An act relating to automobile insurance
S.7 amends Vermont automobile insurance law in two related areas: underinsured motorist coverage and medical payments coverage. First, it provides that when an injured policyholder receives payments from the at-fault driver’s liability insurance, those payments may not be deducted from the underinsured motorist coverage otherwise available to the injured person. In practical terms, the bill prevents insurers from reducing UIM benefits by amounts paid under the tortfeasor’s liability policy.
Second, the bill limits insurer subrogation rights for medical payments coverage. It states that if an insurer has paid or reimbursed medical costs under med-pay coverage, the insurer may not assert subrogation rights against a third party for those medical costs. The bill applies to automobile insurance policies offered, issued, or renewed on or after January 1, 2026, and takes effect upon passage.
The bill would amend 23 V.S.A. § 941 and 8 V.S.A. § 4203(4), changing how auto insurers calculate underinsured motorist benefits and how they may pursue reimbursement for medical payments. It would expand the amount of UIM coverage available to injured insureds by prohibiting deductions for liability payments received from the at-fault driver, and it would restrict insurers’ ability to recover med-pay expenses through subrogation. The changes would apply prospectively to new, renewed, or reissued auto policies on or after January 1, 2026.
Based on the bill text and the absence of recorded committee testimony or votes in the provided materials, the overall sentiment appears neutral to supportive. The bill is framed as a consumer-protection measure intended to preserve insurance benefits for injured policyholders and clarify coverage rules. No contrary positions, amendments, or recorded opposition are included in the available context.
The main policy issue raised by the bill is the balance between insureds’ access to full coverage and insurers’ ability to offset payments or seek reimbursement. Supporters would likely favor the bill because it prevents reductions in underinsured motorist benefits and limits insurer subrogation, increasing the net recovery available to injured drivers and passengers. Potential opponents would be auto insurers or industry advocates, who may view the measure as increasing claim costs and limiting contractual or statutory recovery rights. No specific objections were recorded in the provided committee or voting history.