What Types of Auto InsuranceAre You Required to Buy?
Virginia has a financial responsibility law. The purpose of this law is to keep drivers off the highway if they cannot bear the cost of injuries or damage that they cause. These financial responsibility requirements can be met in one of several ways.
Financial Responsibility Options
(1) When you register your vehicle, you must certify that it is insured by a company licensed to do business in Virginia. Your policy must provide the following minimum limits of liability:
$25,000 for injury or death of one person; $50,000 for injury or death of two or more people; and $20,000 for property damage.
Otherwise, the law requires you to pay the uninsured motorist fee.
(2) Uninsured Motorist Fee: This $500 Uninsured Motor Vehicle (UMV) fee, which is paid to the Department of Motor Vehicles (DMV), does not provide any insurance; it only allows you to drive an uninsured vehicle at your own risk. It expires with your registration and must be paid at renewal.
(3) Self-insurance or Surety Bonds: These are special options for owners of business vehicles. Details are available at any DMV office.
Consequences: Vehicle owners who are uninsured and have not paid the UMV fee will have their operator's license suspended. To be reinstated, they must pay a $500 statutory fee, a $30 reinstatement fee, and file an SR-22 with DMV for three years, which certifies that they have insurance.
OPTIONS 2 OR 3 SATISFY THE REQUIREMENTS OF LAW. HOWEVER, THEY DO NOT CONSTITUTE INSURANCE AND YOUR HOME, WAGES, AND OTHER ASSETS MAY BE TAKEN TO PAY ANY VALID CLAIMS AGAINST YOU.
If you decide to satisfy the requirements of the Virginia financial responsibility law by buying auto insurance, your policy must contain three major parts - (A) liability insurance for bodily injury, (B) liability insurance for property damage, and (C) uninsured/underinsured motorist coverage.
A. Bodily Injury Liability Insurance - This insurance does not protect you or your car directly. If you cause an accident injuring other people, it protects you against their claims for medical expenses, lost wages, pain and suffering and other losses. It will also pay if the accident was caused by a member of your family living with you or a person using your auto with your consent. If you carry the minimum
limits required by law, your policy will pay up to $25,000 for the losses of any one victim in an accident. If several people are injured in an accident you cause, the minimum coverage you are required to buy will pay up to $50,000 for their losses.
B. Property Damage Liability Insurance - Property damage liability insurance pays for any damage you cause to the property of others such as a crushed fender, broken glass, or a damaged wall or fence. Your insurance will pay for this damage whether you were driving your auto or whether it was being driven by another person with your consent. The property damage coverage is subject to a $200 deductible when a loss is caused by a hit-and-run driver who cannot be identified.
C. Uninsured/Underinsured Motorist Coverage - Uninsured/Underinsured motorist coverage protects you directly in the event you are injured by a driver who does not have insurance or a driver whose liability limits are not high enough to cover your damages. It also protects you if you are injured by a hit-and-run driver. It protects you by making sure that money is available to pay for your losses that were caused by someone else. Although the negligent driver is responsible for losses not paid by his insurance company, he may not be able to pay. Your insurance company will pay for losses above the amount of insurance that the negligent driver bought. However, the total amount of coverage you can collect from both sources will not exceed the amount of uninsured/underinsured motorist coverage you have purchased.
The Family Auto Policy, the Personal Auto Policy, and the Special Package Auto Policy:
Differences in Limits of Liability
1. Family Auto Policy - Separate Limits of Liability - When referring to liability limits, the insurance industry uses an abbreviation that can be confusing. The designation of $25,000/$50,000/$20,000 (or 25/50/20) or similar designations refer to the maximum amounts that an insurance company will pay for the three basic liability coverages. The first number ($25,000) refers to the limit on bodily injury per person. The second number ($50,000) refers to the limit on bodily injury per accident where two or more people have been injured. The third number ($20,000) refers to the limit on property damage per accident.
2. Special Package Auto Policy - Single Limit of Liability - Some insurance companies sell a policy that covers bodily injury liability per person, bodily injury liability per accident and property damage liability, but does not have separate limits. The maximum that a company will pay per person or per accident is contained in a single limit. This single limit must be at least $70,000 to satisfy the financial responsibility laws although limits of up to $1,000,000 can be purchased. This limit of liability applies to all bodily injury and property damage liability losses that occur as a result of any one accident for which the insured is legally liable. Uninsured motorist coverage is also contained in every Special Package Auto Policy.
3. Personal Auto Policy - Separate Limits of Liability - The Personal Auto Policy is similar to the Family Auto Policy in that it contains split limits (Although many companies are now offering the PAP with the combined single limit). The policy language has been simplified to provide a better understanding for the consumer. The policy's coverage, conditions, and provisions are written in larger print and have been rearranged to make reading the contract easier.
