HB1205 • 2026

Motor vehicles insurance; hwy. use fee, tangible personal property tax relief for certain vehicles.

<p class=ldtitle>A BILL to amend and reenact §§ 38.2-517, 46.2-770, 46.2-771, 46.2-772, and 58.1-3524 of the Code of Virginia, relating to motor vehicles; insurance, highway use fee, and tangible personal property tax relief; application to certain vehicles.</p>

Taxes

Enacted

This bill passed the Legislature and reached final enactment based on the latest official action.

Sponsor: Oates
Last action: 2026-02-18
Official status: Failed
Effective date: Not listed

Plain English Breakdown

The official source material does not specify exact amounts or details about how funds will be distributed based on income levels.

Motor Vehicle Insurance and Tax Relief

This bill removes highway use fees for fuel-efficient vehicles, allows motor vehicle insurers to establish repair facility networks without requiring insured individuals or claimants to use them, and directs localities receiving state reimbursements for tangible personal property tax relief on qualifying vehicles to distribute remaining funds based on income levels starting in 2027.

What This Bill Does

Removes the requirement that fuel-efficient vehicles pay a highway use fee.
Allows motor vehicle insurers to establish repair facility networks without requiring insured individuals or claimants to use them.
Directs localities receiving state reimbursements for tangible personal property tax relief on qualifying vehicles to distribute remaining funds based on income levels starting in 2027.

Who It Names or Affects

Owners and lessees of fuel-efficient, electric, and alternative fuel vehicles.
Motor vehicle insurers and their policyholders or claimants.
Localities that receive state reimbursements for tangible personal property tax relief on qualifying vehicles.

Terms To Know

Highway Use Fee: A fee charged to drivers based on the type of vehicle they own and use on highways.
Tangible Personal Property Tax Relief: Tax relief provided by localities for certain types of vehicles, such as those used by military personnel or fuel-efficient cars.

Limits and Unknowns

The bill does not specify the exact amount of tax relief that will be distributed based on income levels.
It is unclear how the changes to insurance regulations will affect repair costs and availability for vehicle owners.

Bill History

2026-02-18 House
Left in Committee Transportation
2026-02-03 Department of Motor Vehicles
Subcommittee recommends laying on the table (7-Y 3-N)
2026-02-03 Department of Motor Vehicles
House subcommittee offered
2026-01-29 Department of Motor Vehicles
Assigned HTRAN sub: Department of Motor Vehicles
2026-01-14 House
Prefiled and ordered printed; Offered 01-14-2026 26103658D
2026-01-14 Transportation
Referred to Committee on Transportation

Official Summary Text

Motor vehicles; insurance; highway use fee; tangible personal property tax relief for certain vehicles.
Removes the highway use fee for fuel-efficient vehicles, and maintains the same highway use fee for electric vehicles and alternative fuel vehicles.

The bill removes the prohibition on motor vehicle insurers establishing a repair facility network. Under current law, insurers are prohibited from requiring an insured or claimant to utilize designated replacement or repair facilities or services as a prerequisite to settling or paying any claim arising under a policy or policies of insurance.

The bill also directs each county, city, or town that receives annual reimbursements from the Commonwealth for providing tangible personal property tax relief on qualifying vehicles to, beginning in tax year 2027, ensure that after first reimbursing certain tax attributable to qualifying vehicles leased by active duty members of the United States military, as is currently required by law, (i) no qualifying vehicle owned by an individual with an annual household income in excess of $200,000 receives any reimbursement for such vehicle and (ii) the remainder of the reimbursement provided to such locality is distributed based on a sliding scale for household incomes of residents of such locality, adopted by an ordinance of the governing body of such locality, as described in the bill.

Current Bill Text

Read the full stored bill text

HOUSE BILL NO. 1205

AMENDMENT IN THE NATURE OF A SUBSTITUTE

(Proposed by the House Committee on Transportation

on ________________)

(Patron Prior to Substitute--Delegate Oates)

A BILL to amend and reenact §
38.2-517
of the Code of Virginia, relating to motor vehicles; insurance; repairs.

Be it enacted by the General Assembly of Virginia:

1. That §
38.2-517
of the Code of Virginia is amended and reenacted as follows:

§
38.2-517
. Unfair settlement practices; replacement and repair; penalty.

A. No person shall:

1. Require an insured or claimant to utilize designated replacement or repair facilities or services, or the products of designated manufacturers, as a prerequisite to settling or paying any claim arising under a policy or policies of insurance;

2. Engage in any act of coercion or intimidation causing or intended to cause an insured or claimant to utilize designated replacement or repair facilities or services, or the products of designated manufacturers, in connection with settling or paying any claim arising under a policy or policies of insurance;

3. Fail to disclose to the insured or claimant, prior to being referred to a third party representative in connection with a glass claim arising under a motor vehicle insurance policy, that the third party representative is not the insurer and is acting on behalf of the insurer;

4. Fail to disclose to the insured or claimant, at such time as the insurer or its third party representative recommends the use of a designated motor vehicle replacement or repair facility or service, or products of a designated manufacturer, in connection with settling or paying any claim arising under a policy or policies of insurance, that the insured or claimant is under no obligation to use the replacement or repair facility or service or products of the manufacturer recommended by the insurer or by a representative of the insurer;

5. Fail to disclose to the insured or claimant, at such time as it or its third party representative recommends the use of a designated motor vehicle replacement or repair facility in connection with settling or paying any claim arising under a policy or policies of insurance, that the insurer or its third party representative has a financial interest in such replacement or repair facility, if the insurer or its third party representative has such an interest; or

6. Engage in the practice of capping. As used in this subdivision, "capping" means the setting of arbitrary and unreasonable limits on what an insurer will allow as reimbursement for paint and materials.

B. This section shall not be construed to
(i)
require an insurer to pay an amount for motor vehicle repair services or repair products necessary to properly and fairly repair the vehicle to its pre-loss condition that is greater than the prevailing competitive charges for equivalent services or products charged by similar contractors or repair shops within a reasonable geographic or trade area of the address of the repair facility
or (ii) prohibit the establishment of a repair facility network
. Offering an explanation of the extent of an insurer's obligation under this section to its policyholder or third party claimant shall not constitute a violation of this section.

C. Any person violating this section shall be subject to the injunctive, penalty, and enforcement provisions of Chapter 2 (§
38.2-200
et seq.) of this title. The Commission shall investigate, with the written authorization of the insured or the claimant, any written complaints received pursuant to this section, regardless of whether such written complaints are submitted by an individual or a repair facility. For the purpose of this section, any insurance company utilizing a third party representative shall be held accountable for any violation of this section by such third party representative.