Will your car insurance rates go up? Local agents say yes, legislators say no

Bill before the General Assembly determines how underinsured claims are handled

ROANOKE, Va. – Could you soon be paying more for car insurance? That's the question many area agents are asking with a bill before the General Assembly. It deals with how you get paid when you're hit by an underinsured driver. But legislators backing the bill said that's fear mongering, and the bill is actually good for consumers.

Senate Bill 1117 focuses on two words -- bad faith, as in when your insurance company pays you out, is that offer a bad deal. The bill has bipartisan support in the General Assembly, but some local agents said it's legislating a problem that doesn't exist and will cause more headache than good.

Botetourt County insurance agent Forest Wagner has been following politics very closely. As a director in the Independent Insurance Agents of Virginia, he said Senate Bill 1117 is a wolf in sheep's clothing.

"I think it makes the process much more difficult for the average consumer," Wagner said.

The question comes into play when something like the following situation happens. You're driving down the road and an uninsured or underinsured driver hits you, or even an insured driver hits you and then does a hit and run and is never found. Your insurance company will pay you with the underinsured or uninsured part of your policy.

You can either take that offer to repair your car and pay your medical bills, or if you think it's in bad faith, a bad deal, you can appeal. Under the current law, you can go to the Bureau of Insurance under the State Corporation Commission to settle the issue. But the proposed law takes the issue directly before the judge, asking you to sue your own insurance company and agents said that benefits attorneys' pockets only.

"(Lawyers) are going to contact the individual and say every offer could be a bad faith offer," Wagner said. "You're never going to know if it's a bad faith offer until you go to court."

In the last two years, only two drivers filed claims with the SCC thinking they got the raw end of an insurance deal. Wagner said customers will face more headaches going to court than allowing the state investigators and arbitrators to do it for them.

But despite those claims, the bill is halfway to passing and has bipartisan support. Democratic Sen. Chap Petersen of Fairfax is the bill's patron and said premiums will not go up. He's an attorney himself and he wants people to have their chance in court and get what he said consumers are owed.

"I think it's a pro-consumer bill that will level the playing field," Petersen said. "If someone doesn't keep their end of a contract, of course it's a court issue, so why should an insurance company be able to hide behind state agencies?"

But local agents like Wagner said that's just not true, and the new bill asks customers to sue their insurance companies instead of working it out and that is something that will have costs that bleed down.

"They're going to have a higher cost to resolve those claims and so that higher claim resolution cost is going to follow through to everyone," Wagner said.

Petersen said he got the idea after being contacted by lawyers from Lynchburg who were having issues getting a fair payment for one of their clients.

The bill passed the Senate 25-15 and is currently before the House Committee on Commerce and Labor.

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