A. Whenever any insurance company licensed in this Commonwealth to write insurance as defined in § 38.2-124 denies, refuses or fails to pay to its insured a property damage claim or medical expense benefit or loss of income benefit claim under the provisions of a policy of motor vehicle insurance and it is subsequently found by the judge of a court of proper jurisdiction that such denial, refusal or failure to pay was not made in good faith, the company shall be liable to the insured in an amount double the amount of the judgment, plus interest from 30 days after the date the claim was submitted in writing to the insurer or its authorized agent, together with reasonable attorney fees and expenses.

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B. Notwithstanding the provisions of subsection A, whenever any insurance company licensed in this Commonwealth to write insurance as defined in § 38.2-124 denies, refuses or fails to pay to a third party claimant, on behalf of an insured to whom such company has issued a policy of motor vehicle liability insurance, a claim of $3,500 or less made by such third party claimant and if the judge of a court of proper jurisdiction finds that the insured is liable for the claim, the third party claimant shall have a cause of action against the insurance company. If the judge finds that such denial, refusal or failure to pay was not made in good faith, the company, in addition to the liability assumed by the company under the provisions of the insured’s policy of motor vehicle liability insurance, shall be liable to the third party claimant in an amount double the amount of the judgment awarded the third party claimant, together with reasonable attorney fees and expenses.

C. Notwithstanding the provisions of subsections A and B, whenever any person who has furnished proof of financial responsibility in lieu of obtaining a policy or policies of motor vehicle liability insurance pursuant to the provisions of Title 46.2 or any person who is required and has failed to furnish such proof pursuant to the provisions of Title 46.2 denies, refuses, or fails to pay to a claimant a claim of $3,500 or less made by such claimant as a result of a motor vehicle accident, and if the trial judge of a court of proper jurisdiction finds that such denial, refusal, or failure to pay was not made in good faith, such person shall be liable to the claimant in an amount double the amount of the judgment, together with reasonable attorney fees and expenses.

For the purposes of this subsection, “person” means and includes any natural person, firm, partnership, association, or corporation.

D. Whenever any insurance company licensed in the Commonwealth to write motor vehicle insurance as defined in § 38.2-124 (i) denies, refuses, fails to pay, or fails to make a timely and reasonable settlement offer to its insured under the provisions of any uninsured or underinsured motorist benefits coverage in a policy of motor vehicle insurance applicable to the insured after the insured has become legally entitled to recover or (ii) after all applicable liability policy limits and underlying uninsured and underinsured motorists benefits have been tendered or paid, rejects a reasonable settlement demand made by the insured within the policy’s coverage limits for uninsured or underinsured motorist benefits or fails to respond within a reasonable time after being presented with such demand after the insured has become legally entitled to recover, and it is subsequently found by a court of proper jurisdiction that such denial, refusal, or failure to timely pay or failure to make a timely and reasonable settlement offer, rejection of a reasonable settlement demand, or failure to timely accept a reasonable settlement demand was not made in good faith, in addition to the amount due and owing by the insurance company to its insured on the judgment against the tortfeasor, the insurance company shall also be liable to the insured in an amount up to double the amount of the judgment obtained against the underinsured motorist, uninsured motorist, immune motorist, unknown owner or operator, or released defendant in the underlying personal injury or wrongful death action, not to exceed $500,000, together with reasonable attorney fees for bringing a claim under this subsection, and all costs and expenses incurred by the insured to secure a judgment against the tortfeasor, and interest from 30 days after the date of such denial or failure or the date the reasonable settlement demand was submitted in writing. The insured or the insured’s representative may seek adjudication of a claim that the insurance company did not act in good faith as a posttrial motion before the court in which the underlying personal injury or wrongful death judgment was obtained or as a separate action against the company. If the insured or the insured’s representative seeks adjudication as a separate action and the underlying judgment is appealed, any action filed under this subsection shall be stayed by the court pending final resolution of the appeal of the underlying judgment.

E. Prior to making a demand under this section, the claimant shall provide notice to the insurer 45 days prior to making such demand along with information and documentation sufficient for the insurer to assess the liability and damages of the claimant.

F. There shall be no action for bad faith under this section if the insurer tenders to the claimant the lesser of the (i) applicable limits of the policy or (ii) monetary amount demanded by the claimant either prior to the insurer’s receipt of a settlement offer from the claimant or within 45 days of the insurer’s receipt of the notice of the claimant’s intent to make a claim and accompanying information and documentation pursuant to subsection E.

For the purposes of this section, the term “legally entitled to recover” means the point in time when liability to the uninsured or underinsured motorist insurance company’s insured has become reasonably foreseeable without necessity of a judgment by its insured against an uninsured or underinsured motorist, an unknown owner or operator, or an immune motorist.

1977, c. 621; 1979, c. 521; 1980, c. 437; 1989, c. 698; 1991, c. 155; 1997, c. 401; 2002, c. 631; 2024, c. 781.