Virginia’s approach to underinsured motorist claims changed significantly in 2026 when Governor Glenn Youngkin signed House Bill 107 into law. For accident victims who carry underinsured motorist (UIM) coverage, this legislation reshapes how settlements are sequenced, how policy limits are coordinated, and — most critically — how much total compensation a victim can recover. If you were injured by an underinsured driver in Virginia, understanding this new framework is essential before you accept any settlement offer. This guide breaks down exactly what changed, how it affects your Virginia underinsured motorist settlement 2026, and what real-world recovery looks like under the updated statute.
What Virginia House Bill 107 Actually Changes
Before HB 107 took effect, Virginia’s underinsured motorist framework contained a frustrating catch for injured victims: settling with the at-fault driver’s liability insurer could trigger subrogation rights by your own UIM carrier, effectively reducing or eliminating your UIM benefit. Insurers routinely argued that accepting the tortfeasor’s policy limits constituted a waiver of cooperation or prejudiced their subrogation position, giving them grounds to deny or reduce UIM payments. House Bill 107, enrolled and approved during the 2026 legislative session, eliminates both of those leverage points simultaneously by amending Sections 8.01-66.1:1 and 38.2-2206 and creating a defined framework governing settlement sequencing and UIM insurer subrogation rights.
Under the amended Virginia Code §38.2-2206, a UIM insurer no longer retains subrogation rights once the insured has settled with the at-fault driver’s liability carrier — provided the settlement is documented in writing and the insured gives proper written notice to the UIM carrier before finalizing the liability settlement. The insurer also loses its duty to defend after the liability policy is exhausted and paid. Critically, UIM insurers now have no subrogation rights unless the claimant fails to reasonably cooperate in the defense — for example, by skipping depositions or trial appearances, failing to assist with discovery, refusing to meet with counsel, or neglecting to notify the insurer of address changes. This cooperation obligation is now more narrowly and precisely defined than it was under prior law.
A second structural change clarifies stacking rules. Under HB 107, UIM coverage is not offset against liability coverage received unless the named insured affirmatively elected a reduction endorsement at policy inception. This single sentence in the new statute is worth thousands — sometimes hundreds of thousands — of dollars to seriously injured victims. These changes build on a broader reform trend in Virginia: starting January 1, 2025, the state raised minimum liability limits from 25/50/20 to 50/100/25 and made UM/UIM coverage mandatory rather than optional, ensuring that far more drivers now enter the claims process with meaningful coverage on both sides.
The Written Notice Requirement Under HB 107
The written notice requirement is not a formality. HB 107 specifies that the insured must provide the UIM carrier with written notice of the proposed liability settlement, including the at-fault driver’s policy limits and the insurer’s identity, before the liability release is signed. The UIM insurer then has a defined window to respond, exercise any remaining rights, or waive its position. Miss this step and you risk triggering the cooperation exception — the one scenario where the insurer can still deny UIM benefits. If you are navigating a Virginia underinsured motorist settlement 2026, this procedural step must be locked in early.
How the New Settlement Sequence Works in Practice
HB 107 establishes a clear two-stage process for resolving underinsured motorist claims in Virginia. Understanding this sequence is not optional — deviating from it at either stage can cost you significant compensation or trigger the cooperation exception that strips your UIM rights entirely.
Stage One: Exhaust the Liability Policy
The process begins with the at-fault driver’s liability carrier. Your attorney demands the liability policy limits, documents the insurer’s identity and coverage amount, and simultaneously sends written notice to your own UIM carrier. That notice must include the liability insurer’s name, the policy limits being offered, and your intent to accept. Under the new minimum limits that took effect January 1, 2025, at-fault drivers now carry at least $50,000 per person and $100,000 per occurrence in bodily injury coverage — a meaningful increase from the prior $25,000 per person floor that left so many seriously injured victims severely undercompensated. Once the liability carrier tenders its limits and the UIM carrier receives proper written notice, Stage One is complete.
Stage Two: UIM Claim Without Subrogation Interference
With the liability policy exhausted, your claim moves to your own UIM carrier. Under HB 107, the UIM insurer cannot assert subrogation rights against the liability settlement proceeds you already received. It cannot seek reimbursement from the tortfeasor or reduce your UIM benefit by the amount of the liability payment — unless you failed to satisfy the cooperation obligations described above. The UIM insurer retains the right to investigate the accident, dispute the value of your damages, and negotiate the UIM payment, but it does so without the subrogation leverage that previously allowed carriers to strong-arm settlements at artificially low figures. Additionally, since July 1, 2024, Virginia auto insurers can be held accountable for bad faith when negotiating UM/UIM claim payments — a separate but complementary protection that gives your attorney additional leverage if the UIM carrier stonewalls or lowballs your claim.
Real-World Settlement Examples Under HB 107
The following examples illustrate how HB 107 changes the math for injured Virginians in 2026. These are constructed scenarios, not specific case results, but they reflect the types of fact patterns that arise regularly in Virginia underinsured motorist litigation.
Example One: Herniated Disc Crash, $50K Liability Policy
A driver rear-ends your vehicle at highway speed. You suffer two herniated discs requiring epidural injections and ultimately a surgical discectomy. Your medical bills total $85,000 and you miss four months of work. The at-fault driver carries the new minimum liability policy: $50,000 per person. You carry a $250,000 UIM policy.
Under the old framework, your UIM carrier might have argued that your $250,000 UIM policy was offset by the $50,000 liability payment, leaving you with $200,000 in UIM benefits against a claim worth far more. Under HB 107, absent an affirmative reduction endorsement you elected at policy inception, the UIM coverage is not offset. You recover $50,000 from the liability carrier and then pursue the full $250,000 UIM limit — a total potential recovery of $300,000 against a claim that, conservatively valued, supports that number. In February 2026, a Virginia settlement of $550,000 was reached representing the full amount of available liability and underinsured motorist coverage in a serious injury case — a benchmark that illustrates how stacked UIM coverage under HB 107 can dramatically increase total recovery for catastrophically injured victims.
Example Two: Severe TBI, Multiple Policies
A pedestrian struck by a negligent driver suffers a severe traumatic brain injury with permanent cognitive deficits. The at-fault driver carries $100,000 in liability coverage. The victim carries $500,000 in UIM coverage across two vehicles, which Virginia law permits to be stacked. Total available coverage: $600,000. Under prior law, a UIM carrier might have asserted subrogation rights and then attempted to recover from the tortfeasor’s insurer, creating a three-way dispute that delayed payment for years. Under HB 107, once the liability carrier pays its $100,000 limit and the UIM carrier receives proper written notice, subrogation is extinguished. The UIM carrier must address the $500,000 UIM claim on its merits. If it engages in bad faith delay or lowball tactics, your attorney now has a direct bad faith cause of action available under the July 2024 reform. Total recovery potential approaches the full $600,000 in available coverage.
Example Three: Commercial Driver, HOS Violations
A commercial truck driver violates federal hours-of-service regulations and causes a multi-vehicle crash. One victim suffers spinal cord injuries with partial paralysis. The trucking company’s commercial liability policy carries $1,000,000 in coverage. The victim also carries $300,000 in personal UIM coverage. Because the commercial policy exceeds the victim’s damages, the UIM claim may not be triggered — but HB 107’s framework still matters for the sequencing of any commercial umbrella or excess policy claims. In cases where the commercial carrier denies liability or disputes coverage, the written notice procedure protects the victim’s UIM rights while litigation proceeds. And because the cooperation obligation is now narrowly defined, the victim cannot be tripped up by vague insurer demands for documentation or interviews beyond what the statute requires.
UIM Coverage Landscape: Virginia in National Context
Virginia’s 2026 UIM reforms position the state among the stronger consumer-protection regimes in the country for underinsured motorist claims. The combination of mandatory UIM coverage (effective January 1, 2025), higher minimum liability floors (also effective January 1, 2025), the HB 107 subrogation elimination framework, and the July 2024 bad faith accountability statute creates a layered system where injured victims have substantially more protection than they did even two years ago.
Nationally, UIM coverage requirements vary enormously. Several states still permit drivers to reject UM/UIM coverage entirely in writing, leaving accident victims exposed when they are hit by minimally insured drivers. States like Virginia that have made UIM coverage mandatory represent a meaningful policy departure — one that recognizes UIM coverage primarily protects the policyholder, not third parties, and that the social cost of uncompensated serious injuries falls on everyone. Virginia’s bad faith statute, which took effect July 1, 2024, further aligns the state with jurisdictions like California and Washington that impose first-party bad faith liability on insurers who handle UM/UIM claims unreasonably.
Cooperation Obligations: What You Must Still Do
HB 107 does not eliminate all obligations on the insured. The cooperation requirement survives — it is simply defined more narrowly and precisely than before. Under the amended statute, you must satisfy the following obligations to preserve your UIM benefits:
- Attend depositions and trial when requested by the UIM insurer or its defense counsel.
- Assist with discovery, including responding to written discovery and producing documents within your control.
- Meet with counsel when reasonably requested to prepare for litigation or settlement discussions.
- Notify the insurer of address changes so that the carrier can reach you throughout the claims process.
These obligations are defined in the statute itself, which means insurers cannot expand them through policy language or unilateral demands. If your insurer asks you to do something not enumerated in HB 107’s cooperation framework — for example, submitting to an unlimited number of recorded statements or producing social media records without a court order — your attorney can push back on the basis that such demands exceed the statutory cooperation obligation. Failure to satisfy the enumerated obligations, however, remains the one circumstance under which subrogation rights survive. Do not give your insurer that opening.
National UIM Litigation Context in 2026
Virginia’s HB 107 did not emerge in a vacuum. Across the country, plaintiffs’ bar organizations and consumer advocates have pushed back against insurer practices that use subrogation and cooperation arguments to reduce or deny UIM benefits. Several high-profile cases in 2025 and 2026 have highlighted the disparity between UIM policy premiums collected and UIM benefits actually paid — a disparity that regulators in multiple states have begun scrutinizing through market conduct examinations.
In Virginia specifically, the July 2024 bad faith statute has already produced a wave of demand letters from plaintiffs’ attorneys putting UIM carriers on formal notice of their obligation to negotiate in good faith. Insurers who ignore policy limits demands or delay investigations without reasonable justification now face exposure beyond the policy — a dynamic that has measurably accelerated UIM settlement timelines in the state. The $550,000 settlement reached in February 2026 — representing the full stack of available liability and UIM coverage — is consistent with the trend toward full-limit resolutions that HB 107 and the bad faith statute have together produced.
What HB 107 Means for Your Settlement Value
The practical impact of HB 107 on Virginia underinsured motorist settlement 2026 values operates on three levels.
First, the elimination of insurer subrogation rights removes the most common leverage point carriers used to reduce UIM payouts below their actual value. When an insurer could assert subrogation and potentially recover from the tortfeasor, it had an incentive to pay you less and then pursue its own recovery — a process that could take years and left you waiting. That incentive is now largely gone.
Second, the clarification of stacking rules means that victims who carry UIM coverage on multiple vehicles — or who reside in households with multiple covered vehicles — can aggregate those limits in a way that was previously subject to carrier dispute. In serious injury cases involving catastrophic harm, the difference between stacked and non-stacked UIM coverage can be several hundred thousand dollars.
Third, the bad faith statute creates an enforceable floor for good-faith negotiation. An insurer that receives proper written notice of a liability settlement, watches the liability policy be exhausted, and then refuses to engage meaningfully with the UIM claim faces not just the risk of paying policy limits — it faces the risk of a bad faith verdict that can exceed those limits. That exposure changes the negotiating calculus in every serious UIM case.
Together, these three changes mean that a well-documented, properly sequenced UIM claim in Virginia in 2026 should settle at a meaningfully higher value than the same claim would have produced two or three years ago. The difference is not incidental — it reflects deliberate legislative choices to shift the balance of power toward injured policyholders.
Frequently Asked Questions About Virginia Underinsured Motorist Settlement 2026
Does HB 107 apply to accidents that happened before 2026?
HB 107 applies to claims governed by policies in effect after the bill’s effective date during the 2026 legislative session. Accidents that occurred before the effective date, or claims governed by policies issued before that date, may be subject to prior law. However, if your policy renewed after the effective date, the new framework may apply even if the accident predated the law. This is a fact-specific inquiry that requires a careful review of your policy’s renewal date and the accident date. Do not assume the old rules apply without confirming the effective date question with a Virginia UIM attorney.
What happens if I settle with the liability carrier without notifying my UIM insurer first?
Settling with the liability carrier without providing proper prior written notice to your UIM insurer is the single most dangerous mistake you can make under HB 107. If you skip the notice step, your UIM carrier can argue that you triggered the cooperation exception — and that argument has a reasonable basis in the statute. The insurer may deny your UIM claim entirely or assert subrogation rights that would otherwise be extinguished. Always provide written notice before signing any liability release. Your attorney should handle this procedural step as a matter of course, but if you are navigating the claim without counsel, this is the step that cannot be skipped.
Can my UIM insurer still investigate the accident and dispute liability?
Yes. HB 107 does not prevent your UIM insurer from conducting its own investigation into the accident, reviewing the police report, retaining accident reconstructionists, or disputing the allocation of fault. What it prevents the insurer from doing is using subrogation rights as leverage to reduce your recovery after you have properly exhausted the liability policy and given required notice. The insurer can still contest the value of your damages — past and future medical expenses, lost wages, pain and suffering — through the normal negotiation and litigation process. It simply cannot assert that it is entitled to reimbursement from the tortfeasor or that your liability settlement reduces what it owes you under the UIM policy.
How does HB 107 affect UIM claims involving commercial vehicles?
Commercial vehicle claims present unique complexity because the liability coverage available is often large enough to fully compensate even serious injuries — in which case UIM coverage may not be triggered at all. When UIM coverage is triggered in a commercial vehicle case, however, HB 107’s framework applies in the same way as in a personal auto case. The written notice requirement, the subrogation elimination, and the cooperation obligation all operate identically. The commercial context adds layers around coverage disputes — whether the commercial policy is a true liability policy or a self-insured retention, whether umbrella or excess coverage applies, and whether the employer’s coverage and the driver’s personal coverage interact — but HB 107 does not carve out an exception for commercial vehicle crashes.
Does HB 107 change how UIM claims are valued for pain and suffering?
Not directly. HB 107 is a procedural and structural statute — it governs the sequencing of settlement, the elimination of subrogation, and the definition of cooperation obligations. It does not change the substantive standard for valuing non-economic damages like pain and suffering, emotional distress, or loss of enjoyment of life. Those valuations continue to be driven by the severity and permanency of the injury, the impact on the victim’s daily life and relationships, the quality of medical documentation, and the persuasiveness of the presentation to adjusters, mediators, or juries. What HB 107 does change is the environment in which those valuations are negotiated: with subrogation leverage removed and bad faith exposure on the table, insurers have less room to anchor negotiations at artificially low figures and more incentive to reach full and fair resolutions.
Ryan Fletcher is an auto accident claims researcher with extensive knowledge of car accident liability, insurance claims processes, and settlement values across all 50 US states. Ryan is not an attorney and the information provided is for educational purposes only.