Virginia P&C Study Guide

Virginia’s P&C-side state material lives in three places, and only one of them is Title 38.2. What happens when an insurer fails is § 38.2-1600 et seq. How rates become usable is § 38.2-1904 and § 38.2-1906. And workers compensation is not in the insurance code at all — it is Title 65.2, administered by a separate agency. A candidate who looks for comp law under the Bureau of Insurance will not find it, and that structural fact is itself worth a question.

The guaranty association pays workers compensation in full

Virginia’s P&C-side backstop is the Virginia Property and Casualty Insurance Guaranty Association (§ 38.2-1600 et seq.), and § 38.2-1606 sets what it will pay. Read the units carefully, because each of the three figures behaves differently from how it looks.

$300,000 per claimant is the ceiling on all other covered claims. Per claimant — not per policy, not per accident.

Workers compensation is uncapped. The Association pays “the full amount of a covered claim for benefits under a workers’ compensation insurance coverage.” Virginia caps a liability claim at $300,000 and declines to cap an injured worker’s at anything.

And the $50 on return premium is a deductible, not a cap. The Association pays only that amount of each unearned premium in excess of fifty dollars — so a $400 unearned premium yields $350, not $50. The instinct to read every guaranty number as a ceiling is exactly what the question is testing.

Using the Association’s existence as a sales inducement is prohibited — the same rule that applies on the life side.

Workers compensation — three employees, and a different agency entirely

The threshold is where most material is wrong, and the error is regional as well as national. Plenty of mid-Atlantic sources say two.

Va. Code § 65.2-101 excludes from the definition of “employee” a person working for an employer that “has regularly in service less than three employees in the same business within this Commonwealth.” So coverage is required at three or more employees regularly in service. An employer with two may elect coverage voluntarily, but is not compelled to carry it.

The rest of the framework:

• Administered by the Virginia Workers’ Compensation Commission — a separate agency under Title 65.2, wholly outside the Bureau of Insurance.
• Temporary total disability pays 66⅔% of the average weekly wage, subject to a minimum of not less than 25% and a maximum of not more than 100% of the average weekly wage of the Commonwealth, reset annually by the Commission (§ 65.2-500).
• Permanent total incapacity continues for the lifetime of the injured employee, without limit as to total amount.
• The deadline to file a claim is 2 years from the accident.
• An employer may comply by buying coverage from a licensed insurer, qualifying as a licensed self-insurer, or joining a licensed workers’ compensation insurance group.

One deliberate omission, and we would rather tell you than fill the gap: § 65.2-500 states no maximum number of weeks for temporary total incapacity. The commonly quoted 500-week figure sits elsewhere in Title 65.2 and we are not going to reprint a week count we have not verified against a current section. Learn the 66⅔%, the statewide-average ceiling, and the lifetime rule for permanent total — those are the ones the statute actually gives you.

Rate regulation — file and use, and the label is the question

Virginia is a file and use state, and the tell is the filing trigger. Section 38.2-1906(A) requires each authorized insurer to file all rates and supplementary rate information “on or before the date they become effective.” Not thirty days before. Not subject to approval. On or before the day the rate goes to work.

Be careful with the neighbouring label, because it is the distractor. “Open competition” — also called “no file” — means rates need not be filed with the regulator at all. Virginia requires the filing. If a question offers both labels, filing is mandatory is the tell, and the answer is file and use.

The substantive discipline sits in § 38.2-1904: rates may not be excessive, inadequate or unfairly discriminatory. That standard is enforced after the fact, with disapproval authority in §§ 38.2-1912 and 38.2-1912.1, rather than as a gate the insurer must pass through first.

The philosophy is worth holding as one sentence, because it makes the individual facts easier to keep: Virginia trusts competition to set the price, requires the paperwork to arrive no later than the price does, and reserves intervention for a rate that fails the standard. Insurance credit scoring is permitted in personal lines, subject to adverse-action notice requirements — the same posture, applied to underwriting.

Virginia’s residual market — and a claim you will meet everywhere that is false

You will read, in a great many places, that Virginia has no FAIR Plan. It is not true, and the statute is not subtle about it.

Title 38.2, chapter 27 is captioned “Basic Property Insurance Residual Market Facility and Joint Underwriting Association.” Section 38.2-2702: “A residual market facility shall be established and maintained by all insurers licensed to write basic property insurance or other insurance containing a basic property insurance component.” Shall — the facility is mandatory, and it is maintained by the industry rather than by the Commonwealth. Section 38.2-2700 states the purpose as assuring the availability of basic property insurance for qualified property, and § 38.2-2708 lets the Commission create a joint underwriting association if the facility is not meeting that purpose.

That is a FAIR Plan by function, whatever it is called — and it is what you would expect in a state whose dominant catastrophe exposures are coastal hurricane and storm surge, inland tornado, winter storm and ice, and river and tidal flooding. Hampton Roads has a chronic tidal flooding problem, and no homeowners policy covers flood anywhere, so NFIP or private flood is a live conversation with a Virginia client rather than a theoretical one.

The residual facility sits alongside the surplus lines market rather than instead of it. Risk that is not “qualified property,” and risk the facility will not take, still goes to non-admitted carriers — and that route has a gate. A resident surplus lines broker must already hold a Virginia Property and Casualty license and post a $25,000 surety bond, and a documented diligent effort to place the risk in the admitted market must come first. The producer has to be able to show the search was made, not merely assert it.

Who is in charge, and why the statutes read the way they do

Virginia’s regulator sits somewhere genuinely unusual, and the arrangement explains statutory language you will meet all through your studying.

The Bureau of Insurance is part of the State Corporation Commission — a constitutional body that is also a court of record. The SCC’s three members are elected by joint vote of both houses of the General Assembly to staggered six-year terms (§ 12.1-6). The Commissioner of Insurance is the employee the Commission places at the head of the Bureau (§ 12.1-16) — not elected, not appointed by the Governor.

So when you read that “the Commission” may refuse, suspend or revoke a license, or disapprove a rate, that is not loose drafting for “the Commissioner.” § 38.2-200 charges the Commission with the execution of all laws relating to insurance and insurers, and the authority genuinely sits there.