8.1 The Automobile Liability Insurance Policy

• Library: Insurance Law in Virginia (Virginia CLE) (2020 Ed.)

8.1 THE AUTOMOBILE LIABILITY INSURANCE POLICY

8.101 Introduction. An insurance policy is a contract between an insured and an insurer. It is a contract that must be read with reference to controlling statutes, but when policy provisions are not controlled by statute, the parties to the contract are at liberty to make their own agreement. ¹ When the provisions of an insurance policy conflict with the requirements of a relevant controlling statute, the statute controls, the conflicting policy provisions are void and ineffective, and the statute will control the interpretation of the relevant policy provisions. ² The controlling statutes are discussed in paragraph 8.2 of this chapter.

Provisions of the contract not controlled by statute are to be enforced as written and not subjected to "construction," if possible. If, due to ambiguity or conflict with other provisions, "construction" does become necessary, policy language is to be construed liberally in favor of the insured and against the insurer. ³

Insurance companies writing motor vehicle policies in Virginia are required to conform their policy language to the precise language of the standard form policy approved by the State Corporation Commission (SCC). ⁴ The SCC may not alter the controlling statutes, and if the model policy conflicts with the statutes, the statutes prevail. If the standard form policy provides

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less coverage than the statute, the statute prevails. ⁵ The model policy may also provide more coverage than required by the statute, in which case the carrier will be held to the broader coverage. ⁶ If an insurer wishes to use conflicting policy language, including more favorable policy language, that language must be approved by the SCC. ⁷

8.102 How to Read the Policy.

A. In General. Insurance companies generally do not keep a copy of the policy with the insured's file, so the insurer will have to reconstruct the policy components from its files and computerized records. Counsel must be sure to obtain all the components of the policy. An automobile policy can have (i) a declarations page; (ii) a standard policy form (or "combination form"); and (iii) one or more endorsements that alter, add to, or subtract from the standard policy form. Counsel should make sure that the policy obtained was in effect during the relevant period and that the policy elements provided match the elements described on the declarations page.

B. Requesting the Policy. If counsel is aligned with an insurer, he or she must request the declarations page and the policy components listed on the declarations page. Counsel should not rely on what is produced but should make sure that the components are exactly the same as what is listed on the declarations page. Since July 1, 2008, every automobile insurer in Virginia has adopted the "Personal Auto Form" (PAP) approved by the SCC. ⁸

If counsel is aligned in opposition to an insurer, he or she should not rely solely upon what the insured has in his or her possession. The policy should be requested in discovery. Rule 4:1(b)(2) of the Rules of the Supreme Court of Virginia provides that "[a] party may obtain discovery of the existence and contents of any insurance agreement under which any person . . . carrying on an insurance business may be liable to satisfy part or all of a

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judgment which may be entered in the action or to indemnify or reimburse for payments made to satisfy the judgment."

In federal court, the initial disclosures provision of Rule 26(a)(1)(A)(iv) requires that a party must, without awaiting a discovery request, provide "any insurance agreement under which an insurance business may be liable to satisfy all or part of a possible judgment in the action or to indemnify or reimburse for payments made to satisfy the judgment."

C. Components...