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.
§ 8.01-66.1.Remedy for arbitrary refusal of motor vehicle insurance claim.
Chapter 3. Actions · Article 7. Motor Vehicle Accidents · Last amended 2024 · Last verified July 16, 2026
In one sentenceSection 8.01-66.1 lets an insured, a limited-dollar third-party claimant, or a claimant against a self-insured defendant recover double damages, interest, and attorney fees when a motor vehicle insurer denies a covered claim in bad faith, extends similar exposure up to $500,000 to uninsured and underinsured motorist claims, and requires advance notice before any such demand.
Full Text of § 8.01-66.1
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.
Plain-English Summary
Section 8.01-66.1 is Virginia’s bad-faith remedy for motor vehicle insurance claims. Subsection A covers an insured whose Virginia-licensed insurer denies, refuses, or fails to pay a property damage, medical expense, or loss-of-income claim under a motor vehicle policy: if a court later finds the denial was not made in good faith, the insurer owes double the judgment amount, plus interest running from 30 days after the claim was submitted in writing, plus reasonable attorney fees and expenses.
Subsections B and C extend a parallel, capped remedy to smaller claims. A third-party claimant with a claim of $3,500 or less against someone else’s liability policy, or a claimant with a claim of that size against a person who self-insured or who was required to but failed to obtain coverage, gets the same double-damages-plus-fees treatment if a court finds bad faith and, for the third-party claim, finds the insured liable.
Subsection D reaches uninsured and underinsured motorist coverage specifically, and carries the highest stakes: if an insurer denies, fails to pay, or fails to make a timely and reasonable settlement offer under UM or UIM coverage — or, once liability limits are exhausted, rejects or ignores a reasonable settlement demand — and a court finds that conduct was not in good faith, the insurer owes the full amount due to the insured on the judgment against the tortfeasor, plus a separate bad-faith penalty of up to double the judgment obtained against the underinsured motorist, uninsured motorist, immune motorist, unknown owner or operator, or released defendant, capped at $500,000, plus attorney fees for the bad-faith claim, the costs of securing the underlying judgment, and interest. The insured can raise the bad-faith claim as a post-trial motion in the underlying case or as a separate action, and a separate action is stayed if the underlying judgment gets appealed.
Subsections E and F build in a notice-and-cure process: before making a bad-faith demand, a claimant must give the insurer 45 days’ notice along with information sufficient to assess liability and damages, and no bad-faith action lies at all if the insurer tenders the lesser of the policy limits or the amount demanded, either before receiving a settlement offer or within that 45-day window. The statute also defines “legally entitled to recover” for UM/UIM purposes as the point when liability becomes reasonably foreseeable, without requiring an actual judgment against the at-fault driver first.
Frequently Asked Questions
What can I recover if my Virginia car insurer denies my claim in bad faith?
Under subsection A, if a court finds the denial was not made in good faith, the insurer owes double the judgment amount, interest from 30 days after you submitted the claim in writing, and reasonable attorney fees and expenses.
Does this bad-faith remedy apply to uninsured or underinsured motorist claims?
Yes, and it carries the highest exposure under the statute. Subsection D entitles the insured to the full amount owed on the judgment against the tortfeasor, plus a separate bad-faith penalty of up to double the judgment against the underinsured or uninsured motorist, capped at $500,000, plus attorney fees and costs, for a bad-faith denial or failure to settle UM or UIM coverage.
Do I have to notify the insurer before making a bad-faith demand?
Yes. Subsection E requires the claimant to give the insurer 45 days’ notice, along with information and documentation sufficient to assess liability and damages, before making the demand.
Can an insurer avoid bad-faith liability by paying what was demanded?
Yes. Subsection F bars a bad-faith action if the insurer tenders the lesser of the policy limits or the amount demanded, either before receiving a settlement offer or within 45 days of receiving the claimant’s notice.
Does a third party with a small claim against someone else’s policy have any bad-faith remedy?
Yes. Subsections B and C give a third-party claimant, or a claimant against a self-insured or uninsured party, the same double-damages-plus-fees remedy for claims of $3,500 or less, if a court finds bad faith and, for third-party claims, finds the insured liable.
Amendment History
1977, c. 621; 1979, c. 521; 1980, c. 437; 1989, c. 698; 1991, c. 155; 1997, c. 401; 2002, c. 631; 2024, c. 781.
Source & verification. Section text and amendment history are
reproduced verbatim from the Code of Virginia, published by the
Code of Virginia, Virginia Division of Legislative Automated Systems. Last verified July 16, 2026.
· Official source
Also known as: virginia insurance bad faith statute8.01-66.1 virginia codeuninsured motorist bad faith claim virginiadouble damages insurance denial virginiaunderinsured motorist insurer bad faith virginia