Vermont’s Senate Judiciary Committee has pushed forward S.7, a bill that fundamentally alters how underinsured motorist (UIM) coverage works, with little scrutiny, no actuarial analysis, and a clear bias against insurance companies. The hearings lacked rigorous debate, data-driven policy making, or any real attempt to understand the long-term financial consequences. Instead, the committee rubber-stamped a “floating layer” UIM model that guarantees claimants full policy payouts, regardless of whether their damages have already been partially covered.
This is not how responsible lawmaking is supposed to work.
What UIM Is Actually Supposed To Do
Insurance is not a lottery payout. Its function is mathematical and contractual—it exists to cover financial losses, not generate windfalls. UIM coverage is a safety net designed to fill in the gap when an at-fault driver doesn’t have enough liability insurance to fully compensate the victim. It is not meant to be a secondary profit mechanism for claimants. UIM does not cover vehicle damage—collision or property damage claims are handled through either the at-fault driver’s liability insurance or the injured driver’s own collision coverage.
Under current law:
- If an accident victim suffers $101,000 in damages, and the at-fault driver has $100,000 in liability coverage, UIM should cover the remaining $1,000—no more, no less.
- Under S.7, UIM would pay out its full policy limit, even if that means the claimant walks away with more than their actual damages.
What S.7 Plans to Do
S.7 doesn’t just remove the offset rule—it replaces the entire payout structure, guaranteeing full UIM payments regardless of the remaining damages. Right now, UIM coverage exists to fill the gap between an injured driver’s medical expenses, lost wages, and pain and suffering when the at-fault driver’s liability coverage is insufficient.
Senator Philip Baruth explained this shift clearly:
“The big piece of this is going from Gap to floating layer… so I bought $200,000 and if I have astronomical damages I get my full $200,000 without the bad driver’s coverage being deducted from what I’m getting. It’s that simple.”
In other words, instead of making accident victims whole, this bill guarantees full payouts—even if it results in people receiving more money than their actual losses.
A Reasonable Fix & A Simple Bill
Underinsured Motorist (UIM) coverage shall compensate an insured party for remaining unpaid damages, up to the policy limit, after all available liability insurance from the at-fault driver has been exhausted. UIM payments shall not exceed the insured’s total damages. Any statutory provisions allowing for the reduction or offset of UIM benefits based on payments from the at-fault driver’s liability insurance shall be repealed to ensure claimants receive full access to their UIM coverage when damages exceed the at-fault driver’s policy limits.
How the Systems Compare
This table illustrates the difference between the current system, S.7’s proposed system, and a simple, logical fix.
Scenario | Current System (Before S.7) | S.7’s Full Payout System | A Reasonable Fix |
---|---|---|---|
Total damages | $101,000 | $101,000 | $101,000 |
At-fault driver’s insurance pays | $100,000 | $100,000 | $100,000 |
UIM coverage limit | $50,000 | $50,000 | $50,000 |
UIM payout | $0 (offset rule prevents payout because at-fault driver’s insurance met/exceeded UIM limit) | Full $50,000 (even though only $1,000 was needed) | $1,000 (covers exact shortfall) |
Total received | $100,000 (short by tens of thousands) | $150,000 (overpaid by $49,000) | $101,000 (fully compensated, no windfall) |
What This Table Shows
✔ The current statute allows for scenarios where victims can be unfairly denied their UIM payout.
✔ S.7 takes the problem too far by mandating full UIM payouts, even when only small amounts are actually needed.
✔ A proper fix would simply require UIM to always fill the remaining damages gap, up to policy limits, without overpaying.
The Committee Hearings: A Stacked Deck
The Senate Judiciary Committee—comprised of Sen. Nader Hashim (Chair, D-Windham), Sen. Robert Norris (Vice Chair, R-Franklin), Sen. Tanya Vyhovsky (D/P-Chittenden-Central), Sen. Philip Baruth (D/P-Chittenden-Central), and Sen. Christopher “Chris” Mattos (R-Orleans)—demonstrated a clear anti-insurance bias.
Rather than analyzing real Vermont insurance data, seeking actuarial input, or questioning whether overhauling the system was necessary, the committee instead used the hearings as a platform to villainize insurance companies.
Senator Philip Baruth’s comments reflected this bias:
“These major companies like Geico take our premiums and invest them and make huge, huge tens and tens of billions of dollars a year in profits.”
Not a single member of the committee seriously challenged this narrative or demanded statistical evidence that the current system was failing en masse. While some acknowledged the potential financial impact, they downplayed concerns and assumed any premium increases would be minimal.”
Why S.7 Is a Bad Bill
- It isn’t based on real data. No actuarial studies, no financial modeling, and no financial impact assessment—just emotion-driven hearings.
- It ignores how insurance works. The floating layer system turns UIM into a guaranteed secondary payout, rather than a safety net.
- It will increase insurance costs for all Vermonters. Insurers will be forced to price UIM as a certain payout rather than a conditional one, causing premiums to rise.
- It sets a dangerous precedent. If lawmakers can force insurance companies to pay beyond contracted obligations, what’s stopping them from rewriting other coverage rules?
Final Thoughts
S.7 is a textbook example of how not to make a law. The Senate Judiciary Committee ignored sound financial reasoning, vilified insurers without evidence, and failed to propose the simplest and most logical fix. Instead, they embraced a system that ensures full payouts regardless of actual damages, creating a financial windfall for claimants while raising insurance premiums for everyone else.
🚨 This bill could lead to dramatic UIM premium increases or convince insurers to stop offering the coverage altogether.
🚨 It sends a chilling message to businesses that Vermont’s legislature operates without careful analysis of economic consequences. If lawmakers can arbitrarily rewrite insurance contracts without data, what’s stopping them from making similar changes to other industries?
🚨 The temptation of treating UIM like a guaranteed payout might seem attractive, but in reality, every Vermont driver will be paying the cost through higher insurance rates.
Vermont drivers deserve better.
Dave Soulia | FYIVT
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