s available policy limits without prejudice to her UIM claim against Progressive. Now, Progressive has “skin in the game” and must pay all defense costs should it decide to defend the remaining UIM portion of the case against David, the “released defendant”.

Hopefully, now, with “skin in the game”, Progressive, in the example, and other UIM carriers will have a reason to settle meritorious UIM cases, without requiring the plaintiff to go through the expense of obtaining a judgment against the “released defendant”.

Alexandria personal injury lawyer Gerald Schwartz is a past president of the Virginia Trial Lawyers Association. His passion since graduating law school is helping injured people get their lives back following major injury.

Speak directly with Gerald Schwartz for a free consultation by calling 1-800-423-0055.