Prior to 2005, third-party lawsuits were detrimentally affecting West Virginians. Insurance premium costs were high, little competition existed in the insurance market, and the court system was clogged with meritless claims. Then, in 2005, the West Virginia Legislature enacted Senate Bill 418, which eliminated the right of third-party insurance claimants to file lawsuits against another person’s insurance company for unfair treatment during the claim settlement process.

The tremendous success of Senate Bill 418 is evident. In just five years after its enactment, insurance coverage costs decreased by an estimated $200 million and bodily injury liability (“BI”) costs plummeted by forty percent. Additionally, as the BI claim severity increased steadily nationwide, West Virginia claim severity declined by eight percent.

Senate Bill 418’s success did not come at the expense of the rights of third-party claimants. Third-party claimants may file complaints with the Insurance Commissioner who investigates all complaints and imposes fines and penalties upon insurance companies found to be in violation of West Virginia’s Unfair Trade Practices Act (“UTPA”).

Third-Party Bad-Faith Reforms Enacted in 2005 Reduced Auto Liability Coverage Costs by an Estimated $200 Million in the First Five years According to a New Report From the Insurance Council

West Virginia Continues Tort-Reform Trend With Ban of Third-Party Bad-Faith Actions