Renewed Auto Policies Subject to Virginia’s “Match or Reject” Provisions Requiring that Liability Limits Equal UM/UIM Absent Specific Rejection by the Insured

A recent case from the United States District Court for the Eastern District of Virginia, Richmond Division, held that an insurer’s underinsured motorist coverage limit totaled $500,000, effectively raising the total available coverage in connection to a motorcycle accident by $250,000.  The UIM carrier had argued that its UM/UIM limit totaled only $50,000.


The issue involved what is sometimes known as “mismatched” limits.  Essentially, the policy at issue provided $500,000 in liability coverage, but only $50,000 in UM/UIM coverage.  Under Virginia law, however, the UM/UIM limit must be equal to a policy’s liability limit, unless the insured specifically rejects matching limits and opts for a lesser UM/UIM limit.  Even then, the UM/UIM limits cannot be less than $25,000.  Further, pursuant to statute, Virginia law requires an explicit notice of the “match or reject” provision when new policies are issued.


In this case, in 2009, the insured requested that his liability limit be raised from $50,000/$100,000 to $500,000/$500,000 in order to become eligible for an umbrella policy.  The insurer agreed, raising the liability limit and charging an increased premium.  At no time were the UM/UIM limits raised from $50,000/$100,000, nor was there any evidence that such a request was ever made.  The insurer continued to renew the policy annually with the “mismatched” liability and UM/UIM limits.


When the insured was involved an accident, the insurer took the position that the applicable UM/UIM limits were $50,000/$100,000.  By contrast, the insured argued that, because there was no actual rejection of matching limits, the insurer was obligated to provide UIM coverage corresponding to a $500,000 UM/UIM limit. 


The Court found that, although no Virginia statute speaks directly to whether matching limits must be provided on policy renewals, and that Virginia’s notice requirements do not apply to renewals, a renewed policy still must provide for matching limits unless a prior rejection exists.  Because no such prior rejection was made in this case, and taking into account Virginia’s liberal policy construction in favor of coverage, the Court held that the policy at issue would be deemed to have a $500,000 UM/UIM limit, effectively raising the total available coverage by $250,000. 


Santens v. Progressive Gulf Ins. Co.,  Case 3:13-cv-00226, (E.D. Va. July 11, 2014) (Richmond Division). 


For questions, further information, or assistance with a coverage matter, please contact a member of Harman Claytor’s Coverage Team.