Effective July 1, Virginians will be required to carry automobile insurance, according to a law signed in 2023.

SB 951 repeals the option motorists have to register uninsured vehicles and pay an annual $500 fee. All registrations on uninsured vehicles expire before the effective date.

The House passed the bill 82-16 and the Senate by 36-3.

Uninsured vehicle registration fees are deposited into Virginia’s uninsured motorist fund, which has served to reduce the cost of uninsured motorist insurance coverage, according to SB 951’s impact statement.

The State Corporation Commission distributes money from the fund to insurers that write liability insurance on vehicles registered in Virginia. Revenue collected from penalties and fees for noncompliance with Virginia’s financial responsibility laws are also deposited into the fund.

Of the $5.3 million transferred by the Department of Motor Vehicles to the Fund in fiscal year 2022, $650,000 was 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 bill sponsor Sen. Frank M. Ruff Jr. (R-District 15)) told The Virginian-Pilot.

The Insurance Information Institute (Triple-I) estimates around 12.1% of Virginia drivers were uninsured in 2022, which is lower than the national average of 14%, according to the article.

Effective Jan. 1, 2025, liability insurance coverage requirements in Virginia for injury or death of one person will increase from $30,000 to $50,000; injury or death of two or more people from $60,000 to $100,000 and property damage from $20,000 to $25,000.

Mark Friedlander, spokesperson for Triple-I, told The Virginian-Pilot that the increases will be among the highest in the country and that drivers with bare minimum required insurance coverage might see rate increases.

Motor Vehicle Insurance is noted as one contributor to the consumer price index rising to 3.5% earlier this month, according to a report released by the U.S. Bureau of Labor Statistics (BLS).

The 12-month inflation rate increased from 3.2% in February at an acceleration faster than expected, according to multiple media outlets. The increase also likely means the Federal Reserve won’t be making an interest rate cut in June like previously expected.

Yahoo Finance reported April 10 that auto insurance’s 22.2% annual increase is the largest since December 1976 when prices increased 22.4%.

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