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COMMITTEE ON RULES AND JUDICIARY BILL NO. 35-0197 Thirty-Fifth Legislature of the Virgin Islands November 13, 2023 An Act amending title 22 Virgin Islands Code, chapter 33 relating to insurance contracts, by adding section 847 to give an injured party direct standing to sue an insurer instead of, or in addition to, the insured tortfeasor PROPOSED BY: Senator Marise C. James WHEREAS, Virgin Islands common law does not currently recognize a direct action by 1 an injured party against a liability insurer. For example, an injured party may not, under current 2 Virgin Islands law, bring a direct action against an insurer when good-faith efforts to serve 3 process on the insured are unsuccessful; and 4 WHEREAS, the Supreme Court of the Virgin Islands has not authoritatively decided 5 whether the common law of the Virgin Islands will recognize such a direct right of action; and 6 WHEREAS, it is the intent of the Legislature of the Virgin Islands to pass legislation to 7 permit a direct action against an insurer for the protection of Virgin Islands residents and to 8 clarify Virgin Islands law; and 9 WHEREAS, several states and territories have enacted direct action statutes, including 10 Alabama, Arkansas, Connecticut, Georgia, Guam, Iowa, Kansas, Louisiana, Minnesota, 11 Nebraska, New Jersey, New York, Pennsylvania, Puerto Rico, Rhode Island, and Wisconsin to 12 protect the injured person from having no remedy against an insurer, forcing those injured 13 2 persons to go to the Government for assistance instead of having a remedy in court from the 1 wrongdoer and the wrongdoer’s insurance company; and 2 WHEREAS, this direct action legislation establishes a firm public policy that an injured 3 person should be afforded a mechanism to access an insured’s liability policy and guard against 4 the risk that the injured person’s right of recovery will be frustrated or denied because the 5 insured is bankrupt, not amenable to service of process, immune from suit, deceased, or fled 6 the Virgin Islands or even fled the United States and is avoiding service of process; and 7 WHEREAS, this direct action legislation does not create an independent cause of action 8 against the insurer but grants a procedural right of action against the insurer where the plaintiff 9 has a substantive cause of action against the insured, but the insured cannot be sued due to some 10 procedural fault; Now, therefore, 11 Be it enacted by the Legislature of the Virgin Islands: 12 SECTION 1. Title 22 Virgin Islands Code, chapter 33 is amended by adding section 13 847 to read as follows: 14 “§ 847. Direct action against liability insurer. 15 On any bond or policy of insurance covering liability to others for negligence, a person 16 sustaining damages or loss, or the person’s heirs or representatives, has the right of direct action 17 against the insurer and reinsurer within the coverage terms and limits of the bond or policy, 18 whether or not the bond or policy of insurance was written or delivered in the Territory of the 19 Virgin Islands, and whether or not such policy contains a provision forbidding such direct 20 action, irrespective of whether the liability is presently established or is contingent and to 21 become fixed or certain by final judgment against the insured, provided that the cause of action 22 arose in the Territory of the Virgin Islands, or under the Virgin Islands long arm statute 5 V.I.C. 23 § 4903. Such action may be brought against the insurer alone or against both the insured and 24 insurer. This section is intended to be remedial and curative, and thus applied retroactively.” 25 3 BILL SUMMARY 1 This bill enacts section 847 of chapter 33, title 22, Virgin Islands Code, and gives an 2 injured party direct standing to sue an insurer of a policy covering liability to others for 3 negligence instead of, or in addition to, the insured tortfeasor. This provision protects an 4 injured person from having no remedy, which may cause those injured persons to rely upon the 5 Government for assistance despite an existing applicable insurance policy. 6 BR 23-0542/October 19, 2023/HLF 7