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.”

Gerald Schwartz is frequently invited to teach other lawyers how to maximize a client’s recovery in Underinsured Motorist (UIM) cases. For help with your own UIM case, call Gerald Schwartz for a free consultation at 1-800-423-0055.