Vermont Auto Insurance Fairness Act

Section 1. Underinsured Motorist Coverage (a) 23 V.S.A. § 941 is amended to read: (1) A motor vehicle is underinsured when either: (A) the at-fault driver’s liability limits are lower than the injured person’s underinsured motorist (UIM) limits, or (B) payments made to other injured parties reduce the at-fault driver’s available liability coverage below the injured person’s UIM limits. (2) Full UIM Coverage Guaranteed. Payments made to the injured person under the at-fault driver’s liability policy shall not reduce the amount of underinsured motorist coverage available to the injured person under their own policy. Section 2. Medical Payments Coverage—Subrogation Prohibited (a) 8 V.S.A. § 4203(4) is amended to read: When an insurer pays medical expenses under medical payments coverage (MedPay): (A) the insurer may not seek repayment from any third party, including the at-fault driver or their insurer; and (B) the insured retains full rights to pursue claims for their injuries without reimbursement to the insurer for amounts paid under MedPay. The insured shall cooperate with the insurer regarding other types of subrogation allowed under law, but no subrogation is permitted for medical payments coverage. Section 3. Effective Date This act takes effect on passage and applies to all automobile insurance policies offered, issued, or renewed on or after January 1, 2026.