Senate committee hears bill to change underinsured motorist and med-pay rules

The Judiciary Committee heard testimony on S.7 on auto insurance reforms that would change how underinsured motorist (UIM) benefits and medical‑payment (med‑pay) benefits are applied after crashes.

Proponents told the committee the bill would let policyholders use the full value of the UIM coverage they bought even when the at‑fault driver’s payment does not fully cover the injured person’s damages, and would prohibit insurers from seeking repayment (subrogation) of small, optional med‑pay payments. "This bill would require insurance companies to pay their policyholders what the policyholder expects to receive from that insurance company based on the premiums that they're buying," said Adam Negrassing, representing the Vermont Association For Justice.

Why it matters: committee members and witnesses said the change mainly affects catastrophic crashes — those that produce very large medical bills or permanent disability. Kristen Ross, president of the Vermont Association For Justice, described cases in which victims with severe injuries had medical bills that exceeded available liability insurance; under current law, she said, an insured person’s UIM recovery is reduced by amounts paid by an at‑fault driver. "We have an issue with folks being underinsured in Vermont," Ross said. She urged the committee to allow injured Vermonters to recover the full value of the UIM coverage they purchased.

What the bill would do: S.7 makes two principal changes. First, it revises the UIM definition so that an insured may receive the full limits of the UIM policy irrespective of amounts collected from the at‑fault driver (a move from what advocates called a "gap" approach toward a floating or stacking layer). Second, it prohibits subrogation by insurers for med‑pay benefits — the small, optional payments (commonly $1,000–$5,000) that pay immediate medical costs like health‑insurance deductibles.

Supporters’ arguments and examples: witnesses repeatedly framed the measure as a targeted change for severe cases. Adam McCrassen of the McCrassen Group (testifying for justice‑advocate groups) and Ross described real cases in which survivors’ medical bills exceeded the combined available liability limits and where automatic reductions left injured people with little to nothing after insurers and other payors asserted repayment rights.

Insurer concerns and implementation issues: a trade‑association witness, introduced as Mr. Piazza, said insurers oppose revising the UIM definition and med‑pay subrogation as written. Piazza represented a national insurers’ trade association and State Farm and warned changing definitions will require insurers to refile many policy forms with the Department of Financial Regulation and could prompt premium adjustments. "Changing the definition of underinsured motorist coverage will require all auto policy forms to be changed and refiled for approval with the department," he said, and he asked the committee to consider a later effective date to allow administrative changes.

Committee discussion and next steps: senators on the committee questioned how often catastrophic shortfalls occur, how premiums would change, and whether the proposal would encourage consumers to shift coverages across policy lines. Supporters said the UIM and med‑pay portions represent a small share of premiums but a large difference to injured Vermonters. Insurer witnesses said the line is difficult to model and that companies may respond differently. The committee left the bill open for further information, asked for suggested language from both sides, and said it would revisit the measure in coming weeks.

Votes and formal actions: no formal committee vote on S.7 was recorded in the transcript; the committee paused discussion to seek additional data and language and planned to reconvene on the measure.

Ending: Sponsors and advocates said S.7 is intended as a narrowly targeted change to get more value to policyholders who suffer catastrophic injuries. Insurers urged caution and an implementation window to update filings and actuarial work; the committee signaled it will seek further information before deciding whether to advance the bill.