Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Auto Insurance topic
No spam. Unsubscribe anytime.
Senate orders third reading of S.7 to bar MedPay subrogation, expand underinsured motorist recovery
Summary
The Senate ordered a third reading of S.7, a bill that would prevent insurers from deducting at-fault drivers' payments from a victim's underinsured motorist recovery and prohibit subrogation of MedPay benefits; the bill would take effect Jan. 1, 2026, for new policies.
The Senate on a voice vote ordered a third reading of S.7, a bill that would stop insurers from deducting what victims collect from at-fault drivers from their own underinsured motorist claims and would prohibit subrogation of MedPay benefits. The committee reporter said the bill would take effect Jan. 1, 2026, and apply only to policies issued after that date.
The bill’s committee reporter, identified in the record as the senator from Chittenden Central, framed S.7 as a response to testimony from a Vermonter seriously injured in a traffic crash. The senator said that the injured rider “collected $100,000 from the drunk driver's auto liability insurance” and that current law allowed insurers to deduct that amount from the injured person's underinsured motorist recovery. The senator said the committee concluded “that injured people should be able to get the full value of their own insurance policy.”
According to the senator from Chittenden Central, Section 1 of the bill clarifies the definition of underinsured motorist coverage and prohibits deduction of payments from an at-fault driver from the victim’s own policy. Section 2 would prohibit subrogation of MedPay, the no-fault medical expense coverage that typically ranges from $1,000 to $5,000. Section 3 sets the effective date as Jan. 1, 2026, and limits the change to policies newly written after that date.
The senator from Franklin asked whether the committee had heard testimony about potential effects on Vermont insurance rates, saying, “May I inquire of the reporter bill? Wondering if the committee took any testimony as a potential effect on the rates for insurance in Vermont.” The committee reporter said the committee did take such testimony and that “it certainly was brought up that it could create a a small rate increase, but that the future is not completely predictable.”
The reporter also noted that the committee heard from JB Bien, who represented the auto insurance industry, and said industry testimony indicated that a rate increase was possible. The reporter described the pattern among states as mixed: some states allow the deduction practice and others prohibit it. The reporter said the bill’s language is largely the same as the version passed by the body last year, with the effective date moved back one year.
By voice vote, senators signified their support for ordering the third reading; the chair declared that “the ayes do have it and you have ordered third reading of S7.” No roll-call vote was recorded in the transcript.
The bill will return for a formal third reading and final passage vote at a later session.
