Every motorist in Virginia is required to obtain a certain amount of car insurance. The idea behind this requirement is to ensure that anyone injured in a Virginia car accident will have a means of recovering compensation to help them cover the costs of the injuries they sustained in the accident.
Car insurance companies, however, operate on a for-profit basis and rely on taking in more money in monthly premiums than they pay out in approved claims. Thus, it is not uncommon for an insurance company to deny borderline cases in hopes that the accident victim will not file a personal injury lawsuit.
Virginia lawmakers have enacted a law to discourage insurance companies from acting in bad faith, contained in the Code of Virginia section 8.01-66.1. Under section 8.01-66.1, an insurance company that is found to have denied “a claim of $3,500 or less in excess of the deductible” in bad faith is liable to the insured for double the amount otherwise due. This law applies both to the insured that is named in the policy as well as to any third parties injured by the insured’s negligence.