Effective July 1, 2024, Virginians will be required to carry automobile insurance, as mandated by a law enacted in 2023. Senate Bill 951 eliminates the option for motorists to register uninsured vehicles and pay a $500 annual fee. Any existing registrations for uninsured vehicles will expire before this new requirement takes effect.
The bill passed the House with a vote of 82-16 and the Senate by 36-3. Revenue from the previous uninsured vehicle registration fees was directed into Virginia’s uninsured motorist fund. As noted in SB 951’s impact statement, this fund has helped to reduce the cost of uninsured motorist insurance coverage. The State Corporation Commission utilizes this fund to distribute money to insurance companies that provide liability insurance for vehicles registered in Virginia. Additionally, revenue collected from penalties and fees associated with non-compliance with Virginia’s financial responsibility laws is also deposited into the same fund.
In fiscal year 2022, $5.3 million was transferred to the fund by the Department of Motor Vehicles, with $650,000 originating from payments of the uninsured motor vehicle fee. “I agreed with them that it made no sense for someone that might have a record of bad driving to simply pay $500 when many good drivers were paying more,” said Senator Frank M. Ruff Jr. (R-District 15), the bill’s sponsor, in comments to The Virginian-Pilot.
According to the Insurance Information Institute (Triple-I), approximately 12.1% of Virginia drivers were uninsured in 2022. This figure is lower than the national average of 14%.
Starting January 1, 2025, Virginia will increase the required liability insurance coverage amounts. For injuries or the death of one person, the minimum coverage will increase from $30,000 to $50,000; for injuries or death of two or more people, it will rise from $60,000 to $100,000; and property damage coverage will increase from $20,000 to $25,000. Mark Friedlander, a spokesperson for Triple-I, told The Virginian-Pilot that these increases will be among the highest in the country and that drivers with the bare minimum required coverage may see their rates rise.
According to a recent report from the U.S. Bureau of Labor Statistics (BLS), motor vehicle insurance is one factor contributing to the consumer price index, which rose to 3.5% earlier in the month. Multiple media outlets reported that the 12-month inflation rate increased to 3.2% in February, exceeding initial expectations. This likely means the Federal Reserve will not cut interest rates in June as previously anticipated. On April 10, Yahoo Finance reported that auto insurance experienced a 22.2% annual increase, the largest since December 1976 when prices rose by 22.4%.
