Virginia Governor Signs Bill That Makes Unreasonable Limits Set by Insurers an Unfair Practice

Virginia Gov. Tim Kaine recently signed a bill that will deem the setting of arbitrary and unreasonable limits on what an insurer will allow as reimbursement for materials as an unfair settlement practice. The bill will take effect on July 1, 2008.

The law modifies section 38.2-517 of the Code of Virginia, and adds the following to a list of unfair settlement practices:

6. Engage in the practice of capping. As used in this subdivision, "capping" means the setting of arbitrary and unreasonable limits on what an insurer will allow as reimbursement for paint and materials.

The rest of the already-enacted list includes items such as requiring an insured or claimant to utilize a specific repair facility, engaging in any act of coercion or intimidation to cause an insured or claimant to utilize a specific facility for repairs, failing to disclose to the insured or claimant that a third-party administrator is not the insurer and is acting on behalf of the insurer (in a glass claim specifically) and failure to advise an insured or claimant when a third-party administrator or insurer has a financial interest in a specific repair facility.

The bill originally was introduced in the Senate by Sen. J. Chapman Petersen.

The code notes that the Virginia insurance commissioner will investigate, with the written authorization of the insured or claimant, any written complaints received pursuant to this section of the code, whether the complaints are made by a consumer or repair facility.

CLICK HERE for the full text of the recently passed bill.

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